A PROJECT REPORT ON

INDIAN WINE INDUSTRY

SUBMITTED TO
UNIVERSITY OF MUMBAI

BY
SHREYAS UMESH SHETTY
T. Y. B.M.S.

YEAR 2005-2006

THROUGH
TOLANI COLLEGE OF COMMERCE
ANDHERI (EAST), MUMBAI – 400 093
 CERTIFICATE

I, Dr. A. A. Rashid, hereby certify that Mr. Shreyas Shetty of

Tolani College of Commerce, T.Y. B.M.S. (Semester V) has

completed his project titled INDIAN WINE INDUSTRY in the

academic year 2005-2006. The information submitted herein is

true and original to the best of my knowledge.

Dr. A. A. Rashid Dr. Sheela Purohit

(Project Guide) (Principal)
 DECLARATION

I, Shreyas Shetty, of Tolani College of Commerce, T.Y. B.M.S.

(Semester V) hereby declare that I have completed my project

titled INDIAN WINE INDUSTRY in the academic year 2005-2006.

The information submitted herein is true and original to the best of

my knowledge.

Place: MUMBAI Shreyas Shetty

Date:
 ACKNOWLEDGEMENT

At the outset I take the privilege to convey my gratitude to those who

have co-operated, supported, helped and suggested me to accomplish

the project work. This project work bear’s imprint, of many persons who

are either directly or indirectly involved in the completion of it.

I extend my thanks to Mr. Dinesh Chavla, Chateau Indage, for giving me

an opportunity to do this project in the company.

I am also desirous of placing on record profound indebt ness to my

guide Prof. Dr. A. A. Rashid Tolani College of Commerce, Andheri for the

valuable advice, guidance, precious time and support that she offered.
 OBJECTIVES

1. To make comparative analysis of Indian wine industry in context

of past and present records.

2. To analyze wine industry globally and determine worlds major

market.

3. To determine performance of Indian wine globally.

4. To make a comparative analysis of wine industry in Maharashtra.

5. To analyze market Baron – Champagne Indage ltd.

 Table of Contents
Sr. No. Topics Page
No.
SECTION 1

1. Executive Summary 1-2

2. Introduction 3–6

3. A decade ago… 7 – 10

4. India today 11

SECTION 2

1. Wine globally 12 – 22

2. Indian wine globally 23

SECTION 3

1. Indian wine industry 24 – 31

SECTION 4

1. Wine industry in Maharashtra – An analysis 32 – 42

SECTION 5

1. Case study – Champagne Indage Ltd. 43 – 53

2. Conclusion 54 – 55
 Executive summary

“With chicken tikka masala Britain's favourite dish India is offering a fresh
challenge to the nation's palate: wine.”

Wine has been made in India for many thousands of years, some say for 5,000.
Today India has 123,000 acres of vineyards, but only one per cent of them are
used for wine.

Today there are eight thousand Indian restaurants in Britain representing 33 per
cent of the dining market in spending power, which represents some Stg two
milliard per annum. (Two billion in American usage).

Restaurants of every other nation offer wines from their own country. The only
exception up to now has been India whose restaurants offered their excellent
beer and wine from many other countries. Omar Khayam, a methode
champagnoise wine has been on the British market for ten years. Now it is
possible to find both a red and a white table wine in some shops and restaurants.

..1.
Some people say that wine does not go with curry. Well those of the British Raj
used to drink a choata peg (coktail) or two before dinner, Madeira with the curry
followed by claret then back on to the choata peg or Scottish wine. The very
thought gives me a hangover.

Although Madeira does go with curry one gets legless unless one paces oneself
with lots of water. Otherwise you cannot enjoy the food. Now we can all enjoy a
few glasses of jolly good Indian wine without spoiling either our reputations or the
delicious food.

With thousands of years experience of drinking wine with curry surely they, the
Indians must know which is better beer or wine. Beer as we know it did not reach
the sub Continent until the early to mid 19th century when brewers made I.P.A. -
Indian Pale Ale which was specially high in alcohol and well hopped in order to
stand the voyage from Britain. Before this period rice beer was made in some
areas.

Portuguese settlers improved the wine they found in the 16th century when they
came to Goa. This helped to keep up interest and continuity in the wine industry
which today is growing up into the 21st century from the quantum leap of its
rebirth in 1985.
The Portuguese also introduced Vindaloo to India. The sailors kept their meat in
barrels of wine laced with garlic to which they added the spices they found in
India. The word was originally Vin d'Ail.

Try drinking cool light red wine with meat curries, it is surprisingly refreshing and
works well.

..2.
 Introduction
"There is no reason why wine should not be drunk with the food served in
India (nor with its often slightly paler imitations in "Indian" restaurants
outside the subcontinent). The wine should ideally be quite fruity and
assertive. A subtle old claret is most definitely not the thing; a California
Zinfandel or Australian Shiraz, or even a well-made sparkling wine, would
be much more so." - Jancis Robinson, (the definitive voice on wine).

Wine has been made in India for as many as 5,000 years. It was the early
European travellers to the courts of the Mughal emperors Akbar, Jehangir and
Shah Jehan in the sixteenth and seventeenth centuries who reported tasting
wines from the royal vineyards. Red wines were made from the arkesham grape
and white wine from arkawati and bhokry grapes.

India has now 123,000 acres of vineyards, but only one per cent of this acreage
is used for wine. However, that does not mean the wine market in the country
isn't maturing. Today the overall sales are around 400,000 cases a year. Table
wines account for 85 percent of the market and expensive varieties of vintage
wines account for the remaining 15 per cent.

The flip side of the industry is that of the 400,000 cases sold every year, only
30,000 cases of sparkling wine and champagne are consumed in India. In
contrast the figures of other drinks are: 37 million cases of whisky, 11 million
cases of brandy and nine million cases of rum. Industry officials believe that the
market will grow rapidly once the government drops import duties on bulk
(currently at 108 per cent) and on bottled wines (currently 264-420 per cent).

One of the other reasons why wine drinking has not caught on is that quality
wines are priced relatively high. Since the volumes are low, production costs are
high, as are taxes.

..3.
Thus the real challenge for winemakers in India is to develop a domestic market,
and that is where the problem arises. First, people believe wine and curry do not
go well. "It is a myth," says Thomas Abraham, F & B Manager of Delhi's Hyatt
Regency hotel. “The truth is most Indians prefer beer, whiskey or rum over wine
and champagne. That's why the per capita consumption of wine in India is very
low."

In exports, says Aman Dhal, one of India's leading wine importers and
distributors, Indian winemakers face a peculiar problem. “Traditionally wine
lovers around the world have some kind of a mental block against Indian wines.
They are just not comfortable with the Made in India tag."

