According to an Indian Express article, Mumbai appears to be really suffering from the changes in the taxation structure for wine. The 150-200 percent tax is pushing up the prices of the big brands while the government officials say that it is leveling the playing field. Under the new rules, the hotels must pay 150 percent of the bottle's assessed value which can translate into duty of as much as Rs. 7,000 per bottle. The net result - hotels and restaurants aren't carrying as much wine as they used to and the wine enthusiast is left with fewer choices. In fact, rumor has it that hotels have slashed their wine lists down to 50 bottles from the normal 200 bottles on their menus.

The mainstream news outlets are reporting that the major wine producers in India are busy tying up with the retail chains like Hypercity that are entering the Indian market. The logic is simple. Traditional liquor shops only devote 5-10% of their shelf space to wine and there are no guarantees whether the wine will be properly stored. In contrast to this, the retail chains can offer more space and better storage conditions.

Reliance Retail has entered into agreements with Diageo, Champagne Indage and the UB group. Grover Vineyards is also talking to Reliance, Spencer's and Metro Cash and Carry. This will represent a win for Indian consumers who shudder at the thought of purchasing wines from the existing liquor shops many of which are dark and seedy affairs.

Domestic wine consumption is expected to touch around nine million litres by 2010 growing at a CAGR of around 22 percent per annum according to a new study. It is currently estimated at five million a year with Delhi, Mumbai, Chennai, Kolkata, Pune and Bangaluru drinking the most. Currently India's wine market is at the equivalent of 200 people sharing one bottle per year. 63 percent of volume sales are still through off-trade channels in the five star hotels, pubs and bar restaurants says the study.

For more information, read the DNA Mumbai story which discussed the study in detail.

Decanter Magazine, which rarely covers Indian wine, is reporting that Howling Wolves has set up a joint venture to produce wine in India with distiller and distributor Brihans. The Howling Wolves CEO, Damian Knowles, is quoted as saying that ninety-five percent of locally- produced wine is average or below average because the Indian growers are conditioned to growing quantity not quality. Do you agree?

The vineyard is at Sreepur about 300km south of Mumbai. Knowles says the climate is half way between Western Australia's Margaret River and the Swan Valley near Perth. He argues that producing wine locally is a way to reach the lucrative Indian market and avoid some of the duties.

Diageo has tied up with Reliance Fresh to retail its international wine portfolio in the country. Diageo will launch domestic wines at Reliance Retail outlets in addition to regular liquor shops in September. Initially, the wines will be available at 15 Reliance Fresh outlets in Mumbai and Pune.

Diageo will begin by introducing their Blossom Hill Red wine and White wine in the range of Rs.700-800. Other Blossom Hill varieties like Chardonnay, Colombard Chardonnay, Merlot, Cabernet Sauvignon and Cabernet Shiraz are priced in the range of Rs 900 -1,000.

The World Health Organization's Global Status Report on Alcohol reported that the Indian wine market is growing steadily. The share of red wine is 29%, white wine is 37%, sparkling wine 7% and fortified wine 17%. Not surprisingly, Mumbai accounts for approximately 40% of the country's wine sales. The Times of India has featured the report and highlights some interesting statistics on alcohol consumption in each state.

As a follow on to the reduction of tariffs on wine being imported into India, the EU has halted its WTO complaint about Indian wine. The EU praised the Indian government for lifting barriers to wine and whisky imports. However, Brussels said that it regretted that India was raising its basic duties on wines to 150 percent from 100 percent even though these remain within the WTO limits.

The United States declined to say if it was continuing with a separate WTO probe over the same issue. For more on this issue, read the Associated Press coverage. Sommelier India contributor, Alok Chandra also discusses the issue in a Business Standard article. Also read the previous winetariffs posts published on the Sommelier India blog and comment on the subject.

Himachel Pradesh has gotten the wine bug too. Fruit winemakers are blossoming everywhere and are breeding the market with apples, peaches, plums, rhododendrons and watermelons. It may not be just grapes, but its certainly a type of wine according to The Economic Times.

In fact, Chateau Indage, which is India's largest wine maker, is planning to invest Rs. 30 crore for a winery in Pragati Nagar, 55km east of Shimla. Indage will produce both grape and non-grape wine varieties at this facility.

India is a complex country with often competing interests that clash with one another. A recent example of this is the case of the Kharghar wine shop in Mumbai. Residents of the neighborhood are protesting its opening as they are against the availability of liquor in the educational hub.

Banners denouncing the sale of alcohol have been put up and local authorities have been urged to maintain the "no alcohol" status of the area. Residents had believed that Kharghar was a dry zone because there are several educational institutes in the area. However, the opening of the Shyam Wine Shop has proved this wrong.

City and Industrial Development Corporation of Maharashtra Limited (Cidco) authorities said that as long as the wine shop was in a commercial zone there was nothing wrong. The police added that they cannot do anything as long as the wine shop is not within 500 meters of an educational institution or a place of worship.

Note, wine shops in India sell all kinds of liquor and often the number of wine bottles actually sold is very small. What do you think? Are the residents correct in protesting the opening?

The Indian Government has cut duties on liquor. The Finance Ministry has finally withdrawn all additional customs duties on imported spirit, wine and beer, following ongoing complaints from the EU and US on the high duties levied by India.

A European Commission study had reported that the combination of duties and taxes in some states in India was as high as 550% on imported spirits and 264% on wines. Abhay Kewadkar, Sanjay Menon and Alok Chandra share their opinions.

Chataue Indage organized the Indage Mega Wine Fest at Pragati Maidan in New Delhi to celebrate its 25th anniversary on June 30th, 2007. “We are holding a pan India wine festival and this is an attempt to make wine consumer friendly and to reach out to more people,” said AS Bhatia, manager of Indage’s northern region.

As the Indian Express and others reported, amidst grape stomping sessions and raunchy Punjabi pop numbers, people sipped the recently launched Ivy, Sauvignon Semillon, White Zinfandel and Vin Ballets and nibbled spicy paneer tikkas and fish fingers dipped in coriander chutney. "The whole idea of having these different stalls was to give people a new perspective on wine and to break that barrier of formality, rules and just be a free spirit and enjoy what you like," said Ajay Kumar Gothwal of Champagne Indage Ltd.