Sanjay Menon Says It As He Sees It
One of India's most seasoned and plain-speaking wine importers talks about the current state of the industry
Sanjay Menon is perhaps one of India’s most seasoned wine importers. In 2003, he started Sonarys Wines, a company that would bring some of the finest wines in the world to India, soon after the government allowed the import of alcoholic beverages (alcobev) in the same year. The move was the last step in the long-drawn out process to liberalise India’s economy that started in 1991.
Over the last two decades, the plain-speaking, handlebar-moustachioed Menon has seen first-hand how India’s wine industry has evolved – from relying predominantly on imported wines to becoming a small but thriving segment of the larger alcobev industry, that boasts three major wine producers (Sula, Fratelli and Grover’s) and a few small ones (Valloné, Reveilo and Krsma Estates, to name a few). Almost all of them are in Maharashtra and/or Karnataka and produce good quality wines.
Menon, however, has a different view of things. In this wide-ranging conversation, the agent provocateur of India’s wine industry talks about its evolution, the reasons why it hasn’t realised its true potential, the rise of cocktail bars, and why India will never produce great wine.
I know this is a broad question but a good one to begin with: how has the wine industry evolved in India over the last 25-odd years?
The simple answer is that it has gone in fits and starts. Liberalisation [of alcoholic beverages] actually came in 2002, 2003. It was in 2003, March or April that the final bits of the items that were in the so-called negative list [of imports] were removed.
That was an exciting phase because, you know, hotels at the time, were, tourism was booming. The economy was starting to boom. There was a lot of international travel coming into the country. The hospitality trade was buzzing. A lot of top hotels, starting with the Hyatt group and even followed thereafter by the Oberoi group. And then the Taj group was starting to employ expatriate professionals in food and beverage positions and general manager positions. And they were the ones who first brought the wine. You know, they sowed the first seeds of bringing wine back to the Indian market. Once liberalisation happened in 2003, we could distribute much more [widely].
But upon the prompting of the domestic industry, as they call themselves, the local wine boys, they went and, you know, raised the heckles with the agricultural ministry. Together, they ensured that the both import tariffs and non-tariff barriers were kept at a high level to protect so-called domestic industry. And duties had to be brought down to whatever agreed levels were, but they created other barriers through the excise departments. So after the highs of the early 2000s, things kind of dampened.
We mustered up the courage to develop the segment because there was great interest from the consumer. And we ourselves had fallen in love with wine and were starting to engage with some of the best producers from around the world.
By we, you mean Sonarys/Sansula [the previous name of the company] or other importers too?
Sansula, yeah. At the risk of sounding pompous and boastful (which I also am, unfortunately), no importer really plays any role in trying to think of it as a segment that needs to be grown, you know, education, engaging with the consumer, engaging with the professional. That’s true even now. Anyway, things picked up steam again in 2004 up until 2008 when two things happened.
One, that big financial crisis happened around the world. So that dampened tourism around the world. And because a lot of the business continued to come from the luxury hotels, that was hit.
But simultaneously in Maharashtra, there was a kind of non-executable policy created, which took the better part of the year to resolve. So two years in a row, we could actually not transact in the biggest market in Maharashtra. So from a peak of importing 250,000-300,000 cases a year we came down to 70,000 cases or so which was the pre-liberalisation level. After that, everybody lost interest.
State departments were also getting into the act and made the imports of wine more difficult. In some cases it was at the behest of the domestic industry, but what they did not see was that the only impact that it had was that it dampened the growth of the domestic industry as well. After everything that they have done so far, they’re still hovering around [producing] a little over two million cases, which is pathetic because [in comparison] China [produces] around 135 million cases. And the way they achieved it was that they opened the market up [to the world].
They invited the entire world industry to come in and exploit and create the market. And also they encouraged them to form joint ventures and set up production in China as well. So know-how of every kind flowed into China, right? Market know-how, product know-how, viticulture know-how, winemaking know-how, education know-how, everything, the entire wherewithal around wine flowed into the country. And it just, they ended up creating a robust domestic industry, which is right now pegged at something like 135 million cases versus our two million cases.
The potential is huge. If China has those numbers, India has at least those numbers in terms of potential, simply because as a demographic, we are even better suited to wine than the Chinese. So, you know, sometime in the future, hopefully the government will understand that it is not helping the segment at all to keep it protected because we simply don't have the geography to produce wine. And, you know, this segment needs to be promoted over hard alcohol spirits because wines are less harmful, less alcoholic.
