Companies & Sectors
Wine producers enjoy spurt in sales, as drinkers shift from hard liquor that has become costlier

The big increase in prices of hard liquor and beer has given a fillip to wine sales in Maharashtra. After struggling for over two years, wine producers are seeing a 30% jump in demand, mainly from the younger generation

Hard liquor's loss is the wine industry's gain. A couple of months after liquor producers increased prices on beer and other liquors, it seems that several people, particularly youngsters, have shifted to wines, pushing up wine sales significantly.

For over two years now, the wine industry has been struggling with sluggish sales and excess supply. That seems to be changing with wine producers reporting an estimated 30%-35% jump in sales over the past three months.

Liquor companies increased prices in April, after the Maharashtra government announced a steep hike in excise duty on liquor products, including country liquor, Indian Made Foreign Liquor (IMFL) of 50% and an astonishing 100% duty hike on beer. On the other hand, wine enjoys a 100% excise duty exemption in Maharashtra. Naturally, state wineries have decided to make full use of the government largesse and cutting costs by nearly 30-35% to attract new customers.

Maharashtra has emerged as the country's leading wine producing state, with most of the processing in and around Nashik. However, the past two years have been difficult for the industry. Sales were flagging and with over-capacity globally, wine producers were stuck with excess supplies. The financial slowdown and the debacle at Indage Wines due to reckless expansion also took a toll. But since the state excise hike, things have cheered up.

Interestingly, the biggest growth has been in the cheap wines segment. Jagdish Holkar, president of the All India Wine Producers' Association told Moneylife, "Since April, wine sales have gone up by at least 30%-35%, although it is the off-season for wine consumption. This is mainly due to the hike in prices of beer and hard liquor. Wineries have also cut down their cost by around 30%-35% so they can cater to a lower segment, where consumption is as high as 60%-65%. As per the current trend, wine is preferred by people across the segments."
 
"Accordingly, wines with reasonable price points such as Sula's Samara Red, Vinsura's Valentino, Migo from Renaissance and Figuera by Indage, are among the leading ones which are seeing sales growth," he said.

Rajeev Samant, founder and CEO, Sula Vineyards, said, "There is definitely growth in sales. Demand has accelerated as many from the younger generation are preferring wines. Increase in the prices of beer and liquors due to the state budget has also pushed up wine sales.  Our wines, such as Samara Red, Madera Red and even wines in the premium segment, are witnessing sales growth. We are targeting 20%-plus growth for the current year over that in the previous year. And we also expect demand to increase, going beyond."

Mr Holkar also agreed that there is a lot of demand for wines from the younger generation. He explained, "The younger crowd does not prefer hard liquor for various reasons, health being the important one. This is the main reason for the sales growth in beer and that is now the case for wines."

A manager at Peekay Wines, Mumbai's oldest wine store, told Moneylife, "There is continuous improvement in the sale of wines. Lot of people are buying wines these days. Wines by Sula are the most preferred by consumers."

User

SEBI decision on Takeover Code likely on 30th June

An agreement seems to have emerged between the finance ministry and the capital market regulator for raising the trigger limit from 15% to 25%, as recommended by a SEBI panel but the government is not in favour of 100% open offer

New Delhi: The Securities and Exchange Board of India (SEBI) is likely to raise the trigger limit for open offer to 25% when it takes a decision on the new Takeover Code for mergers and acquisitions at its board meeting scheduled later this month, reports PTI.

“SEBI is likely to clear the Takeover Code in its board meeting scheduled on 30th June,” an official said.

An agreement seems to have emerged between the finance ministry and the capital market regulator for raising the trigger limit from 15% to 25%, as recommended by a SEBI panel but the government is not in favour of 100% open offer, sources said.

“Certainly not 100%,” the official said when asked if the open offer would be for the entire stake.

“More or less it would be between 50% and 75%,” he added.

The SEBI committee headed by C Achuthan on a new Takeover Code had suggested that the acquiring company should make 100% open offer, thus giving the exit option to all the shareholders of the target company.

Current norms mandate acquirer to make an open offer of 20% in the target company. The recommendation of 100% open offer was opposed by the industry as it would have made acquisition a very expensive proposition.

As per the SEBI panel’s recommendations made in July last year, an entity buying 25% stake in a company should make an open offer to the rest of the shareholders.

User

Higher food prices here to stay: OECD-FAO report

The report noted that food prices are expected to fall from the current high level in the coming months on good harvest but the prices are expected to be higher in this decade than 2001-2010

New Delhi: Global food prices are expected to be higher in the 2011-20 period compared with the previous decade and this could have a ‘devastating’ impact on the poor in developing countries, reports PTI quoting an OECD-FAO report.

“Higher food prices and volatility in commodity markets are here to stay,” Organisation for Economic Co-operation and Development (OECD) and Food and Agriculture Organisation (FAO) said in a joint report released today.

The report ‘OECD-FAO Agriculture Outlook for 2011-2020’ noted that food prices are expected to fall from the current high level in the coming months on good harvest but the prices are expected to be higher in this decade than 2001-2010.

“A good harvest in the coming months should push commodity prices down from the extreme levels seen earlier this year. However, the outlook states that over the coming decade real prices for cereals could average as much as 20% higher and those for meats as much as 30% higher, compared to 2001-10,” the report said.

The projections are well below the peak price level experienced in 2007-08 and again this year, it added.

“While higher prices are generally good news for farmers, the impact on the poor in developing countries which spend a high proportion of their income on food can be devastating,” said OECD secretary general Angel Gurria in a statement.

The report pointed out that higher prices for commodities are being passed through the food chain, which leads to rising consumer price inflation in most countries.

“This raises concern for economic stability and food security in some developing countries, with poor consumers most at risk of malnutrition,” it added.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)