Not so long ago, wine producers believed they could expand the market in India significantly. It has quite turned out that way as demand is sluggish and they are burdened with unsold stocks

Four years ago, wine producers dreamed of expanding the growing interest in wine in the country. Today, those dreams remain unfulfilled as the industry struggles to squeeze out any worthwhile gains.

India is believed to be one of the fastest growing markets for wine. In fact, it's not only about wine, but it's among the fastest growing markets for several items-from food and clothing to fun and entertainment-with demand being generated from a fast-growing consumer class.

So, in 2007, the wine makers drew up big plans hoping to introduce the uninitiated to a new taste. And there was good reason for such hope. Domestic wine consumption had grown to about 10 million litres that year from just one million litres in 2001.

They introduced wine-tasting sessions that were well-received, held wine exhibitions that were well attended and wine producers even set up visits to vineyards, combining education with pleasure. Sure, these programmes have reached many who didn't know much about wines, but it hasn't helped expand the business much.

Why has acceptance been slow? Hemant Walunj, assistant winemaker with Vallée de Vin, believes, "People do participate in wine-tasting events and farm visits, but when it comes to actual buying the wine, many people do not. Price is the major factor, as wines cost a lot more compared to other liquors." Vallée de Vin (the name means valley of wines) produces and exports wines from its unit near Nashik, Maharashtra.  

Subash Arora of the Indian Wine Academy blames the sluggishness on government policy. "One of the reasons that the wine industry hasn't performed as expected is that government policy is not conducive for selling of wine in India."

The global financial crisis may also have something to do with it, as the market for wine which was growing at about 28% up to 2007, has dropped thereafter by nearly 30%.

A year ago, Moneylife reported that large stocks of unsold wine could result in winemakers selling their products at reduced prices. For example, Sula Wines, one of the major producers, had about 40-50% of its wine stocks lying unsold in its tanks; it was worse with Indus Wines which had around 90% of unsold inventory.

In fact, a combination of low demand and damage to grape crops due to unseasonal rain over the past two years has resulted in the prices of wine remaining stable.

"Producers will first look to dispose off unused stocks. Even production is undertaken on the basis of the unsold stocks. But this is not the right way to go about the business," says Mr Arora. "Good marketing and branding strategies are required."

On the issue of prices, Mr Arora believes that while there is good demand in the domestic market, Indian wines have a narrow international market, catering to restaurants serving Indian food.

Ankush Mittal, director, Mittal Vineyards, also based in Nashik, does not expect prices to rise. "For the past two years the wine industry has stagnated due to recession. Production was increased in anticipation of a rise in demand which hasn't happened. So there is hardly any scope for rise in wine prices," says Mr Mittal. "However, if we have unseasonal rain next year also, the scenario could be different."  

Clearly, wine makers have a lot to deal with, to turn around this situation. Of course, they will hope that the initiatives they have launched will not be wasted. Gaurav Chitnis who operates Unity Wine Tours, is encouraged by the response so far. "Business has been quite consistent. A lot of people are getting aware of the wine industry with many wine-tasting festivals held across cities. People continue to be interested in grape farm tours." — Alekh Angre