India Wine Sector Looks to Australia for Expansion
Tuesday, 25 March 2008
MELBOURNE: The relatively young Indian wine sector is looking to Australia and other places around the world to help it meet increasing demand for quality wine in India.
Indage Holdings Ltd, a subsidiary of India's biggest wine producer, Champagne Indage Ltd, last week agreed to acquire the 90,000-tonne-capacity Loxton winery of Australian Vintage Ltd (formerly McGuigan Simeon Wines) in South Australia for $A60 million ($US54.68 million).
Indage Holdings chairman Sham Chougule said the acquisition of Loxton would expand Indage's winemaking facilities with quality fruit and facilities.
"Loxton's additional capacity will allow us to meet the increasing demand in India and in other countries for quality wine," Mr Chougule said.
The acquisition of Loxton is the second winery acquisition in Australia for Indage, which last year acquired the Monash winery of Tandou Ltd - renamed Thachi Wines - in South Australia for $10 million.
Indage aims to have production in 10 countries over the next five years, with the intent of broadening the range of Indage wines in overseas markets and in India.
Champagne Indage, which claims to have a market share of about 75 per cent of fledgling premium wine market in India, produces white, red, sparkling and rose wines under labels that include Chantilli, Riviera, Ivy, Vin Ballet, Marquise De Pompadour and Omar Khayyam.
As well as supplying the Indian domestic market, the company exports wine to the United States, Japan, the United Kingdom, Switzerland, Germany and elsewhere in Europe.
Champagne Indage has several wineries located at Narayangaon in the Indian state of Maharashtra, with an aggregate capacity of 3.5 million litres of wine per annum.
Vineyards in Maharashtra produce well-known grape varieties such as chardonnay, sauvignon blanc, cabernet sauvignon, syrah and pinot noir but also include Indian varieties such as arkesham and arkavati.
According to its website, Champagne Indage started in the Indian wine market with the launch of its flagship product, a sparkling wine called "Marquise De Pompadour", in 1988.
The company said the wine culture in India at that time was virtually non-existent, and wine was perceived as a ladies' drink.
Indage said, however, that wine had a long history in India, and early European visitors to the courts of the Mughal emperors in the 16th and 17th centuries had tasted wines from Hyderabad, Surat and Maharashtra.
Under 19th century British influence, vineyards were established in Kashmir and Baramati in Maharahstra.
Indian-made wines were exhibited at the Great Calcutta Exhibition of 1884, but in 1890 the Indian vineyards were decimated by the grapevine pest phylloxera.
Winemaking in India remained a cottage industry and unknown to the rest of the world until the 1980s, when Indage started to produce wine on an industrial scale.
Indage Holdings Ltd chief financial officer Rajesh Chalke said India had been making wine for thousands of years, but at an industry level it was only a few decades old.
He said the market for wine in India had been growing at a rate of about 60 per cent for the last five years.
The state of Maharashtra accounts for 90 per cent of India's wine production, but it is being expanded to other parts of the country.
Mr Chalke said the Indian market was small at the moment - at about 1.5 million cases - because of production constraints.
But if production could be expanded, India had the potential to become as big a consumer of wine per capita as China.
Mr Chalke said the "drinking concepts" of India were changing as the population became better educated and incomes rose.
"Rather than getting drunk being the concept, people are now trying to enjoy alcohol as part of their life instead of something that can wreck your life," he said.
Wine production costs were gradually coming down, which meant that wine companies were able to produce more wines that were affordable, at $US5 or less.
Mr Chalke said that as with most countries that produced their own wine, Indian consumers preferred to drink locally-made wine for "regular" consumption.
Imported wine was generally reserved for niche markets and higher income groups on special occasions.
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