As wine sales lose fizz, wineries to reduce crushing capacity

Rahul Wadke Mumbai | Updated on January 10, 2021

Wine sales have been affected by about 35 to 40 per cent in the country due to the Covid pandemic. Therefore, wineries will collectively reduce their crushing capacity by about 8,000 to 10,000 tonnes this year. On average, 25,000 tonnes of wine grapes are crushed in the country, said Jagdish Holkar, President, All-India Wine Producers’ Association.

Holkar, who is also the Chairman of Flamingo Wines, said that wine grape availability has also been affected by the extended monsoon. In 2020, pruning of grapevines was delayed, which has also resulted in delayed crushing of grapes this year. The area under wine grapes is about 1.25 to 1.50 lakh hectares this season, which is the same as that of last year. However, the yield would be less due to climatic conditions, he said.

Grapes for winemaking are primarily cultivated in Maharashtra, Karnataka, and a few districts in Madhya Pradesh. Farmers get ₹40 to ₹65 per kg for wine grapes, depending on the variety, quality, and diseases-free produce.

The grapes are also sourced based on their Brix scale, which determines the sugar level in grapes. It is a parameter to measure the alcohol content of grapes before they converted into wines.

Contract farming

Holkar said that wines from table grapes will not be made this year. Crushing of wine grapes will be given priority, and the season is expected to be complete by the final week of March. Those wineries that have entered contract farming will honour their contract with the farmers, but open market purchase will be minimal. Due to the lack of sales and uncertainty created by Covid, wineries still have a lot of unsold wines in the tanks. Some wineries may empty their tanks and pack the wines in bottles, but that will add to the inventory cost and overheads. However, this will not be reflected in the sales, he said.

Before the breakout of the pandemic, on average, four million cases of wine were sold per year in the country. A case contains 12 bottles of 750 ml each.

Wine expert and former chief winemaker for the United Spirits, Abhay Kewadkar, said that wine grape contracts will be fulfilled by wineries. A situation will not arise where the grapes will have to be thrown away by farmers having contracts for their produce.

However, those framers who have not entered into contracts with wineries but were waiting for the wine grapes prices to rise, may take a hit on their rates. The extended monsoon has affected the availability of wine grapes, but it will also enhance the quality of the grapes, he said.

Unsold stocks

Kewadkar, who is also the Managing Director of Tetrad Global Beverages, said that wineries will have to accommodate more unsold stocks, which will increase the inventory and interest costs. These twin factors will affect the profitability of wineries, he said.

Akalpit Prabhune, Managing Director and co-founder of Rhythm Winery, said that this year the winery will make less wine due to stagnant demand. Wine sales are heavily dependent on tourism, large hotels and fine dine restaurants, which are still recovering from pandemic-related restrictions. Wine consumption is also linked to foreign tourists arrivals, which is still not happening. The business projections of Rhythm has been revised downwards by about 8 to 10 per cent. The winery will have to make less wine this year, he said.

Wine grape-producing framer, Damodar Khandagale, from Rui village in Niphad taluka of Nashik district, said that he has been having a contract with a leading winery in Maharashtra since 2013. This year, due to Covid, the winery would be buying lesser grapes from his farm. The winery had informed him in advance that their wine tanks are full and therefore farmers have to reduce the output.

This year, Khandagale has about 18 acres of wine grapes in his vineyard and has been a wine grapes grower since 1998. He has planted Chenin Blanc and Shiraz varieties of wine grapes for which he will get ₹55 to ₹60 per kg from the winery.

Khandagale said that his agreement with the winery has a clause that every three years, 10 per cent procurement cost would be increased but this year the winery has said that due to Covid there would be no price increase but the produced would be purchased.

58-year-old farmer Laxman Jadhav from Pimpalgaon-Khamb village in Nashik district has a similar tale to narrate. This year, the winery has said that they will purchase lesser grapes and, therefore, farmers have reduced the production by changing the pruning techniques.

Published on January 10, 2021

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