However, Oz Clarke, one of the presenters of the BBC's Food and Drink
programme, refutes that. “Western wine drinkers are some of the most
imaginative aficionados in the world. I think when they see Made in India, they
won't say: "What a weird idea." They'll say: "Fantastic! I haven't tried it. Give me
some." In fact, one of Chateau Indage's most popular wine, Omar Khayam, is in
the British market for a decade now!

A spokesman of spirit major McDowell that also distributes imported wine in the
Indian market, says that wine imports --both bulk and bottled --have gathered
momentum in the last three years. Growth rates, he claims, have touched 25
percent per annum in the last few years. “Volumes are driven mainly by Indian
wines that are priced below Rs 150 per bottle," he adds

McDowell's, in fact, has an agreement with Concha Y Toro, the largest producer
of wine in Chile for importing wine. The company is represented in the Indian
market by two premium brands, Bosca Reisling and Red & Rose.

Though Shaw Wallace's Golconda has a 25 per cent market share, the leader is
Chateau Indage, a diversified Indian public company with interests in viticulture

..4.
and wine distribution. The company manufactures 12 types of wine and owns
vineyards spread over 600 acres south-west of Mumbai.

Pioneer of French-style wines in India, CI Limited produces a variety of exquisite

still and sparkling wines. In the Indian market Indage holds 75 % share of the
premium still wine category and virtual monopoly in Sparkling wines. Chateau
Indage, pioneered by Sham Chougule was established in 1984, with the
technical collaboration of Champagne's Piper Heidsieck. The ultra-modern
winery in Narayangaon, Maha-- ra-shtra, produces a wide range of high-quality
wines under the watchful eye of Californian winemaker John Locke. Chateau
Indage's Riviera label includes a fruity, well-balanced white blend of chardonnay
and ugni blanc and a soft fresh red made from pinot noir. The Chantilly label
wines--a white (chardonnay) and a red (cabernet sauvignon)--are aged in French
oak and show their varietal characteristics. Omar Khayyam is a top-quality
chardonnay-based sparkling wine, made by the methode traditionelle, that
compares favorably with champagne.

Grover Vineyards, in Dodballapur, 40 km north of Bangalore at the foot of the

Nandi hills, on the other hand, uses French grapes Vitis Vinifera in its vineyards
in Bangalore. It exports wine worth $435,000 every year. "The Grover range
produced from high-altitude vineyards north of Bangalore, with help from the
ubiquitous Michel Rolland of Pomerol, is extremely respectable. The reds,
particularly the Reserve red, are a distinct notch above the slightly dull Clairette-
based white."
Fifteen years ago, the Grovers took on the task of reviving wine drinking in India.
The company, together with Mr. George Vesselle accepted the immense
challenge of growing, for the first time, French varieties of grapes, suitable for
wine production in India. Grover Vineyards is jointly owned by Kanwal Grover
and Veuve Cliquot. Kanwal Grover is advised by two top French winemakers,
Michel Rolland and Georges Vesselle. The vineyards are planted at 2,000
feet above sea level and produce two crops a year. Still white and red wines from

..5.
Bangalore purple, cabernet, shiraz and Thompson seedless grapes are made
under the supervision of winemaker Bruno Yvon. The white is medium-dry and
fairly bland; the red is cabernet-style with good depth of fruit.

For those who curl up their nose at Indian wines, the advise would be not to write
off the local offerings. The consumption is increasing though ever too small.
Sham Chougule, the chairman of Chateau Indage puts it succinctly, “It’s about
half a teaspoon per head. The day it becomes one litre, the market will be one
billion litres."

..6.
 A decade ago…
Wine has a history in India, but it has never taken centre stage as it did at times
in Europe. Wine is thoroughly wrapped up within western culture from its very
beginnings (to take a minor example, Homer’s epics – the first great
literature of western civilization – repeatedly employ the phrase, “over the
wine-dark sea”…). But in India, wine tended to be brought into the culture by the
various waves of conquerors and sojourners. I do not believe, as some try to
argue, that soma, the ancient gods’ intoxicant, had anything to do with wine.

One of the names for wine in ancient India was Drakshasava. Artefacts from
Harappan civilisation indicate indigenous familiarity with wine. Moving to the
Vedic period, it is claimed that wine was known as Somarasa, was associated
with Indra and poured as a libation and drunk at religious festivals. There were
certainly some references and uses of wine before Alexander brought vines with
him to northern India.

Example
Pre-Alexander Shaivite cult practices – in this sense analogous to Greek
Bacchic rites – involved the use of wine as an intoxicant.

Kautilya’s Arthashastra, which dates from somewhere between 321-150BC (that

is, during the Mauryan Empire, which was in the making during Alexander’s
conquests in north-western India), discusses “alcoholic beverages made from
fruit,” though it is not clear that wine proper is meant. Interestingly, the Mauryas
strictly regulated the production and distribution of alcoholic beverages, and in
this respect, the current outrageously over-regulated Indian laws have a native
predecessor.

The Persians had a famous wine, Shiraz, which was often sent to the Moguls,
and later to the British.

..7.
From the moment the British set up the Surat factory (1612), wine began
becoming more and more familiar throughout India. Indeed, the breakfast given
all the employees at the Surat factory consisted of little else but “burnt wine,” that
is, wine that was scalded by dropping a red hot brick of gold into it.

Wine was always expensive in India, so today is no different from any earlier
time. Due to the cost of shipping wine to India, the British planted vineyards, in
Surat, and also in Kashmir. Kashmir happens to fall right into the longitude (30º –
50º) where the world’s best wines originate, including California and Europe in
the Northern Hemisphere, and Chile, South Africa and Australia in the Southern
Hemisphere. If the Kashmir problem is ever solved, the wine problem in India will
also be solved.

Some of the domestics were drinkable, in spite of the fact that viticulture was
hardly known in India. As the production was really picking up, a Phylloxera
epidemic destroyed all the vines in India, just as it had done in Europe as well.
Whereas Europe replanted with resistant (American) rootstocks grafted on to
superior European vines India did not. Thus, from the British landing in Surat in
1608 to today, the vast majority of the wine drunk in India has been imported.

And the wine the British drank was not just any import, but often some of the
best. They developed the art of pairing Indian food and wine, although since the
taste of wine has changed so much in the last century, it is difficult to agree now
with their judgments.

Example

Bordeaux Lafite or La Rose was matched with Bombay Duck. Today this
pairing would be contraindicated.
In fact, because of the problems with water purity, the Brits drank an enormous
amount of wine while in India – far more than they ever would have drunk when
at home. The record book of a certain Mr. Francis, dated 1774, shows that in a

..8.
single month his household consumed 75 bottles of Madeira, 99 bottles of claret
(red Bordeaux), 74 bottles of porter (a stout beer), 16 bottles of rum, 3 bottles of
brandy and 1 bottle of cherry brandy!

