John Harris, Green Point winemaker from Australia in his recent visit to India said that India is one of the major emerging markets for all companies. This is primarily because of the increasingly wealthy middle class which is looking out for popular lifestyle choice. We hope they embrace wine as their first choice in beverages.

As the Indian wine market becomes a hot spot, many international players are ready to gamble their fate. We decide to gather some response from the domestic players.
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The total wine production for the year 2007 has grown by 37 per cent in India over the previous year and seven new wineries were added to take the total tally in India to 54 during this year. A

As per the statistics provided by Jaideep Kale, wine consultant for the Grape Wine Park of the Maharashtra Industrial Development Corporation, commercial wine production during this season touched 1.42 crore litres, up from the 1.04 crore litres production during the 2006 season.

Of this, Maharashtra alone, with 51 of the 54 wineries in the country, accounted for 1.32 crore litres, while the three remaining wine units in Karnataka and Andhra Pradesh produced 10 lakh litres. Seven new wineries were set up in Maharashtra and became operational during the new season, taking the total investment in the State from Rs 160 crore in 2006 to Rs 247 crore this year.

While most of the wine produced is for domestic consumption, four wineries, three from the Narayangaon-Nashik belt and one from Karnataka exported wines to European markets.

Currently, around 5,000 acres of land in seven districts of Maharashtra are under wine-grape cultivation, and grape crushing is an annual activity that happens in February every year. Several new wine projects are in the pipeline.

All these indicate that the Indian wine market is set for an upheaval with the world’s largest spirits maker Diageo declaring its intent to enter India. Currently, short of 1% of the overall domestic spirits market, the wine market is already growing at a rapid 20-30%. But the entry of Diageo is expected to accelerate this growth.

In an industry that is dominated by three players – Indage, Sula Wines and Grover Wines – who command 90% market share, the entry of USL and Diageo will significantly change the demographics.

Yet, Diageo is likely to fund United Spirits Ltd (USL) – India’s largest and the world’s third largest spirits maker – as a key rival in this nascent, yet fast growing, industry.
In an interview with Ambrosia, Abhay Kewadkar, Chief wine maker, United Sprits Limited and Director, Four seasons wines limited said that the UB Group has realized the potential of wines business in the country and has decided to form its own strategy for the same.

To go with the image of being a global player and to confirm its intentions, the Group decided to buy Bouvet-Ladubay, a quality winery with 156 years old heritage in the Loire valley of Saumur region in France. This is the first time an Indian Company has ventured into buying a winery outside India. In this case, it is special as wines are from France, a country which is the global leader in the wine segment.

Revealing his plans, he also said, “Bouvet-Ladubay products have been already launched in Maharashtra and soon they will be launched in Delhi, Karnataka and Goa in the next 3 months. To be present in all prices and product lines, there will be a Company, M/s. United Vintners Ltd., which will deal with import of wines from all over the world, viz. France, Italy, South Africa, New Zealand, etc. to name a few.”

A green field project is coming up in Baramati, which will be India’s best and the biggest winery. 300 acres vineyard will be owned by the Company and long term contractual agreements will be made with local farmers for 1000 acres. The winery itself will be in the middle of 300 acres vineyard. This will give 5 million bottles production of wines exclusively using wine varieties of grapes over the next 5 years.

The bottling will start in October and in the first year of operation 600,000 bottles will be sold which will consist of 6 different varietal ranges. Additional 8 brands will be added over the next 3 years, to manufacture premium wines which will go through French oak barrels. Plans are also in position to manufacture sparkling wines using traditional French method (methode champagnoise) and with the technical guidance of Bouvet-Ladubay.

The wine market in India today is still in its nascent stage. The industry is one million cases of wines manufactured in India and 0.15 to 0.2 million cases of imported wines. This, against spirits industry which has 125 million cases and beer which is at 100 million cases. A lot needs to be done in terms of education, awareness and demystifying wine as a product. This will help in expanding the consumer base of wine as a category and this is what UB Group would like to achieve.

The wine market is expanding at 30% every year but considering such a small consumer base, though the figure sounds impressive at 30%, it is not enough.

The growth in wine industry will be directly beneficial to farmers, cultivating wine varieties of grapes and this will also create job opportunities in the rural area. The Government of India and different State governments should realize this potential and promote wines. In India, wine is considered as any other alcoholic beverage while in countries like US and Europe, wine is always separated from alcohol for licensing procedures. In these countries, the retail price of wine is hardly 30-40% more than ex-winery prices while in India, the minimum is 100% and can go up to 300%, in certain States.

Considering the health benefits of wines and the fact that it is associated with food, the authorities should look at this potential and take measures to promote Indian wine industry.

