November 21, 2005

India gets a taste for wine

By Rina Chandran

MUMBAI (Reuters) - Get ready for Bangalore Nouveau. Best
known for its teas and spices, India now aims to place its
wines on supermarket shelves in Europe and the United States.

Rising incomes and easier regulations mean a chicken tikka
is now more likely to be washed down with a glass of local red,
prompting a rush of local entrepreneurs and foreign firms to
tap both the domestic market and global interest in New World

India's wine market is estimated at 5 million bottles a
year -- equivalent to around 200 people sharing one bottle --
and, at 2.75 billion rupees, makes up less than 1 percent of
India's $1.8 billion alcoholic drinks market.

But the wine market is growing at 25-30 percent a year,
nearly three times as fast as beer, whisky or rum, which
together make up 45 percent of the total. Exports currently
make up about 10-15 percent of total output.

"Consumer attitudes toward wine have really changed," said
Rajeev Samant, who runs Sula Vineyards in Nashik, 120 miles
north of Mumbai, formerly Bombay.

"It's seen as more sophisticated and healthier than liquor,
and therefore more acceptable for women or youngsters who are
starting to drink."

Youth appeal is important in a country where more than half
the 1 billion-plus population is below the age of 25.


After a 15-year struggle to turn Indian consumers on to the
grape, Kapil Grover feels vindicated by a recent issue of
'Decanter' magazine, which named his 'La Reserve' as the best
red among New World wines.

"It has put Indian wine on the world map," said Grover,
whose father first planted imported French grape varieties in
1988 on 20 acres at the foot of the Nandi Hills north of

Funded by other family businesses for years, Grover
Vineyards has expanded 10-fold and now sells a range of
Cabernet Sauvignon, Shiraz, Clairette and Sauvignon Blanc

While small farmers scramble to plant grapes, wealthy
entrepreneurs, private equity firms and foreign labels are all
sizing up India's wine market.

Seagram plans to set up a winery in Nashik, and Australia's
Foster's Group Ltd. will soon launch its wine brands.

"We're seeing a bullishness from investors and we require
funds to expand capacity and (make) acquisitions as the market
grows," said Ranjit Chougule, managing director of Champagne
Indage, the local market leader.

Grover is to plant grapes on 50 acres of land owned by
Jerry Rao, head of software services firm MphasiS BFL.

"Just as happened in Napa Valley, we're seeing a lot of
interest from Bangalore's tech people," Grover said, recalling
the California wine rush triggered by the 1990s dotcom boom.

India's wine market is still a tiny fraction of China's $7
billion industry that has attracted millions of dollars from
private equity firms and foreign labels.

But even the Chinese drink on average less than two glasses
of wine a year, compared with 59 quarts a head in France and 12
quarts in the United States.


Wine-making in India dates back several hundred years.

Mughal kings were as devoted to fine wines as to grand
architecture, and the British made wine fashionable. Before
foreign brands arrived in 2002, local fruit wines were popular.

The recent take-off in demand was helped by regulatory
changes triggered when the western state of Maharashtra
declared wine-making a food processing industry in 2001,
exempting it from excise duty and slashing sales taxes.

At least 20 wineries have sprung up around Nashik and Pune,
known for their cooler, yet sunny climate -- a far cry from the
1980s when Grover spent years seeking a suitable location for
his grapes, before settling on the southern Karnataka state.

"It's a very profitable business now, but when we began
exports (in 1999), Indian restaurants in London were very
resistant, unlike their acceptance of beers like Kingfisher,"
said Grover, referring to the top brand from local United

International wine experts reckon it's time consumers tried
wine with curry, preferably fruity, assertive wines that
complement spicy Asian dishes.

United now has two wine brands in India and is looking to
tie up with a local or foreign brand to raise its profile.

"You can't do a Chardonnay, Merlot or Pinot Noir in India
and you live with that, but we're looking at a more distinctly
Indian label to make our wines stand out from other New World
wines," Grover said.

Sula, which sold its first bottle of wine in 2000, has more
than 300 acres of grapes under cultivation and will sell more
than 1 million bottles this year, including a sparkling wine, a
Chenin Blanc, a Cabernet Shiraz, a Sauvignon Blanc and a blush
Zinfadel. A planned third winery will take capacity to 1.75
million quarts a year.


Wine makers now host wine tours and harvest festivals in
India, and Sula has a 2,000-square-foot tasting room
overlooking its vineyards, nestled amid scenic lakes and hills.

"India is in the news a lot these days and is perceived as
cool and hip, and Indian food is also becoming popular," said
Sula's Samant, a Stanford engineering graduate who quit his job
at Oracle Corp. to head his family's farm.

But consumption in India remains low and there is strong
opposition to easing regulations in a country where drinking
tends to be frowned upon and wine is seen as a luxury product.

High taxes and rules against selling wine in department and
grocery stores in most Indian cities push up the cost of a
bottle of wine, said Sonal Shah, who heads the strategic
advisory division at Rabo India.

Shah reckons three-quarters of local wine sold in India
sells for 200-600 rupees a bottle -- more than the price of a
local wine in London or Paris.

But it is not just the rich city dwellers that wine makers
are targeting: Enterprising farmers are naming their wines
after their villages, locals visit Sula's tasting room, and
Indage has launched a brand at less than 100 rupees a bottle.

"The only way to grow the market is by making wine a
utility, making it affordable and accessible," said Chougule,
whose firm began making sparkling wine nearly 20 years ago and
will export a quarter of this harvest's output under its
Chateau Indage label.