But why is that the case?
The reason for that is very simple and straightforward. You know, aatmanirbhar [a reference to the Government of India’s self-reliance impetus] cannot happen with everything. Because there are some things we have, we have a great climate for agricultural produce. But that doesn’t mean that you can also make grape for making wine. That requires a completely different discipline. Much more importantly, it requires a different geography, which provides a different climate cycle that allows you to grow grapes to make wine from.
If you look everywhere in the world, the old world and the new world, wine is grown in that belt between the 30th parallel and 50th parallel, both north and south of the equator.
So you will find all the wines producing regions in the south, southern tip of South Africa, the southern tips of the odd shaped island of Australia. New Zealand’s southern part, the northern part of the southern island, the southern part of the northern island of New Zealand and the central part of Chile and the central part of Argentina. So that’s the band where everywhere in the world, the geography which supports the cultivation of vitis vinifera (the grape used for wine production).
We are not in the position, we are not in the right place in the world to make grape for making wine. And we will, in my opinion, never make great wine.
So are you saying that the likes of Fratelli, Sula and Grover who have made wines that cost, say 2000 rupees plus, are not great wines?
They are able to charge that kind of price for those wines simply because of the protection that is afforded to them by the tariff and non-tariff barriers. They are by no stretch of imagination, great wines. They are highly overpriced at that quality point.
I’d like to sort of shift focus a little bit to the consumption patterns of alcohol in India. It is generally perceived that India is a predominantly a spirits market, and even within spirits, it’s a brown spirits dominant market.
That is a fact.
So in the hierarchy of alcobev consumption, wine is at the bottom. Do you think one reason for that is because of how ritualistic we have made wine consumption to be? For example, wine purists say that you need to have wine at a certain temperature, in a particular glass, paired with a particular food…
First, there has to be the understanding that spirits and their categorisation and their comparison with wine is not accurate. They are both alcoholic beverages, but their consumption motives are completely different. So everywhere in the world, spirits are consumed as aperitif or digestive ––before or after the meal. Wine is considered a part of food. In the old world countries, which are all European, wine is part of the [respective] agricultural ministries.
There’s only been few other parts of the world that is not part of the agricultural ministry. In India, it’s part of chemicals and fertiliser ministry. And in America, it’s part of arms, ammunition, drugs, and that sort of thing. Some sort of odd oddity there.
So first, there is nothing wrong with the ceremony. There doesn't need to be ceremony around it. And absolutely, there is an issue with temperature. Because each wine needs to be served at an appropriate temperature so that it can give its best to you. Otherwise, you will think the wine is shit.
If I serve you a young wine with a lot of freshness in it, like Sauvignon Blanc or Riesling, and I serve it at Indian room temperature at 22 degrees, 24, 25, 26 degrees centigrade, it’s going to taste like shit. So what is wrong with saying that it needs to be served at 8, 9, 10 degrees? What's the fucking ceremony in that? Do it if you want. Be a fucking idiot and drink it at 22 degrees or 24 degrees or 30 degrees.
It's not about ceremony. Now, we are as Indians used to having a warm meal. So should we say “why are you making such a big fuss? Have your tandoori chicken out of the freezer. What's the big difference?” They're just stupid arguments.
The other thing that I wanted to ask was that over the last few years, we've seen an explosion of cocktail bars – especially within the 25-30 age group. Would it be fair to say that this age group, which has now gravitated towards cocktails, would have come to wines had it not been for the mushrooming of cocktail bars?
Not at all. I don't think so. You know, cocktails are fun, alcoholic, sweet, easy for a young person to appreciate. So wines are a little bit more staid or boring, it might seem to younger people. But eventually they'll get there because, you know, they want the next level of experience. They'll understand that that comes from wine. And the proliferation of the cocktails segment is rather interesting. It's given a lot of the young people behind bars, a lot of freedom to express themselves. And they've done that really well.
By “behind bars”, I’m assuming you mean the bar counter…
Behind the bar counter, not accompanying Mr. Lawrence Bishnoi in the comforts of Sabarmati jail.
I asked because I was having a chat with a friend of mine and he seemed to suggest that, look, you know, there's this entire generation that has been lost to the wine industry because...
No, no, no, not at all. It's bullshit. This cocktail boom is not localised to India. It's happened around the world.
