The grape divide in Maharashtra's wine industry

Representation pic

In a shattering turn for Maharashtra's non-grape wine industry, the state's ongoing preference for grape-based producers has left many fruit wine and mead (a gluten-free alcoholic beverage created by fermenting honey with fruits and spices) brewers struggling to stay afloat. The recent policies have compelled Hill Zill Wines Pvt Ltd, a boutique winery from Bordi-Dahanu known for innovative fruit-based wines - including chikoo, star fruit, mango, strawberry, and pineapple - to announce its decision to shut shop. Similarly, Moonshine Meadery, a pioneer in India's honey-based alcoholic beverages, is uncertain about its future.

Despite a 300 per cent growth in the alco-beverage sector after nominal excise duties on non-grape wines were introduced in 2019, fruit and honey-based alcoholic beverages account for only five per cent of total wine production in the state

The plight of these businesses reflects the deep challenges these unfair policies pose. It raises important questions about the government's commitment to nurturing a rich and diverse alco-beverage landscape that celebrates all types of craftsmanship. Maharashtra has long been the heart of India's wine production, with grape wines receiving significant state support since the early 2000s, leading to the establishment of around 100 licensed wineries at its peak. The Nashik region emerged as the wine capital of India, with wineries spilling over to Pune and Baramati, driving 80 per cent of the nation's wine output. The introduction of the Maharashtra Wine Incentive Grant Scheme (WIPS) in 2001 marked a turning point, offering grape wineries VAT rebates and excise duty exemptions, propelling the industry towards a market size of less than Rs 1,000 crore by 2022.

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Fruzzante's chikoo wine is made in the GI-tagged Dahanu-Gholvad region

While grape wines enjoyed complete excise duty exemption until 2020, non-grape segments, such as fruit wines and meads, experienced a very different trajectory. In 2017, a government order classified fruit and honey-based wines under the legal definition of wine. However, these non-grape producers received different financial support than their grape wine counterparts. Despite a 300 per cent growth in the alco-beverage sector after nominal excise duties on non-grape wines were introduced in 2019, these beverages only account for five per cent of total wine production in the state. While grape wineries thrived under nearly two decades of uninterrupted benefits, the non-grape segment struggled to compete, highlighting an ongoing policy gap that hinders the growth of diverse alco-beverage offerings.

According to Priyanka Save, Co-founder of Hill Zill Wines, "The policies were always skewed, but the situation has become unbearable. After years of hard work, it's devastating to see businesses collapse due to policies that continue to ignore the potential of fruit wines and honey meads." Save is also the VP of All India Wine Producers Association.

According to her, for a brief period, it seemed that Maharashtra's non-grape wine industry might finally catch a break. However, a promising start was cut short. Looking at the chronology of events, in 2019, the state government introduced a nominal excise duty of R 1 per litre on wine made from fruits and honey meads, down from a 100 per cent excise duty. This move was a game-changer for fruit wineries and meaderies. Entrepreneurs like Save, whose company produced wines from chikoo, mango, and starfruit, were optimistic about the future with consumers eager to try new offerings beyond grape.

In 2020, as the COVID-19 pandemic ravaged the global economy, the Maharashtra government discontinued the excise duty waiver for fruit wines and meads, imposing a uniform excise duty of R 10 per litre across all wine types. This change significantly impacted the industry, but the government's decision earlier this year dealt the final blow to the non-grape wine sector.

Priyanka Save and Rajesh Jadhav

In February 2024, the Maharashtra government announced reintroducing its value-added tax (VAT) rebate policy, offering an 80 per cent rebate to grape wineries retroactively from 2020 to 2024. 
According to the GR (an approval order sanctioning the release of funds for development-related works) dated March 28, 2024, of the 100 crore allotted, the bulk of the funds - approximately Rs 86 crore - ended up going to one public listed wine company (which owns four wineries) . The purpose of the WIPS was to help build the wine industry in the state by allowing many new wineries and wine brand to take flight, like one sees in Europe, Australia, US and South Africa. Instead the subsidy seems to be predominantly helping the larger grape wine brand become even larger, leaving little room for smaller wineries, and non-grape wines, to grow or even survive.