To give a brief summary of changing drinking patterns during the British Raj, one
could basically say that from the 1600s to about 1820, wine was pre-eminently
the drink of choice. Those who could not afford it had arrack and other
indigenous spirits, but anyone of means had steady supplies of both domestic
and imported wines ready at table. When supply of imported wines was
interrupted and/or domestic production was not of decent enough quality to drink
unadulterated, punch was the substitute. Indeed, punch became the rage in both
India and abroad during the 17th century. The Portuguese at Goa were crazy
about it, even establishing several punch houses in Goa, and the idea spread to
Calcutta and Madras. This went out of fashion in India from around the 1750s,
though the fad lasted another half-century in Britain itself.

The word punch, of course, derives from the Sanskrit-based Hindi word for ‘five,’
panch: punch was an Indian concoction over 2000 years old consisting of five
ingredients: arrack (or another spirit like toddy, etc.), sugar, limejuice, water, and
spices (including clove, and other aromatics like rose water). The Europeans in
India developed dozens of popular punches, one of which is still common today
in British taverns, called East India Punch, a mixture of brandy, port, sugar, lime
juice, and spices; the more festive, fizzy punch includes sparkling wine.

After the end of the punch fad by the 1750s, Persian shiraz was regularly
supplied to India. This ended with political conflicts in Persia in the 18th century,
and Persian shiraz was substituted by Madeira – the only wine thought to
improve, rather than deteriorate, in the torrid Indian climate.

..9.
With the invention of Indian pale ale, beer began to overtake wine consumption
in India in the 1820s, and then from around 1840-1870, brandy began to be
recognised as the drink of choice. At the same time, with soda becoming widely
accessible, whisky became a strong contender. Additionally, around the 1860s,
when the Schweppes Company began marketing its anti-malaria tonic, gin began
to gain currency as the best means for making tonic palatable.

Finally, in the 1920s to 1930s, cocktails became a fad worldwide, and even today
in India, cocktails, whisky soda, rum and brandy are far, far more widely
consumed than wine.

..10.
 India today

Nevertheless, wine consumption in India is currently increasing at a rate of over

20% per year and certain domestic wineries yearly sell out their entire stock. The
best cannot keep pace with demand. Indeed, it is expected that wine
consumption in India will grow tenfold to reach an average consumption of about
60 million bottles in the next 7-10 years.

20 %

Vineyards are multiplying in Maharashtra, as farmers see ever more advantages

to switching to wine grape growing. Nashik is the current centre of the boom.
Enterprising table grape farmers have shifted to growing wine grape varieties,
with generous subsidies from the state government encouraging the move. The
government of Maharashtra has issued over 70 licenses in the last couple of
years for setting up new wineries.

Further, the state’s revenue department has introduced a zero excise duty
regime with 4% sales tax on locally produced wines. This is the most progressive
action yet taken on the Indian wine scene, and hopefully, other states will follow
Maharashtra lead.

..11.
 Wine globally

Introduction
The dynamics of the global wine industry are better understood through a brief
history of wine as well as an overview of the wine making process. Some
countries have longer historical and cultural ties with wine then others and that
can affect the quality and perception of the product in the eyes of the consumer.
Also, the conditions in which the wine grapes are raised and the processes used
to make the wine can create a superior wine and therefore a competitive
advantage.

Wine has been a part of Western history since the Neolithic Period (8,500-4,000
B.C.), when cultures first started to develop permanent communities, and
stopped being nomadic hunter-gatherers (U. Penn, 2000). One of the earliest
written records of the consumption of wine is recorded in the Bible and the
impact of wine on Mediterranean cultures became more pronounced over the
years as the geopolitical situation stabilized in the region under the Roman
Empire. Roman Imperialism helped to spread the production of wine across most
of the countries in the Empire, which included most of North Africa and Southern

..12.
Europe (Britannica, 2000). During that same era, wine became ingrained in the
Christian faith and is still used in Christian mass today. The close tie between
wine and the Christian faith aided to the spread of wine production and wine
consumption across Europe in the ages after the fall of the Roman Empire and
eventually throughout the world with the European Imperialism of the 15th - 19th
centuries. The wine producing and consuming countries listed in both Tables 1
and 2 are dominated by Western countries or ex-colonies, with most of them
being historically Catholic.

(In millions of gallons)

Country 1996 1997 1998
Italy 1,551 1,343 1,430
France 1,506 1,414 1,390
Spain 818 876 800
US 498 580 539
Argentina 334 356 334
Table 1
Germany 228 224 286
World Wine Production
South Africa 230 232 215
Australia 177 162 195
Chile 100 120 144
Romania 202 176 132
Hungary 110 118 110
Yugoslavia 92 106 106
Rest of World 1,296 1,195 1,150
World Total 7,142 6,902 6,831

..13.
 Table 2
% Share of the World Wine Production, Wine Consumption,
Share of World Wine Market and Share of Export Market 2004

% Share % Share
% Share of % Share of of of World Export
Country*
Production Consumption World Export Market Rank
Market Market
Italy 21.0% 14.3% 20.8% 25.3% 1
France 20.4% 15.9% 20.3% 25.1% 2
Spain 11.7% 6.7% 10.6% 15.6% 3
United
7.9% 9.3% 8.4% 4.2% 4
States
Argentina 4.9% 6.1% 6.4% 1.7% 10
Germany 4.2% 8.5% 4.1% 3.6% 5
Australia 2.9% 1.6% 2.3% 3.0% 8
Chile 2.1% 1.0% 2.0% 3.5% 6
Portugal 1.4% 2.2% 2.5% 3.4% 7
Others 23.5% 34.4% 22.6% 14.6%
Total 100.0% 100.0% 100.0% 100.0%

There has never been a universally accepted system for naming styles of wine.
Currently there are two prominent systems for naming wine
™ Varietal
™ Appellation.
Appellation is a French term used to describe the region or specific area in which
a wine is produced. In France when the Appellation naming convention was
created, it was accepted that certain geographic locations, due to "terroir" the
land where the grapes are grown, were better prepared to produce a specific
type of grape, and therefore a specific style of wine.

..14.
Example
That is why Champagne (wine with a degree of carbonation) comes from the
Champagne region in France, east of Paris.

Some Appellations that have been created around the world include:
1. Bourdeaux (FR)
2. Burgundy (FR)
3. Chablis (FR)
4. Champagne (FR)
5. Tuscany (ITY)
6. Maipo (CHL)
7. Mendoza (ARG)
8. New South Wales (AUS)
9. Napa Valley (USA)
10. Sonoma County (USA).

