With Nashik positioning itself as the country's wine capital, the district's young wine industry is getting down seriously to the business of consolidating its competitive strengths and aligning markets, minimising costs and apportioning risk . By SOURISH BHATTACHARYYA

Nashik prides itself in being the wine capital of India. On January 24, the city's youthful and vibrant wine industry is taking yet another big step to re-assert its claim. In association with the Confederation of Indian Industry (Western Region), Nashik's wine growers are going to spend the entire day at the Taj Residency rapping with the leading lights of industry and agriculture at a session appropriately called Agri Advantage 2005.

For decades, Nashik, about 180 kms from the country's commercial capital Mumbai, has been famous for being a busy industrial hub -- Larsen & Toubro, Mahindra & Mahindra, Mico Bosch and V.I.P. are some of the big names that crowd the city's industrial park -- with a strong farm sector that has turned the district into the country's principal source of onions and table grapes, besides making it a major producer of sugarcane. More recently, Nashik has been in the news -- a bit hush-hush in this case -- for being the Air Force base where the Sukhoi figher aircraft from Russia are being inducted into India's military arsenal.

But it's the grape farmers of Nashik who're making a decisive difference to both their lives and the economy of their district. More and more table grape farmers are switching over to wine grapes, which explains why the acreage under wine grapes has shot up from about 50 about four years ago to nearly 1,000. The growth is showing no signs of a slowing.And why should it? With the Indian wine industry posting a 25% growth in 2004, and the industry's most visible face, Rajeev Samant of Sula Vineyards, predicting that the market for Rs 150+ wines touching the million-case mark within five or six years, the pointers couldn't be more positive.

There are strong economic factors pushing Nashik's table grape farmers to make the switch. Explains Samant: "We're signing five-year contracts with farmers to sells us wine grapes grown according to our standards at Rs 25 a kilo. It translates into a farmer earning Rs 1.5 lakh an acre. The arrangement also insulates the farmers from the uncertainties of the table grape market." He's referring to the double whammy that has struck the table grape growers. The international market is turning increasingly slippery, with the Indian table grapes being regularly under attack for failing international pesticide residue standards. Domestic grape prices, as a result, fluctuate wildly, sometimes dropping to Rs 8 a kilo.

The economics of moving over to wine grapes is explained lucidly by Prahlad Khadangale of Vinsura Vineyards, which owns the first wine-making facility that has come up in at the sprawling 150-hectare Vinchur Wine Park, an ambitious project of the Maharashtra Industrial Development Corporation (MIDC). "You've to invest a lot more to grow Thompson Seedless grapes," explains Khadangale

"A farmer, for instance, spends Rs 10,000 more per acre on labour," he says. "The emphasis of table grape farmers is more on greater yields, so they have to spray pesticides 25 times during a growing cycle. Wine grapes, on the other hand, don't need more than five sprays. Likewise, wine grapes require twice as much water as table grapes. Which means you also have to spend more on electricity and labour. It's bad news for a state constantly confronted by water scarcity."

True, a farmer can produce up to 10 tonnes an acre of Thompson Seedless, but says Ashok V. Gaikwad, the district's most influential table grape farmer who has now launched his N.D. Wines label with a French wine-maker, "wine grapes may yield low margins, but what you save in terms of input costs and protection from an erratic market leaves you in a win-win situation."

The Maharashtra Government has also contributed to the party by giving the new wine entrepreneurs a package of freebies: a ten-year excise holiday; a reduction of the sales tax rate from 20% to 4% (the decision, though, hasn't yet been gazetted); and a 25% state subsidy on project costs. Additionally, it has done its bit to create a level playing field by jacking up the excise duty on bulk wine imports from Rs 7 to Rs 100 a litre.

But behind the rosy picture lurks the fear that Nashik may see the wine world's equivalent of the dotcom bust, with too many players rushing into what's still a sunrise industry in a limited market. Nashik, incidentally, has nine wineries already and at least ten more are expected to come up this year.

Predicts Samant, who sold 65,000 cases of his Sula, Satory and Madera brands in 2004: "There's going to be a pretty high failure rate and an equally high consolidation rate. The table grape growers have a great expertise on the grape-growing side, which is what they should build up on, instead of getting bogged down in marketing." Already, moves towards consoldiation are on. N.D. Wines sold 1.5 lakh litres to Samant for his Madera wines.

At Vinchur, MIDC is creating a centralised storage facility for sparkling wine so that the individual wineries don't have to invest capital in creating individual storage spaces. And Khadangale is also talking about putting his wine press, which he imported from Italy for Rs 8 lakh but doesn't use for more than eight days, more profitably by letting the other wineries coming up at Vinchur use it for a price. Such an arrangement would keep the press active for 60-90 days and save the new wineries an avoidable investment.

Mirroring this "integrative" mood, the CII conference will focus on developing an "integrated agriculture supply chain" to distribute competitive advantages and apportion risks, besides minimising costs and aligning markets. Others issues being discussed at the one-day conference are: chain integration of vineyards, table grapes, flowers and vegetables; development of cold chains; and contract farming. The line-up of speakers (besides Samant, who's also the event chairman) -- Shyam Chougule, Chairman, Chateau Indage; P. H. Ravi Kumar, Managing Director & CEO, National Commodity & Derivatives Exchange; P. G. Adsule, Director, National Grapes Research Centre, Pune; Firoz Masani, Director, National Horticulture Board, Nashik; Praveen Gupta, General Manager, APEDA -- promises to make the discussions meaningful for the participants. It couldn't have happened at a more relevant time.

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