A study of marketing cost and marketing efficiency of grape wine in Maharashtra

Introduction

Grape (Vitis vinifera) holds significant importance in India's horticultural landscape. It is the third most extensively cultivated fruit crop in the country, following citrus and banana. Globally, grapes are a crucial fruit crop, with an estimated production of 68.9 million tonnes, making them one of the top fruit crops, placing them behind only citrus, bananas, and apples. In India, grape cultivation spans a substantial area of 139 thousand hectares, with a production volume of approximately 2920 thousand tonnes in the 2017-18 period (NHB). The principal grape-growing states include Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu, Punjab, Haryana, western Uttar Pradesh, Rajasthan, and Madhya Pradesh. Among these, Maharashtra stands out as the leading producer, contributing about 62.7 percent of the total grape production in the country. This makes Maharashtra a critical area for grape cultivation and processing, with key districts like Nashik, Sangli, Pune, Ahmednagar, and Solapur being major contributors. Given the highly perishable nature of grapes, it is essential to process them into more stable products such as wine, raisins, and juice. This has led to the development of a robust grape processing industry in India. Currently, there are 95 wine industries in the country, with Maharashtra housing 78 of them, making it a hub for grape processing. The concentration of grape production and processing industries in Maharashtra highlights the importance of studying the marketing and economic aspects of grape processing. The perishable nature of grapes necessitates efficient marketing and processing strategies to minimize losses and maximize profitability. Wine, raisins and juices derived from grapes not only provide a means to preserve the fruit but also add significant value, making grape cultivation a more lucrative endeavor for farmers. Therefore, understanding the dynamics of grape processing industries and their marketing channels is crucial. By examining these aspects, stakeholders can devise strategies to enhance efficiency, reduce intermediary costs, and increase the profit margins for farmers. This study focuses on these areas to provide insights and recommendations that could benefit grape producers and processors in Maharashtra and other grapegrowing regions in India. Objectives 1. To study the marketing cost of various marketing channels of grape wine. 2. To identify effective marketing channel for the distribution of grape wine.

Methodology Marketing Efficiency

There are three methods of marketing efficiency i.e. Conventional method, Shepherd method and Acharya method.

Pricing marketing efficiency

The primary data was collected from farmers, processors, commission agents, wholesalers and retailers by preparing schedule and by personal interviews on marketing cost, margins and price spread for different distribution channels. Marketing efficiency indicated the ratio of value added for the goods to the marketing cost and was calculated by the following formula using Conventional method.

Where, V = Value added to the commodity I = Total marketing cost incurred ME = Index of Marketing efficiency OR Marketing Efficiency by Shepherd's method

Results and Discussions Channel wise marketing cost and marketing efficiency of Grape Wine

Five districts i.e. Nashik, Sangli, Pune, Solapur and Ahmednagar were selected to collect the primary data of marketing cost of various middlemen's for marketing of grape wine. There are total 78 no. of grape wine industries in Maharashtra. Of these, there were 48 no. of farmer-producer grape wine industries. Therefore, about 30 percent of the total farmer-producer industries in Maharashtra i.e. 14 no. of grape wine industries were taken as a sample size to collect the primary data related to marketing cost of grape wine. The data was also collected for different marketing channels of these industries to market the grape wine. Following channels were observed for marketing of grape wine during the study.

Of these total 4 marketing channels, channel no. I, II and III were observed commonly in all selected grape wine industries. The overall marketing cost calculated for these 14 no. of industries is given in the below table 1. It was seen from the table 1 that, in channel I profit margin of producer was Rs. 147.86 per litre of wine whereas in channel II it was Rs. 125.36 per litre of wine and in channel III the profit margin was Rs. 103.93 per litre of wine. The profit margins for producer were 100, 58.02 and 46.41 percent for channel I, II and III respectively. All the industries which were selected for the study were farmer-producer grape wine industries. From the above, it concludes that farmers are benefited by reduction of middlemen in marketing of grape wine. The channel I shows more profit margin to the producer than channel II and III. It is due to less no. of middlemen. The above table also concludes that as the number of middlemen increases, their marketing cost increases due to their charges for storage, packaging, transportation, loading and unloading which is affected on profit margin of farmers. Therefore, tables 1 and 2 demonstrate that a reduction in the number of middlemen in the marketing of grape wine processed products leads to an increase in the producer's profit margin.

The above table concludes that as the number of middlemen increases, marketing costs rise due to additional charges for storage, packaging, transportation, loading, and unloading, which in turn negatively impacts the profit margin of farmers.

Conclusion

The study of marketing channels for grape wine revealed three primary routes: Channel I (Producer → Consumer), Channel II (Producer → Retailer → Consumer), and Channel III (Producer → Wholesaler → Retailer → Consumer). Among these, Channel I proved to be the most efficient and profitable for farmers due to the absence of intermediaries. This direct producer-toconsumer model yielded higher profit margins and marketing efficiency, as confirmed by both the Conventional and Shepherd methods. In contrast, Channels II and III involved additional middlemen, which increased marketing costs such as storage, packaging, transportation, loading, and unloading, ultimately reducing the farmer's share of the returns. Overall, reducing the number of intermediaries in the marketing of grape wine significantly enhances producer profitability and marketing efficiency.

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