Non-grape wine producers were excluded from this rebate entirely. This decision left small, innovative wineries such as Hill Zill Wines and Moonshine Meadery at a severe disadvantage. Buoyed by subsidies, larger grape wineries could now offer aggressive incentives to retailers, further squeezing smaller competitors out of the market. "It's deeply unfair," says Nitin Vishwas, Co-founder of Ronin Wines, which operates Moonshine Meadery. "The discriminatory VAT rebates undermine the spirit of a unified wine policy. How can the government claim to support the industry when supporting only one segment?"

Nitin Vishwas and Kunal Chug

The policy shift has created a near-monopoly within the state's wine industry, with grape wineries controlling most of the market. Smaller wineries, especially those producing non-grape wines, now face an uphill battle to survive. The collapse of non-grape wineries has a far-reaching impact, extending to local economies and agricultural communities. Hill Zill sourced fruits from farmers in Palghar (chikoo), Pune (honey), Raigad (mango), and Nashik (jambul). The closure of such wineries leaves these farmers without a crucial market for their produce.

According to Save, "Our business supported the livelihoods of many small farmers. They are losing a key buyer. This is not just a business issue - it's an agricultural crisis." Moreover, the non-grape wine industry had the potential to diversify Maharashtra's agricultural output, reducing reliance on grapes and encouraging the cultivation of a wider variety of fruits. By focusing exclusively on grape wineries, the state is missing out on an opportunity to support sustainable agriculture. Industry leaders are now calling on the state to create a more level playing field for all wine producers.

Rajesh Jadhav, Secretary, All India Wine Producers Association (AIWPA) , has been vocal about the need for reforms. "We need an integrated policy that treats all segments of the industry fairly," he said. "Small wineries deserve the same support as larger players." Jadhav also warns of long-term consequences of the current policies. "If the government continues to favour only-grape wineries, we could see a complete takeover of the industry by one or two large corporations. This would stifle innovation, reduce consumer choice, and hurt local economies."

The situation is already dire. Many wineries are considering relocating to more business-friendly states. Save confirmed that Hill Zill is exploring opportunities in Karnataka and Goa, which have more supportive policies for non-grape wine producers. The Maharashtra wine industry's growing monopoly is not just the result of government policies. According to insiders, large grape wineries have formed a cartel, using their government subsidies to engage in unfair trade practices. These companies can offer retailers deals like ‘Buy five cases of wine, get 10 cases free', effectively driving smaller competitors out of business. On the other hand Vishwas of Moonshine Meadery has had to layoff people and cut down their marketing budgets to a large extent. "There are no funds to do it," he admits, adding, "It has affected our visibility to a large extent and so now we have had to take day lisences and invite people to the meadery for honey and mead tastings - it's not easy."

"The current rebate system has allowed large wineries to inflate profits and dominate the market," said Kunal Chug, IVM International Vintage Master, Founder, Winemaker and Director, Virgin Hill Wines. "This isn't just about government policy - it's about the abuse of power by big players to kill off smaller wineries." Chug further explains that the rebates fund aggressive marketing campaigns and sales incentives that smaller wineries cannot match. "It's a classic David vs. Goliath situation," he said. "And right now, Goliath is winning."

Maharashtra's wine industry stands at a crossroads. With urgent reforms, the state can retain a vibrant and diverse sector that has the potential to contribute significantly to the local economy and agricultural sustainability. Industry leaders are urging the government to extend VAT rebates to all wine producers. Next, the Wine Incentive Grant Scheme (WIPS) must be revived for fruit wines and honey meads, offering similar benefits to those given to grape wineries. Fair trade practices must be enforced to prevent large companies from monopolising the market through aggressive incentives and unfair pricing strategies.

In the long term, a more integrated and equitable wine policy could help Maharashtra's wine industry diversify and grow. Non-grape wines, meads, and other innovative products have the potential to capture a significant share of the market, but only if they are given the same opportunities and boost as grape wineries. As Vishwas says, "We don't want special treatment - just a fair shot. The non-grape wine industry has proven it can thrive if given the chance. Now it's up to the government to decide whether it will continue to favour the old guard or support the future of Indian wine."