Maha Incentives for Maha Producers in offing
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Posted: Thursday, 06 January 2011 11:50
Maha Incentives for Maha Producers in offing

There are a host of new incentives to be granted soon by the Maharashtra government including easy licenses for the state producers to open multiple winery- owned retail vends for  their own labels to enable them selling  wines cheaper to the consumer, and further letting them open wine cafes at lower license costs with easier procedures, writes Subhash Arora.

‘The sale through an outlet at the winery is currently allowed but small producers need an option to be able to sell directly to the end customer,’ explains Jagdish Holkar, President of All India Wine Producers Association. ‘Marketing has been a problem for them with the distributor, wholesaler and retailer in the chain, adding too much to the cost for the end consumer. Several schemes like ‘buy one-get one free’ and ‘buy two-get one free’ had been introduced in the past, which meant less revenue to the producer but consumer rarely receiving the benefit,’ says Holkar who, despite a personal tragedy of losing his mother last Friday, shared achievements and wish-list of the Association in alleviating the problems of small producers.

Would this not create immense problems with the middlemen, especially retailers boycotting such wineries? ‘Perhaps big producers like Sula may not take this step of going direct and cutting down the price of a bottle by Rs.150-200. But small producers will be able to open retail stores by paying the nominal license fee of around Rs.10,000 a year and offer wine at cheaper price,’ he feels.

Although no response was received from Rajeev Samant at the time of publishing the article, the business Savvy Rajeev will certainly see the merit in opening a few exclusive shops on a Franchise/partnership (like Reebok, Nike, Samsonite and several apparel brands available both in retail and company owned stores basis where the prices will not upset the retailers but will help him take the branding to yet another level and help increase sale. Similar action may be expected from Grover, Indage, UB and the likes of Zampa.

‘Another problem faced by the producers is the distribution channel. The excise license fee for distribution is the same (around Rs.6, 50,000) whether one sells only wine, liquor or both. There is a limited number of distributors being chased by several producers who
are thus under their thumb,’ adds Holkar. ‘The distribution license fee for wine only is being reduced by the government with the new license FLW-1 being introduced from April for less than Rs. 50,000. This would mean many more distributors available.’

The procedures to open wine bars and cafes are being made more effective for producers to allow wine tastings in a bigger way. ‘Although the state government had already reduced the license fee for wine bars and cafes to Rs. 36,000 in Mumbai, the procedures are very complicated. We had to go to the AC level which meant bureaucratic holding up and made getting the license very difficult. Now the Collector at District level will be able to issue these licenses. The cost is also being brought down further to Rs.5,000-10,000 a year. Thus, we shall be able to conduct wine tastings much more freely. The restaurants are good places to drink wine but wine tastings at these wine cafés would be very welcome.’

Another incentive in the offing seems to be the long-standing ‘demand’ of Maharashtra producers to allow reduction in the annual cost of K-form for out of state producers from the current Rs. 650,000. The producers were quiet all these years until Karnataka adopted the tit-for-tat policy a couple of years ago, taking the wind out of the Maharashtra producers who have been but driven out of the growing wine market of Karnataka. The producers now favour a fairer policy for out –of –state producers (read Karnataka). ‘The government has agreed to reduce the K-form charges to a very nominal Rs.10,000,’ says Holkar who added that the additional excise duty burden would be reduced to almost Rs.10 a bottle from the current special excise duty of 150% of the declared manufacturing cost.’

Holkar hastens to add that although these decisions have been taken, the gazetted notification is awaited. When delWine asked Kapil Grover, owner of Bangalore based Grover Vineyards, if he knew of such measures and whether his winery would lobby with the Karnataka government to waive off the special excise duties being levied for the outsiders like Maharashtra,, he responded with the jibe, ‘I have been hearing this information for 7 years? Is it for real!?’ Karnataka government has already indicated that it would reciprocate if Maharashtra removes the anomaly which is affecting its producers like Grover.

Kapil has reasons to be skeptical. The government and politicians in the past have made expeditious commitments but the gazetted notifications, making the promises as diktat takes months or years-sometime making the promises disappear in the thin air! It is not surprising that a couple of small Maharashtra producers with whom delWine discussed the incentives in the offing, reacted with sarcasm and disbelief but did not wish to be quoted.

For an important producer like Grover not to have the relevant information is also not   very complimentary for an Association which claims to be an All India Association. Though it is operating out of Mumbai/Nashik, it is imperative that it maintains a Pan India status in terms of membership, management and the information dissemination, with transparency in its manner of working for long term collective benefits for the industry.

No matter what shape the excise rules and procedures take, the Maharashtra government has its hands full with promises it has made and one will know soon, as the new policy effective in April is announced. It will display the resolve of the Maharashtra government to save the industry and the small producers. There is no respite from the Delhi government which already charges them exorbitant license fee and registration charges. But one hopes that maha steps are in the offing to help the Maha vintners.

Subhash Arora

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