Karnataka wine industry in doldrums, say experts

The Karnataka Government should plough back at least some part of the additional taxes it collects on sale of wine to grow the local industry.

During a debate organised by KRSMA Estate at the Bangalore Wine Festival, wine consultant Alok Chandra said the State makes ₹8 crore through additional taxes but none of it goes towards development of the local wine industry.

Karnataka levies ₹270 per bottle (750 ml) on companies as tax which import wine from other States and also between ₹5 and 40 per bottle for those which are produced and sold inside the State.

Alok Chandra pointed out that farmers make a mere 10 per cent of each bottle sold and hence do not see any incentive in producing grapes.

Another wine consultant Heemanshu Ashar said that if corrective steps are not taken immediately, the local wine industry faces the possibility of closure.

KS Lokesh, a liquor retailer, said it was important for growers to limit production to the demand.

Alok Chandra said that though the wine industry in Karnataka is very new, it is growing fast. In 2001-02, about 0.3 million cases were sold while in 2012-13, it had gone up to 2.3 million cases (of 12 bottles each). However, wine sales are a mere 1 per cent of total spirits sales in Karnataka.

Another interesting statistics he shared was that for a ₹500 retail price for a bottle of wine, wineries sell it at ₹275. They incur a cost of ₹175 per bottle and the rest goes towards their margin as well as sales and marketing.

Hence, the government should introduce policies that help growers as well as producers to sustain their operations and in a profitable manner.