And what do you attribute that to?
I attribute that to two things. First, in all the other advanced Western democracies, younger people are actually turning away from alcohol. I don't know whether you know that.
Yeah I’m aware…
So they have understood that it's harmful for health. But equally, what has happened in many countries in the world is that marijuana has started becoming relaxed. And that clearly, again, scientifically has been proven that it's not addictive. It has many health promoting properties as well. You know, youngsters are turning a lot towards that as well. So for both these reasons, alcohol in general is suffering.
And to counter that, the alcohol industry has been very active in trying to boost consumption through creating this buzz with cocktails and encouraging cocktail competitions and creating international bar competitions, cocktail bartender competitions, etc., etc. So all of that is, you know, is coming together.
Coming back to wine, one of the striking features seems that over the past few years, our domestic winemakers have ventured into what one could call the premium wine segment. For example, Fratelli has the J’Noon range, Sula has The Source and RaSa wines. Does their presence at a high price point indicate that consumers are now willing to spend a good amount of money on quality wines?
Not at all, it absolutely is not indicative of any suggestion that the consumer is willing to upgrade. And I'm saying this specifically as far as domestic wine is concerned, because, those at the top of the pyramid, are already used to engaging with really high-end wines and the price is not a consideration [for them]. But the appearance of wines like J’Noon are not indicative at all any suggestion that the consumer is willing to trade further up the quality ladder, because even the current quality price ladder is horrible.
Let's take a Sula Sauvignon Blanc, for example, which sells at about 800 rupees. So the problem is that at that quality point, 800 rupees is what? About 10 euros, right? $10, let’s say. 800 rupees is $10. That quality of wine is available anywhere else in the world at about $3, $4 a bottle.
So the consumer [of those wines] does not need to be an expert in tasting wine. Let’s understand that. You don't have to be able to be discerning to the extent of being able to differentiate different aroma profiles and to be able to describe them, to be able to taste and appreciate quality on the nose and on the palate. Because everybody's, every average human being is imbued with those abilities. So the consumption is not growing because you are put it at a stupid price.
They are just creating these brands as ploys to up the image of the company rather than achieving any meaningful sales. I can tell you that J’Noon doesn't sell more than a few handful of thousand cases per annum.
There's a very poor price-to-quality equation there. And the reason why wine is not growing and the reason why spirits are growing, in contrast, is this poor price-to-quality equation. You know, the value for kick is just not there. And with the protection that is afforded to Indian wines, they're just overpricing the product.
What is this protection? Can you elaborate a little bit more on it?
There’s 150 percent of customs duty [on imported wines]. And there are state levies in different states. You have to deal with each state like a different country in terms of establishing the route-to-market through them. So each state has a different excise fee. Then there is a label registration fee charged by different states.
Moreover, every consignment that comes into the country is subject to testing by the Food Safety and Standards Authority of India (FSSAI). So, when you're dealing with high end wines, where you’re importing only a few bottles, you have to sacrifice two bottles to the FSSAI for every consignment that comes into the country. The label registration process adds to cost and also creates a huge bureaucratic hurdle because every year we have to do this and the process takes anything from two to four months.
Given this context, do you see more players coming into the import, the wine and liquor import business? Because I imagine that these regulations and these rules can be a pretty strong deterrent…
Yes, yes. They are big deterrents, but unfortunately, we find more and more people entering the business, attracted by the glamour of it and believing that, you know, India is a huge market and there’s huge potential. Of course, there's huge potential. India is the last frontier for wine in the world. But with the tax situation as it is right now, you know, it's not going anywhere.
If there were a few policy/regulatory measures governments could do to ensure or ease the growth of the wine sector, what would they be, in your view?
They should get the fuck out of the way. That's the simple answer.
They don't know what they're doing, and they should get the fuck out of the way. But they won’t. Not because of any noble intent to protect somebody (i.e. the domestic industry) but because they just don't understand. They haven’t got it that after protecting the domestic industry for 25 years, they are at the abysmal volume of around 2 million cases, of which 70 percent is really poor quality swill. And 30 percent of what you and I recognise as wine is being sold at three times the price it should be, for the quality point. And then, you know, they’re just completely misleading the segment, and making them believe that they have got somewhere in terms of creating quality here. The government should completely remove all barriers, as far as wine is concerned, and let the international industry come in and develop a market for wine.