Varietal is a descriptive naming convention based on the type of grape used to

produce a wine. Varietal is predominately used as U.S. industry marketing tool to
segment the market and is not specific to a geographic location. Some common
Varietals today are; White Zinfandel, Riesling, Chardonnay, Burgundy, Shiraz,
Petite Shiraz, Merlot, Pino-Noir, Zinfandel and Cabernet Sauvignon.

Terroir is a determining factor in the quality of the wine. It is not who makes it, or
how they make it, but the quality of the grape that is used. It is the environmental
factors that determine the flavors and sugar content in the grape. These factors
are based on the temperature in the region, the amount of light that the grape
vines are exposed to, the amount of rain that the area receives annually and the
characteristics of the soil. A vineyard that has all of these natural benefits still
must have considerable agricultural work done to keep the vineyards healthy and
free of insects and/or molds that damage the vines ability to produce quality
grapes. The combinations of attributes that are needed to create a high quality

..15.
grape are not very common throughout the world. The amount of good "terroir" is
limited, and therefore the ability to produce fine wines is limited

..16.
Wine producing countries
In the global wine industry there are two broad categories for the classification of
wine producing countries;

1. New World Producers

2. Old World Producers.

The larger New World Producers include the USA, Australia, Chile and
Argentina. The largest of the Old World producers are France and Italy. The New
World (except the USA) and the Old World Producers industries are described in
the following section.

Australia
Grape vines in Australia were first introduced in 1788 by English immigrants. The
wine "industry" was born in the 1860's when European immigrants added the
skilled workforce necessary to develop the commercial infrastructure. Since
Australia has a very limited domestic market, the wineries realized that if the
industry was to continue to grow it would have to do so in the international
market. At the same time that the Australian wine industry was starting to show
strong growth, the government was considering legislation that would severely
tax wine in an attempt to gain revenue. To protect the industry, the local wineries
joined together with government officials to develop a plan that would keep the
government from doing this, and the result was the formulation of "Strategy
2025"

Strategy 2025" is a business strategy that outlines how Australian wines will
expand domestically and internationally. Their vision is that by the year 2025 the
Australian wine industry will achieve $4.5 billion in annual sales by being the
world's most influential and profitable supplier of branded wines and by
pioneering wine as a universal first choice lifestyle beverage. They were even

..17.
bold enough to name the specific markets that they would target. The top four
markets targeted were the U.K., U.S., Germany and Japan.

Chile
The first vines were introduced to Chile in the 16th century by a Spanish priest.
Over the years the cultivation slowly grew until the late 19th century when wine
began to be produced on a large scale. Due to political and economic instability,
the wine industry was not able to develop and take on a global perspective until
1979 when Chile began to focus on the exporting of natural resources to
strengthen its economy.

The high Andean climate is very good for the production of high quality red
wines. Chilean wines are higher in quality then Argentina. Chile is the 9th largest
producer of wine in the world with output of 100 million gallons in 1996 and 210
million gallons 2004. Despite being only the 9th largest producer, Chile had
3.5% of the total export market and was ranked 6th in the world for 2004.

France
France has been a long time world leader in the production of wine due to
historical and cultural factors. In terms of volume, France was the number 2
producer of wine in the world with output of 1,506 million gallons in 1996 and
1,390 million gallons in 2004. The French developed the Vins d'appellation
d'origine controlee (AOC) system centuries ago to help ensure that the quality of
wine produced stays high. The AOC regulates the area of the production, the
method used to produce and store the wine as well as the minimum alcohol
content of the wine. There are many regions in which quality grapes can be
grown in France, and the dominant position that France has in the export market
reflects this. Some of the appellations that are better known in France are
Bordeaux, Burgundy, Champagne and Rhone.

..18.
Italy
Italy, like France, also has a very old and established wine industry that relies on
the appellation method to control the quality of their wines. Italy was the largest
producer of wine in the world with output of 1,551 million gallons in 1996 and
1,430 million gallons in 2004. The two main organizations responsible for the
control of the quality in Italian wine are the Denominazione di Origine Controllata
and the Denominazione di Origine Controllata e Garantita. The second
appellation control system was developed in recent years to help raise the quality
of the wines produced.

..19.
Major world markets
Although several of the major wines producing countries are also major markets,
there are many countries and regions that do not have the capability to produce
quality wines in large volumes, but have high demand for the product. This
section will provide an overview of wine markets around the world and will
reference the per capita consumption rates of select countries listed in Table 3.

Table 3
Per Capita Consumption of Wine in Selected Countries
2000 2004

(In liters)
Rank Country Population* 2002 2003 2004
1 Luxembourg 388,000 62.89 69.07 70.36
2 France 58,109,160 59.88 61.09 61.09
3 Italy 58,261,971 59.55 52.96 54.92
4 Slovenia 2,051,522 54.79 51.74 48.74
5 Croatia 4,547,000 37.61 47.26 47.66
6 Portugal 10,562,388 54.91 49.45 47.34
7 Switzerland 7,084,984 41.36 40.93 40.93
8 Argentina 34,292,742 38.97 39.05 39.52
9 Spain 39,404,348 36.69 37.02 38.07
10 Uruguay 3,222,716 29.88 33.57 35.13
United
33 267,636,000 7.82 7.69 7.88
States

In Australia social behavior has driven the growth of the domestic market. These
trends include a shift toward a Mediterranean style diet, the rise in the awareness
of the health benefits of wine, recreational activities and general entertainment
As these trends have been increasing, so has Australia's per capita consumption.
They were ranked #18 in the world for consumption According to Strategy 2025,

..20.
this low market penetration by imported wine is attributed to the high quality and
low price of the domestic brands, not because of government intervention to
protect the market. In 1996 when Strategy 2025 was written, 6% of the brands
sold in Australia accounted for more then 75% of sales.

Argentina was ranked #8 for per capita consumption in the world. Consumption
in Argentina is showing a very slow growth trend, with 39.52 liters per person
being consumed in 2004.

France and Italy were the number 2 and 3 countries in the world for per capita
consumption Both countries have a long history of wine production and
consumption, yet despite this the consumption rate in France is relatively
stagnant while Italy is showing a decrease. Italy, unlike France, has a very small
market for imported wines.

There are other countries and regions around the world that do not have the
capability to produce large quantities of high quality wine, yet have markets that
must be sustained through importing. These markets include the United
Kingdom, Canada, Japan and Asia. The United Kingdom's wine market is
considered to be the "crucible" for the global wine market The U.K. has a very
small domestic wine industry and also has good relationships with many of the
wine producing countries in the world. That coupled with the long history of wine
consumption the British have due to their historical association with the French
and the Germans results in an open and competitive market. The British import
market was second only to the German market in 1998, and the U.K. was ranked
23 for per capita consumption in the same year with a trend of increasing
consumption. The situation is very similar in Canada, except that there are more
governmental constraints to competition in Canada. In 1998 Canada was ranked
30 in the world for per capita consumption with an increasing trend.

