The Hindu Business Line : Sula Vineyards scaling down harvest next year

The industry will have to bear the burden of over capacity primarily because of steep increases in duties in States like Karnataka. – Mr Rajeev Samant

Mr Rajeev Samant

K. Giriprakash

Bangalore, Nov. 5 One of India’s largest wine makers, Sula Vineyards is set to scale down its harvest next year by as much as one-third as the wine industry reels under over capacity and steep increases in duties by several States.

Sula Vineyards’ Chief Executive Officer, Mr Rajeev Samant, told Business Line that the company will scale down 2009 harvest plans to 4,000 tonnes from 6,000 tonnes. “The (industry) growth in crushing will come down to between 10 per cent and 20 per cent from about 50 per cent during the previous years,” Mr Samant said. He said the worst affected will be those who are sub-contracting for bigger producers.

Growth to slow

Consequently, the industry is expected to grow much slower at about 20 per cent next fiscal from about 28 per cent - 30 per cent during the current fiscal. Mr Samant pointed out that the industry will have to bear the burden of over capacity primarily because of steep increases in duties in States like Karnataka.

The southern State recently imposed a duty of Rs 300/litre on ‘out-of-state’ wine brands. A good quality wine produced locally sells at between Rs 250 and Rs 300 a bottle and with this duty it could double the price of wine in the State.

Karnataka is the second largest market for Sula Vineyards after Maharashtra. Goa too is set to impose a duty on ‘out-of-state’ wine brands which could make it difficult for wine producers to sell their brands in these States. “The Centre should intervene and make the States to see reason,” Mr Samant said.

Maharashtra too has recently imposed a fee of Rs 7 lakh a year on ‘out-of-state’ brands for all types of liquor brands but there is a possibility that the State might scale down the fee for wine producers. “We are lobbying with the Government to reduce the duty as wines and liquor cannot be clubbed together,” Mr Samant said.

New wineries

Sula Vineyards is trying to get around the issue of such steep increases in duties and over capacities by planning wineries in other States. It is planning to set up a winery in north Karnataka at an investment of about Rs 5 crore which will produce about 8 lakh litres. It is also planning to set up a similar winery in Goa as well. The current market size for wines is about 1.5 million cases of (each case consists of 9 litres) locally – produced wines and 150,000 cases of imported wines.

More Stories on : Outlook | Cultivation | Horticulture/Fruits & Vegetables | Breweries

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