Friday, February 4, 2011

Fill up and feel the difference

A few decades back hoardings with the message “Fill up and feel the difference” was a common sight along the highways. It was an oil company ad and the meaning was very clear - use their petroleum products. But some people did give it a twist – “(men) fill up (with alcohol) and feel the difference”.

Not really a joke, is it? When drivers fill themselves up with liquor, the result quite often is a tragic road accident.

What reminded me of the old hoardings was an article on commodity prices titled ‘Fluid logic’ in The Economist of January 22, 2011. It deals with the findings of two IMF economists, Serhan Cevik and Tashin Saadi Sedic, that supply factor has only a minimal impact on wine prices. The article goes on to illustrate the similarity in price fluctuation of wine and crude oil. The emerging economies are the key players in both these commodities.

The developing countries are using up more oil than before. That goes for wine as well. Last year, for Bordeaux wines China became the biggest export market displacing Britain. If the Chinese like red wine with Coca-cola, that’s their business. The wine makers keep their mouth shut and sell more bottles. The art of wine drinking is not easy to come by.

An interesting revelation in The Economist article is that compared to some high quality wines the equivalent quantity of crude oil costs less than 50 US cents. (The current crude price is around $90 per barrel containing about 42 US gallons/159 litres.) Well, not many people drink $5000 a bottle wine.

What do Indians fill up with?

Truck drivers and car owners consume different types of liquor. How much do they spend on the stuff per day? What the former knocks back may be cheaper liquor but the quantity consumed is presumably more. In good clubs the medium priced popular brands seem to be priced around Rs.50 per peg (60ml). Both give kicks, sometimes more than what the consumer can bear.

According to GreenFacts Scientific Board the recorded per capita consumption of Indian population of 15+ (in litres of pure alcohol) is 0.82. The estimate of intake that is not recorded is 1.7 litres. The world average is about 5 litres. About 50% of the male adults in India consume liquor. Details of how many sip from the glass or knock back are not available.

A new trend, which indicates increased spendable income, is wine drinking. The Vinexpo/IWSR 2010 study places India at 10th position in world wine consumption and fifth in Asia. Imported wines accounted for 14.4% of the total volume of Indian consumption in 2008. Value wise it was 29.3%. The yearly rate of expansion of the Indian wine market is expected to be 25% or more.

There are a few interesting factors which promote wine drinking in India. With some people in Metropolitan cities particularly, wine is slowly becoming a family drink. Then there is the snob market which in many cases means promotion of the drink by those who hardly know about it. The heart friendly angle, and the belief that less alcohol is being consumed (actually depends on the quantity of intake) also help.

But what makes the major international brands and the smaller ones make a beeline for India is the low cost of establishing a winery in the country. Then too, there is the colossal  market potential.

Well, there is one more interesting point. Increase of petroleum products prices invariably cause agitation in India. I can’t recall any such problem about liquor. 

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Merry Mallus and mosquitoes


kochuthresiamma p .j said...

india's 10th position in wine drinking. not surprising, considering india houses the small state called kerala where recently, when liqour was made unavailabe in certain parts for a day, there was a huge sale of arishtams with their negligible liqour content. such is the withdrawal symptom of the mallu.

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the life:) images said...

..but after all who is controlling the price of the petroleum products.??/

jeeva said...

..nice to hear you..., but after all who is controlling the fuel price???