..21.
Although Japan has seen a steady increase in the size of its imported wine
market, they do not rank in the top 33 countries in the world for per capita
consumption. In fact, no Asia country has a high per capita consumption when
compared to Western countries. This has to do with the lack of traditional and
cultural trends that drive the consumption patterns in more established wine
drinking countries.

Asia does present a great opportunity for wine producers around the world
because it is a very large market that has yet to be tapped. China alone has 1.4
billion potential consumers.

..22.
 Indian wine globally

Introduction
The Indian wine industry may still be in its infancy, but it is hoping to challenge
the supremacy of winemaking countries in an effort to gain a foothold in the
international wine market. Though they get most of their technology and advice
from Europe, Indian winemakers are now promoting themselves in a big way to
catch the attention of the rest of the world.

Oz Clarke, one of the presenters of the BBC's Food and Drink programme, says
that, “western wine drinkers are some of the most imaginative wine drinkers in
the world.” He says, “England in particular, but also Scotland, Ireland, Sweden,
Norway - those kind of countries are desperate for new experiences,"

Challenges
The other challenge for winemakers in India is to develop a domestic market as
most Indians prefer beer, whiskey, and rum and sometimes even home-brewed
spirits over champagne and wine.

..23.
 Indian Wine Industry
Introduction
Wine has been made in India for many thousands of years, some say for 5,000.
Today India has 123,000 acres of vineyards, but only one per cent of them are
used for wine

The Indian wine industry, estimated at Rs 2.60 billion (US$59.3 million), is all set
to grow ten-fold in a decade as wine culture is fast catching up with the
emergence of exclusive wine clubs in various cities.

2.60 mn

The consumption of wine in India recorded a 14 per cent growth in 2003-2004 to

reach 4,90,000 litre cases as against 4,30,000 litre cases in the previous year,
the study conducted by EXIM Bank says.

Mumbai accounts for approximately 40 per cent of India's wine sales followed by
Delhi (15 per cent), Goa (8 per cent) and Bangalore (6 per cent). It is expected
that wine consumption in India will grow ten-fold to reach about five million cases
in ten years; the study said adding, wine clubs have come up in Delhi, Bangalore,
Chandigarh and Hyderabad, indicating changing trends and growth of the
industry.

..24.
 Market analysis

Alcohol consumption
The share of wine in the total alcoholic beverages market in India is a mere
0.14%, with total consumption of 1.36mn liters per annum. Consumption of beer
is the highest with a 52.6% market share followed by distilled spirits at 47.3%.
Low awareness and high pricing compared to the other two categories makes
wine a low market share category.

Alcohol consumption in India (% share)

..25.
Wine consumption in India
From a total consumption of 1.36mn liters in FY00, the Indian wine industry has
grown to 2mn liters in FY04. The percentage of imported wine to total wine
consumption in the country has gradually decreased from 56% in FY00 to 39% in
FY04. Most of the importers of wine are five star hotels, embassies and other
such institutions. The imported wine segment is fragmented with over 1,000
labels from various manufacturers on offer. French wine is the most imported
wine in the country.

Wine consumption in India (mn liters)

100%

80% 44 39
56 49
60%

40%
56 61
20% 44 51

0%
FY00 FY01 FY02 FY03

Domestic(%) Imported(%)

..26.
Basic wines and their consumption
As per classification based on the type of wine consumed, red wine has the
largest market share (45% of total wine consumed). White wine stands second
with a market share of 40%, followed by sparkling wine (13%) and rose wine
(2%).

Classification based on type of wine

2%
13%

45%

40%

Red Wine White Wine Sparkling Wine Rose Wine

..27.
Geographical classification
Consumption of wine is unevenly spread across the country. Although wine is
sold in around 20 cities in India, 4 cities namely Mumbai, Delhi, Goa and
Bangalore contribute to almost 70% of the total wine consumption. Lack of
availability has limited the expansion to other parts of the country.

Geographical classification
8% 6%

15% 31%

40%

Mumbai Delhi Goa Banglore Rest of India

..28.
Duty structure in wine industry
Levy of excise duty on wines in India is the domain of the State government. The
excise rates thus vary across the country as each State decides the rates after
considering its revenue targets and other factors. While the excise duty on wines
has been exempted in some States like Maharashtra, it is very high in some
others.

The customs duty on imported wines ranges from 150% to 175%. High customs
duty prevents cheap imports and promotes development of the domestic
industry. The duty structure on imported wines in the last three years is as
follows:

..29.
Some facts

1. The wine industry has witnessed a CAGR of over 25% over the last 3
years in the premium wine segment mainly fuelled by the strong growth in
the domestic wine consumption.

2. The industry is not very capital intensive, as it requires around Rs.10-15

million to setup a Wine plant with a capacity of 100,000 liters.
3. The key raw materials such as grapes, bottles, and corks account for
approximately 20% of the total costs and are higher than the international
norms.

4. The industry has low entry barriers because of its low capital-intensive
nature however the industry is under pressure for profits due to high
marketing costs and low volumes. With demand increasing at a steady
pace, the industry is expected to go through a consolidation phase.

5. The industry is dominated by three players viz Indage, Sula wines and
Grover wines and enjoys more than 90% of the total market share.

6. The fortunes of the industry are linked to the trend in the changing drinking
habits of Indians, higher disposable incomes, growth in the foreign
tourists, and government regulations and policies.

7. The Indian wineries have planned expansion plans to meet the increasing
demand.

8. There is a strong growth in the imported wine market with Indian importers
importing hundreds of brands from countries like Australia, US to Bulgaria.
Some of the well-known wine producers are also present in India like Moet
and Hennessey, E&J Gallo and HWWG.

..30.
 Conclusion
The growing Indian urban population with rising disposable incomes is the key
growth driver for the wine industry. Consumption of wines will also get a boost if
the benefit of duty exemptions in Maharashtra is passed on to consumers
through price reductions. Positive government outlook towards the sector will go
a long way in developing the industry. Going ahead, the industry is likely to
witness entry of many local and foreign players. This will help widen the market
further.

..31.
Wine Industry in Maharashtra - An
Analysis
Two of the country's biggest grape-producing districts, Nasik and Sangli, are in
Maharashtra; 20,000 hectares of vineyards here grow more than one lac tons of
grapes a year. As much as 99 per cent of the grapes is used for making honey,
crushes and jams, or consumed fresh or dry. The rest is used for making wine.
Thus the opportunity in this sector is immense and given proper help and
guidance this sector can be great help of employment as well as earning.