The Bouvet-Ladubay products have been received extremely well in the markets of Mumbai and we have listings in prominent retail shops, fine-dining places and star hotels. The general impression has been that the quality of wines is extremely good and at a given price. Bouvet-Ladubay has won many international awards and the list is enclosed herewith. Bouvet has also been associated with Art and Theatre, sponsoring the “Festival d’Anjou”, the “Premiers Plans” festival (Deubut films festival) in Angers, Arcachon, Biarritz, Brest and Mont Doré and the Company has been present at The Cannes film festival for the last five years.

UB has plans to invest about 20 crores in the first year of operation will be and same will be scaled upto 80 crores in the course of 4-5 years.

Marketing plans are in position to grow the wine as a category as stated earlier. Packaging will be premium and the product/presentation will be to match international standards, he said.

UB has already recruited best professionals from the industry and the focus is to also attract the best talents in marketing/branding even from outside the trade to bring in innovative ideas.

With the launch of UB wines, the industry experts expect huge volumes offered to consumers, backed by big marketing and promotional expenditure in the industry which has a very low consumer base right now.

Diageo has already appointed Adrian Pinto, former marketing head of Sula Wines, to explore opportunities in the domestic market. Asif Adil, MD of Diageo India has already said that the Indian wine industry is in for great times ahead and Diageo wants to be a part of it. He, however, declined to outline a time frame for his entry into the domestic wine market.

Established players like Chateau Indage foresaw this development four years ago and had prepared themselves, says Arun Shah, director Indage.

“We were the only one to bear the cost for the last 15-20 years. Now that will be shared. Their entry will only help the industry,” he said.

Rajeev Samant, MD Sula Wines said, “The Indian wine market is tiny but growing fast. In contrast to the Indian wine consumption, China’s consumption is estimated at 300ml per capita. But India is one of the world’s fastest growing wine markets, with an annual growth rate of over 25% for the past three years. We believe a 20+% annual growth rate for the next five years is very feasible. More and more people are drinking wine, every new restaurant that opens in the cities has a wine list, and awareness is growing fast. Women are drinking in much bigger numbers, and often their first choice beverage is wine. The movies reflect this change, with Bollywood actresses routinely seen drinking wine, which would have been unthinkable just five years ago.”
He said that the value of the market at the point of sale is around US$50 million.
Sula Vineyards has a wide portfolio of variety of wines. The Premium range includes Whites like Chenin Blanc and Sauvignon Blanc, Blush Zinfandel, in Reds Cabernet Shiraz, Dindori Reserve Shiraz, Red Zinfandel and Satori Merlot. In the sparkling Brut (Methode Champenoise), Dessert wine from Late Harvest Chenin Blanc and entry level wines like Madera (Red, Blush, white).
Speaking of the performance of his brands, he said, “All the varietals are moving at a break neck speed and every vintage is sold-out.”

About Diageo’s plans, Asif Adil said, “The aim is to be present in every segment of the alcohol beverage industry. India is clearly important for Diageo Plc.”

Significantly, Diageo India has roped a senior executive from local wine maker, Sula Vineyards, to spearhead its wine foray. Adrian Pinto, who helmed marketing operations at Sula, is carrying the mandate to establish a wine business for Diageo. This could include showing up with locally-made wines as well as developing the franchise for imported brands. In this context, it must be mentioned that Diageo has been courting a local wineries for an equity JV or a contract filling arrangement.

But the only constraint with the Indian wine market is the almost non-functional storage conditions. Plus, the emergence of a strong local wine market has to be taken into account.

As Harris said, in a burgeoning market, he would like to sell at least half of his exports to India though that would be an unrealistic target. I have faith in our distribution system and am hoping they will help us achieve at least a 20 to 30 per cent growth to start with.

The 8 PM fame, Radico Khaitan has also designed its strategies to tap the growing wine market. In a significant move aimed at catapulting the Indian liquor industry to international standards, Radico Khaitan Ltd has an international division - Radico International. Some of the brands to be handled by Radico International include wines from Ernest & Julio Gallo, like, Gallo of Sonoma County, Turning Leaf, and Wine Cellars. The Gallo portfolio also includes Andre and Carlo Rossi. Abhishek Khaitan, MD, Radico Khaitan said, “The Indian Wine industry even though the base is small is growing at a rapid pace. We at Radico are focusing on the IMFL segment right now & are not looking at producing our own wines. The distribution tie-up we have with E& J Gallo fills the gap for wines in our portfolio.”



Much to the excitement of the domestic wine makers, vintners in Nashik have decided to open wine bars in winery premises, tying up with tour operators or hotels

Nashik, the country’s unofficial wine district is witnessing a new trend: set up a wine bar on the winery premises to promote tourism. This is done through tie ups with tour operators or hotels, which will put a clutch of wineries on the tourist map. This trend is emerging from a new breed of vintners, who are typically young professionals, bringing skills learned in other professions to this business.

The move is important since marketing is seen as the major shortcoming for an industry necessarily located in remote areas, where the vineyards are. Hence, this is aimed towards helping to push the wine consumption further in India.


Courtesy:  http://www.ambrosiaindia.com