Sourish Bhattacharyya on how Covid-19 has affected the wine business in India

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Sourish Bhattacharyya

And then came Covid-19…

The pandemic has corked the wine business in India – at least for six months to a year

Whenever the world talks about the Indian wine business, it is politely described as being in its infancy. It was turning out to be a rather prolonged infancy since business did not seem to be fast-tracking towards youth. And now, the Covid-19 pandemic seems to have infinitely extended its infancy.

 

The view from within the wine business is that the 20% compounded annual growth rate (CAGR) the trade had managed to clock over the past five years leading up to Financial Year 2019-20 would definitely slow down over the next couple of years and the consumers are most likely to trade down. “We must be prepared for a rollercoaster ride,” warned Kapil Sekhri, co-founder, Fratelli Wines, mixing realism with hope. “But we have to be resolute and ride out the storm. India’s consumption story is intact in the long term.”

It is the short term that many people in the wine business see as an insurmountable hump. With hotels at their lowest occupancies, and restaurants shut down or forced to remain dry even if allowed to open, on-trade wine sales are at zero. June, anyway, is a bad month for wines, but in a market where there’s scarcity all-round, people appear to have moved over to inexpensive whiskeys, having forgone even the summer-time comfort of beer, if off-trade sales figures are any indication.

Even destination wine stores such as Brindco’s La Cave Wines and Spirits led by Madhulika Dhall are sending out mixed signals. The plush store may be in the stylish Select Citywalk in South Delhi, but Madame La Cave’s patrons continue to be diffident about visiting the mall, fearing exposure to the virus. “The mall is nearly empty despite the very high standards of sanitisation the management has put in place,” said Madhulika Dhall. “On the day we reopened, we had a few customers, but since then we have seen a sharp drop.”

Necessity being the mother of invention, Dhall has devised a way to cater to her customers while addressing their fears. They now place their orders on the phone, pay electronically, and pick up the bottles from the main entrance to the mall. The orders are delivered by hand to the customers by the store’s staff – all masked and gloved. Life would have been simpler had the Delhi NCT Government allowed online wine sales.

“The good news is that people are drinking wine at home and some of our high net worth customers, who now cannot travel abroad, are not hesitating to buy their favourite wines from our store; normally, they would have picked them up during their foreign travels,” Dhall said. The spending limit per bottle, though, stands capped at Rs 10,000 to Rs 15,000.

Beverage consultant and sommelier, Ankur Chawla, however, doesn’t see much hope in the home market. “Indians are not in the habit of drinking wine at home,” he said. “It is still not a part of our culture.” The banqueting business, meanwhile, stares at an uncertain future, at least for the next six to nine months, because of ‘social distancing’ practices. Rising wine consumption at
weddings and corporate social events, as a result, are headed towards an all-time low. “I don’t see any movement forward till at least Diwali,” Sumit Sehgal, director, Prestige Wines and Spirits, said. “Even then, selling quality wines will remain a major challenge. The market has moved towards value-for-money wines.” Does that imply an opportunity for domestic wines?

Aditi Pai, journalist and co-founder, Vallonne Vineyards, Igatpuri (Nashik), said the production of the 2020 vintage went off without a hiccup because the industry sources its labour locally and therefore wasn’t hit, like many others in Maharashtra, by migration blues. That’s where the good news ends, because the wineries have lost out on wine tourism and cellar door tastings and sales,
which had emerged as major revenue sources for Vallonné in recent years. “We had to cancel innumerable bookings for harvest tours,” Pai said. “And whatever gains we have made because of home delivery of wines being allowed across Maharashtra do not compensate for the loss of business of our winery restaurants,” she added.

The hurdles confronting the wine business only seem to be mounting. As most restaurants are shutting down their electricity connections in order to save on power bills, industry insiders fear significant quantities of wine stock are getting spoilt in the heat. Not all restaurateurs follow Diva Restaurants’ chef and co-owner, Ritu Dalmia’s practice of keeping her wine coolers working 24×7. “One person from my staff goes daily to my restaurants to check that the power supply is uninterrupted,” she said. Dalmia perhaps has the best-stocked wine cellar among stand-alone restaurants with more than 7,000 bottles representing 400 labels in stock.

Only five-star hotels can afford such a luxury. “They have the storage capacity to hold wine stock for six months to a year,” explained Samrat Banerjee, Rooh’s director of Operations, “but not restaurants, which already are weighed down by exorbitant rentals.” At Rooh, the Delhi outpost of Chicago’s Michelin-starred Modern Indian restaurant by the same name, anchored by Chef Sujan Sarkar, Banerjee has pared down his wine menu to 16 or 17 bottle choices.

“It makes no sense for us to keep wines priced over Rs 3,000. “ ‘Caution’ is the buzzword. We have no option but to play safe,” Banerjee said. “No one in India has any idea of how the market will shape up.” On his part, Banerjee proposes to prop up Indian wines by pursuing an aggressive wine by the glass programme. His next choice will be “uncomplicated New World wines”. The big ‘if’, however, is the uncertainty over the resumption of alcohol sales in hotels and restaurants.

Even hotels, according to Sumedh Singh Mandla, CEO, AWS Global, and VBev would be under pressure to sell off their duty-free stock. This may be why Rajesh Namby, who has taken charge of The Lodhi New Delhi after a hugely successful stint as general manager at The Leela Palace, Udaipur, is preparing to “tie up with the legends of the industry to bring back a robust wine culture” after it’s back to the ‘old normal’.

Namby plans to host at least two to three wine dinners a month after his hotel re-opens fully. His confidence stems from the fact that 50% of The Lodhi’s health club members are in touch with him for curated dinners. “People want to step out of their homes in their finest clothes and meet their friends over a fine meal,” Namby said wistfully.

But as Dhall warned, “There’s a big question mark about the future. It is too early to make plans.” A big promoter of wine events, Dhall said she did not see any happening in the next six or eight months. Pai of Vallonne reminded us that if the anticipated second Corona wave does take place in December, we can forget about wine dinners for at least another year. The prognosis couldn’t be grimmer. Dalmia summed up the market sentiment when she said, “We can breathe easy only when our struggle for survival turns into a return to revival. But it may not happen that soon.”

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