Problems faced by the wine industry

1. One of the other reasons why wine drinking has not caught on is that
quality wines are priced relatively high. Since the volumes are low,
production costs are high, as are taxes.

2. The domestic excise policy, with an `insane' 300 per cent duty slab on
each bottle is the huge prohibiting factor: the growing breed of wine
importers, as well as Indian makers of wine, are waiting for a
rationalization in the policy, which will allow freer, cheaper imports, as well
as an opportunity for Indian wines to be available easily all over the
country.

3. The wine industry is both competitive and challenging. It exhibits the

characteristics of the consumer packaged goods (CPG) industry –
aggressive brand building supported by large advertising and event
budgets, combined with high manufacturing costs. But a key differentiation
in the wine industry is the relatively higher packaging costs– glass bottles,
labels, foils etc. So a key challenge for industry is maintaining lower costs

..32.
 to control the cost of expensive packaging inputs. Another challenge for
the company was to manage the distribution of the finished goods.
4. Scarcity of water could be accounted for as the chief cause responsible for
the wine industry as the grape cultivation suffers from unseasonal rains.

5. Ministry of Finance has imposed additional duty on imported liquor with

effect from 1.4. 2001 as countervailing duty in lieu of excise duties paid by
domestic liquor products in different States. These were imposed at the
rates of 75%, 100% and 150% on ad valorem basis for three different
categories of CIF value. Considering the already high customs duty on
such liquor, the overall duties on import of liquor have gone up to 463% to
706% on different types of products. Such high duties are totally counter
productive and were not justified for providing protection to local liquor
companies.

6. State Government has also imposed very high Sales Tax on consumption
of imported liquor in restaurants and bars.

Measures taken by the government for reviving the

industry

The Maharashtra government has decided to pare the license fee hike for five
liquor categories to 150-200 per cent. In October 2001, the government had
announced a 200-400 per cent hike in the license fees for various categories.

A government media release said while the license fee hike had been announced
in 15 categories of liquor, a rethink in the wake of protests by the liquor industry
has resulted in the new decision, restricting the hike to certain categories. The
five categories of liquor manufacturing and sale for which the license fee hike
would be restricted to 150-200 per cent are the wholesale segment of foreign

..33.
liquor, retail segment of foreign sale, permit rooms and wholesale and retail sale
of country-made liquor.

The release said the decision was in response to repeated pleas by wholesalers'
and retailers' associations that an unrealistic license fee hike would run these
segments of the industry out of business.

The government also decided to levy an additional sales tax on country-made

liquor manufacturing units at Rs 18 per box. This will result in additional revenue
of Rs 28 crores annually for the state and is intended to offset the notional loss
that would arise out of the decision to restrict the license fee hike

Maharashtra has also announced a grape processing industrial policy

incorporating incentives like excise duty reduction on wines, sales tax
concessions, simplified processes and procedures, fixed license fees for a 10
year period and creation of a wine institute and a grape board for quality control,
certification and export promotion.

The Finance Minister has reduced the customs duty on import of liquor from
210% to 182%. Government had also given a commitment to WTO that this will
be reduced to 150% by 2004. They have therefore started the gradual reduction.
Last year Government had introduced CVD or additional duty on ad valorem
basis in 3 slabs. This duty was 150% on imported liquor of CIF value of under
US$20 per case, 100% on imported liquor with CIF value between US$20 to
US$40 and 75% on imported liquor with CIF value of over US$40 per case. The
combined effect of the basic duty, SAD and CVD took the total duty on imported
liquor to 706%. Finance Minister has now reduced the CVD and made it into 2
slabs. Imported liquor with CIF value under US$25 per case will attract additional
duty of 75%.

..34.
All other liquor with CIF value over US$25 per case will have CVD of 50%. Thus
there is a substantial reduction on CVD and the industry is happy with this. The
peak total duty will now be as follows:

Note:
CIF – Means that the seller delivers when the goods pass the ship’s rail in port
of shipment.

CVD - The duty to be paid along with basic customs duty and special additional
duty for the imported items.

..35.
Various taxes and duties applicable to the wine industry

1. Excise Duty
2. Additional Duty
3. Distillery/Brewery License Fee
4. Bottling fee
5. Litterage fee
6. Assessment Fee
7. Franchise Fee
8. Permit Fee
9. Gallon age Fee
10. Raw Material Excise
11. Availability Fee
12. Brand/Label Fee
13. Permit Fee
14. Transportation Fee
15. Import Pass Fee
16. Export Pass Fee
17. Educational/Welfare Cess
18. Vend Fee
19. Sales Tax/Surcharge
20. License Fee
21. Toll Tax

..36.
 LIQUOR Bottled in India
Products imported in bulk for bottling in India attract import duties of 222.4%
besides local excise duties on par with Indian made products.

(Source: EXIM Tariffs)

..37.
 Main factors for wine manufacturers

Parameter Sensitivity Explanation

Inflation High margins already under pressure; difficult to pass
on higher costs

FDI High FDI in this sector would enable the local

manufacturers to acquire better manufacturing
technologies and tap the markets of the foreign
partner

Excise duty High Excise duty is around 23% of sales

Political Stability Low demand being inelastic, would not be affected by

political activity

Income Tax High effective tax rate is 35%

Sales promotion costs High Sales promotion costs account for around 22%
of sales

Personnel costs Low Employee cost accounts for around 4-5% of

sales

Competition

Existing players

Medium McDowell has been able to hold its own in the existing competitive
scenario and garnered a 26% market share.
New entrants

Strong marketing and distribution networks, and brand equity of the existing
players are extremely difficult to replicate.

..38.
 Steps taken by the companies to counter the
competition
1. Surrogate advertising
The ban on liquor advertising has in a way it came as a blessing in disguise since
it created an entry barrier for any new prospective player. McDowell has used
this ban to its advantage by using surrogate advertising for products like mineral
water and soda, which also generated additional revenue for the company. With
a view to actively develop this area, the company has franchised the bottling and
sale of McDowell’s purified drinking water and soda, which are now available in
over 75 cities in the country. The company is also planning to launch cigars in a
high price range, which it plans to import and sell under its own brand name. It is
primarily focusing on the youngsters as its target market with its USP being that
cigars are less harmful than cigarettes. These areas used by the company for
surrogate advertising, have been identified to be yielding high-margins,
especially if one compares with the present margins in the liquor industry.

2. Aggressive marketing and sales promotion

3. Rich brand portfolio

4. Web initiatives like joining the dotcom brigade

5. Amalgamation, restructuring and consolidation

..39.
Hope: Maharashtra grape policy 2001
Accordingly, to give impetus to the grape processing and wine industry in the
state, preparation of a separate policy was under active consideration of the
State Government.

1. Declaration as a Preferential Area

As the Winery industry does not fall in the preferential area of granting
loans, the financial institution like NABARD does not grant loans in such
industries. Therefore, to get the high price of the product for farmers and
to create better employment in the state, NABARD may be requested to
declare preferential area for Winery Industries, enabling to grant such
requisite loans.

2. Declaration as a Small Scale Industry

Within the limits of investments prescribed for the Small Scale Industry,
wineries should be considered as a Small Scale Industry.

3. Concessions in Excise Duty

For those wine industries whose production has been started before 19th
September, 2001, the excise duty will be charged at the rate of 50 per
cent of the production expenditure incurred by such units instead of
present 100 per cent rate. For those wine industries whose production
have been started or would be started on or after 19th September 2001,
the excise duty will be charged at the rate of 25 per cent of the production
expenditure incurred by such units. Such concessions will be admissible
for period of 5 years.

4. Concessions in Sales Tax

It has been decided with the consent of all states in the country that the
floor rate of Sales Tax on liquor will be at the rate of 20 per cent. However,

..40.
 the Wine Process is totally different from the Liquor Production Process
and wine unit is considered as agriculture process unit by the Central
Government. Therefore, to encourage the Grapes Processing Industry in
the state, a request will be made to the Empowered Committee of Finance
Ministers of all states constituted by the Government of India to reduce the
floor rate of Sales Tax on wine.

5. Wine Sales License

Wine will be permitted for sale by Beer Bars and also licenses will be
given to Wine Bars to sell wine on the basis of Beer Bars.

6. Wine Sales License Fee

An amount of Rs. 5000/- per year will be charged for License Fee for the
sale of wine and this rate will not be changed for next 10 years.

7. Simplification in the system of License/Permission for

Wine Production
If Wine production is taken in Winery Park as declared by the State
Government, Wine Product License will be given at district level at the
time of allotment of Plot. In other places for Wine Production, by
simplifying the system of License the Collector of the district level will be
empowered with a binding condition to issue licenses within 30 days.

8. Establishment of Wine Institute

To maintain the quality of Wine at the International Level and to make
available trained man power, a separate Wine Institute will be established.
For setting up of the Wine Institute, Government/ MIDC will allot the plot at
the nominal rate as given to the other educational institute. Such Institute
will look after the work of training, checking the quality of wine, research
and information center for the Wine Industry. These institutes will be
established by forming separate trust firstly at Sangli and Nashik.

..41.
9. One Window System
For Winery Industry, essential license, plot, electricity supply, telephone
etc. infrastructure will be made available with One Window System.

10. Establishment of Grapes Board

A Grape Processing Industry Board would be established for Wine and

other Grape Processing Industry in Maharashtra. The Board will consist of
representatives from the concerned industry, Grapes producing farmers,
State Government, government laboratories, wine institute etc. The
organisation and functions of similar kinds of Boards existing in other
countries will be examined before establishment of Grape Board in
Maharashtra on same standards.

11 Wine Product Units - Permission for the Tourists

In foreign countries, permission is given to watch the Wine Product Units.

In similar manner, in Maharashtra also, permission will be given to the
tourists to visit Wine Product Units for testing the wine. Also, licenses will
be given to such Wine Product Units to sale wine on retail basis.

12 Taxation on Imported Wine

a) Excise Duty: Excise Duty cannot be charged on the Imported Wine. It
would be examined as how to charge tax equivalent to the percentage
of excise duty on the Imported Wine by other ways.

b) Fees on Labels and Brand: No fee on Labels/Brands is charged on

Imported Wine. However, fee is charged on the wine produced in the
state and the country. This issue would be examined fees will be
charged on labels and brands.

..42.
 Champagne Indage Ltd.

A toast to good times!

Champagne Indage Limited (CIL) is India’s leading wine producing company with
71% market share. CIL has been instrumental to a large extent in developing the
wine industry in India. It produces white, red, sparkling and rosy wines of many
varieties. Apart from the domestic market, the company also exports its wines to
USA, Japan, UK, Switzerland, Germany and other European countries. CIL has
three wineries located in Narayangaon, Maharashtra with an aggregate capacity
of 3.5mn liters of wine per annum.

Champagne Indage Limited (CIL) - India’s largest wine manufacturer - is on a

high growth trajectory. CIL has expanded its production capacity, which will
enable it to enjoy tax breaks and improve its margins. Introduction of wine
coolers (Sinn) and entry into beer segment will add to the company’s revenues
FY05 onwards. Recent policy initiatives to classify wine under the agro
processing industry will augment its prospects. Established brands like Chantilli,

..43.
Riviera and Marquise De Pompadour gives it the armory to exploit the growing
Indian fondness for wines.

Dominant position in Indian wine market

CIL is a pioneer in the Indian wine industry with a market share of 71%. The
company has a dominant presence in all sub segments namely white, red,
sparkling and rosy wines with a virtual monopoly in the sparkling wine category. It
was the first company in India to introduce champagne under the brand name
“Marquise De Pompadour”.

Indian wine market segmentation

12% 3%

14%

71%

Champagne Grover Sula Others

Production capacity doubled in April 2004

CIL had two wineries with an installed capacity of 1.8mn liters; both situated in
Narayangaon in Maharashtra. The company recently set up a third winery at the
same location, for a total investment of Rs74mn. This winery, with a capacity of
about 1.7mn liters, is one of the most modern wineries of the world. Commercial

..44.
operations have commenced at the third winery from March 2004 and full
benefits will materialize in FY05.

Entry into the beer segment

To capitalize on its established network of warehouses and common dealer
network, CIL has ventured into beer marketing. CIL targets the large Indian
domestic beer market having a size of about 85mn liter cases in volume terms
and Rs7bn in value terms. The new venture will be launched in two phases. The
first year of operations will cover 15 states in India constituting 84% of the total
national consumption of about 85mn liter cases. Under phase two next year, the
reach will increase to embrace the entire country.

The company also intends to cater to the demand from Indian restaurants in
Europe and North America, where taste for Indian beer in picking up.

The total advertisement expenditure planned for this project is Rs50mn, which
will generate sales of 0.8mn cases and revenues of Rs120mn. We expect beer
business to contribute Rs15mn to the PBT in FY05.

With its entry into beer and into other alcohol segments later on, CIL will become
a complete alcoholic beverages company. This complete value proposition will
take CIL far ahead of its competitors in the wine industry.

..45.
Introducing concept of wine coolers
CIL has recently launched fruity wines of different flavors called ‘wine coolers’.
The drink -available in smartly packaged pint bottles- is branded as ‘Sinn’. The
idea behind ‘Sinn’ is to introduce wine to starters who will eventually migrate to
red and white wine. Launched initially in Goa, the company introduced ‘Sinn’ in
Mumbai by July 2004. Positioned as an alternative to beer and rum cooler
‘Bacardi Breezer’, CIL is targeting sales of 3mn cases and revenue of Rs100mn
from this brand in FY05.

Brands are the company’s key assets

CIL’s key asset is the brand equity earned by the company’s wine over the years.
It owns a portfolio of 64 wine brands. The top brands among different wine
categories are:

..46.
Champagne India’s wines available in market

..47.
CIL’s wines enjoy a strong brand image not only in the domestic market but also
overseas. During the initial stages of its operations, the company spent a lot of
efforts in developing a positive image for its wines. CIL regularly participates in
international wine competitions. CIL’s wines have so far won 7 bronze and 1 gold
medals at The International Wine & Spirit Competition, London. Such
international acclaims enhance its brand’s popularity.

Price positioning ensures larger reach

CIL’s portfolio of 64 brands is priced in such a way that they target different
income groups. Ranging from wine coolers (Sinn) priced at Rs30 per bottle to
premium segment priced over Rs500, the company claims to offer wine for
everyone and every occasion.

..48.
Group presence in hotel business provides marketing
platform
The Indage Group’s presence in the hospitality business is marked by their
company ‘Indage Hotels’. Indage Hotels owns some of the most renowned
restaurants, pubs and lounges in Mumbai. This unique chain of elite hotels
provides the correct ambiance, opportunity and target audience to promote its
wines. The emphasis of these places is to give the consumer the perfect wining
and dining experience. Forward integration of such kind gives CIL a chance to
strengthen its brand image and improve brand loyalty. The existing units of the
company are:

Some of the upcoming units of the hotel company are as follows:

Indage Hotels is a highly visible profit making company, which will immensely
help the winemaking efforts of CIL. Overall it is a unique proposition wherein the
company has raw materials, production and brand portfolio of its own to top the
marketing network.

..49.
 Wine process at CIL Ltd

Crushing The grapes are hand picked and transferred to the crusher.
The crusher punchers the grapes and transfers it to a de-
juicer which separates the pulp from the juice. While the
skin, stems and other remains from the crushing are used as
manure, the juice is sent for fermentation.

Fermentation The grape juice is first chilled in a combination of stainless

steel tanks and oak barrels and then fermented by adding
yeast. This process is called the first fermentation of wine
and it takes about 8 weeks.

Maturation The first fermentation wine is further stored in tanks and/or

oak barrels for 6-8 months for maturation.

..50.
Bottling Once the mature wine is ready; it is stabilized through cold
treatment. After testing the stability of the wine, it then is
filtered to screen the balance fine particles. The filtered wine
is then packed in bottles, which are washed internally and
externally with double filtered water to remove bacteria and
germs if any.

..51.
Projected income statement

..52.
 Issues of concern
Impending equity dilution
To finance its foray into new markets and products, CIL is planning to raise
Rs220mn via issue of Optionally Convertible Debentures (OCDs). The maturity
period of this 4% coupon paying debt is 18 months. In the event of redemption,
a premium of 4% shall be paid. The conversion price of the OCDs is fixed at
10x EPS of FY05.
The proceeds of the issue will be used for the following purposes

Increasing Competition will reduce market share

Wine production and marketing is a lucrative business and thus we expect more
players, both Indian and Foreign, to set up shops in the country. Gradually, the
market share of CIL will slip lower from current 71%. Rapid product innovation
and enhancing brand loyalty will be critical. The company may have to
compromise on profit margins in order to maintain the leadership position by the
company.

Thus champagne India is on its big plans with its wine sector. Though there are
regulations and government laws champagne India will surely make out of this.

..53.
 Conclusion
Nevertheless, wine consumption in India is currently increasing at a rate of over
20% per year and certain domestic wineries yearly sell out their entire stock. The
best cannot keep pace with demand. Indeed, it is expected that wine
consumption in India will grow tenfold to reach an average consumption of about
60 million bottles in the next 7-10 years.

Vineyards are multiplying in Maharashtra, as farmers see ever more advantages

to switching to wine grape-growing. Nashik is the current centre of the boom.
Enterprising table grape farmers have shifted to growing wine grape varieties,
with generous subsidies from the state government encouraging the move. The
government of Maharashtra has issued over 70 licenses in the last couple of
years for setting up new wineries.

Further, the state’s revenue department has introduced a zero excise duty
regime with 4% sales tax on locally produced wines. This is the most progressive
action yet-taken on the Indian wine scene, and hopefully, other states will follow
Maharashtra’s lead.

Again, wine has a chequered history in India, but it also has a booming present.
That is beyond dispute. And the present boom is occurring even in spite of some
of the most restrictive and regressive laws covering wine import, marketing,
sales, etc. in the world. As and when the market (and, naturally, Indian society)
liberalises, the stage is set for a glorious future. There is, however, one shadow
hanging over this prediction, and that is the mistaken belief that Indian wine will
never be on par with international standards. That is, as the market liberalises
and more and more foreign brands are readily available, there is a ponderous
threat that people will simply eschew Indian wines and lap up the foreign goods.

..54.
It need not be so. Provided that the Indian producers continue to attend to quality
at least as diligently as they have been for the last two years, and preferably
even more so, then the local product will be inherently competitive with the
foreign rivals. It will then come down to questions of prejudice and conspicuous
consumption, and these super-structural challenges may be faced by intelligent
marketing and tactical distribution.

So, those who curl up their nose at Indian wines, the advice would be not to write
off the local offerings. The consumption is increasing though ever too small.

Sham Chougule, the chairman of Chateau Indage puts it succinctly, "It's about
half a teaspoon per head. The day it becomes one litre, the market will be one
billion litres."

..55.
 Bibliography
Magazines
1. Business & economics
2. Decanter – worlds best wine magazine
3. Business world

News Papers
1. Economics times
2. Times Of India
3. Asian Age

Reports
1. Maharashtra state wine industry report
2. Report on wine industry- GOI

Internet
1. www.wineaustralia.com.au
2. www.the-south-asian.com/ Sept2002/Indian_Wine_industry.htm
3. www.indianwine.com/winepark.htm
4. www.indianwine.com/dsm/indianwinemarketresearch.htm
5. www.indiainbusiness.nic.in/india-profile/food-pro.htm
6. ccsindia.org/interns2003/chap21.pdf
7. www.indiainfoline.com/sect/chin.pdf
8. www.expressindia.com/fullstory.php?newsid=58498 - 48k
9. www.blonnet.com/life/2004/ 02/09/stories/2004020900110200.htm

..1..
Section 1
Section 2
Section 3
Section 4
Section 5