At the biennial Vinexpo in Bordeaux last month, the world’s largest wine expo where producers, importers and other members of the wine trade gather for a five-day bacchanal, it was almost funereal compared to the frenzy of past fairs.
Visitor numbers were down 10% from 2007 and a number of booths looked deserted, with forlorn producers sipping ruefully on their own wines and wondering what hit them. The global wine business is hurting this year after many years of steady growth and, frankly, producers need to share a healthy part of the blame.
The crisis has hit the high end and low end alike. Bordeaux first growths that commanded ridiculous $500-a-bottle “en primeurs” (pre-release) prices last year have quietly released this year’s primeurs at half the price. And in the New World, Australia’s dream run where it seemed like the world was going to be conquered by their cheap “critter wines” has come to a grinding halt. Australian exports are down 15% this year and the value per bottle has plunged 25% and more in the key U.S. and U.K. markets.
The Yellowtail phenomenon that was so touted as a classic “Blue Sea” case study has delivered a nasty bite, leading consumers to label Australia as a producer of basically cheap Chardonnay and Shiraz.
So producers and importers settled for sitting back with a glass of wine and catching up on things – with no pressure to buy more labels and hit big sales targets. Completely different from the aggressive meetings of the 2007 Vinexpo where producers were releasing ever more expensive labels and importers were lapping them up. This time it wasn’t about new relationships and markets, it was more about cementing existing relationships and hunkering down till things pick up again.
“Farmers who didn’t know the first thing about wine and jumped onto the winery bandwagon are pulling out and new winery projects are on hold.”
Here in India we haven’t been spared. The world’s fastest-growing wine market for the past five years came crashing down to earth in 2009 with sales falling for the first time since 2001. Local producers who jumped into the game expecting quick returns in a “can’t miss” market with 25% annual growth are now sitting on full tanks of wine which they have to empty before the next harvest, when their contracted grapes come flooding in.
Meanwhile the banks which were once so eager to lend are getting impatient and the dreaded Non-Performing Asset phrase is bandied around depressingly often, usually pertaining to small farmer-operated wineries that really never figured out how to make quality wine and had even less idea of how to market it.
Grape growers who rushed to plant wine grapes without having contracts with wineries have been left high and dry in the just-concluded harvest, with the most unfortunate ones having to leave the fruit to rot on the vine. And no new wine vineyards were planted in the planting season in December 2008, compared to a frenzied 2,000 new acres annually from 2004 to 2007. But there’s a bright spot to all this. The situation has led to ripe pickings for consumers, who are spoiled silly with special offers at their local wine stores in Mumbai – “buy one, get one free” being the most common mantra, giving them a peek into the once-unthinkable fast-growing Indian wine lake.
New producers who once thought nothing of pricing their wines at 500 rupees-plus, even with zero market pedigree, have learned their lesson the hard way. Pricing is much more sober these days and more and more winemakers are realizing that the “sweet spot” is between 150 and 300 rupees, not the glorified 400-800 rupees that the market seemed to have accepted earlier. The hottest wine launch of 2009 is a sub-200 rupee quaff called Samara, which is flying off the shelves as consumers realize wine doesn’t have to be expensive to be eminently drinkable.
The Maharashtra government has also rushed to the rescue, announcing three major policy decisions that should make wine drinkers in the state very happy.
First, local duty on imported wine has been slashed, and the effect will be most dramatic on higher-end wines and champagne. Second, out-of-state wines have to pay much lower registration fees, which were earlier stiflingly high and had led to retaliatory duties in Karnataka which hopefully will get rolled back.
Finally, local producers will get a big VAT refund which will be a lifeline to those gasping for air. All in all, Maharashtra will regain its title as the wine-friendliest state. And other states aren’t far behind; Karnataka just put in place a wine-friendly policy that slashed tax on local wine and unveiled a new cheaper “wine bar” license.
So 2009 is a turning point, but I see mostly good things ahead. Most importantly, local producers have realized that simply fermenting grape juice and sticking a label on the bottle is not the same as making decent wine. Farmers who didn’t know the first thing about wine and jumped onto the winery bandwagon are pulling out and new winery projects are on hold.
Growers will also have to think hard before planting new vineyards on a whim. They’ll have to plant varieties that the market might need in the future, and they’ll have to use best quality, sustainable viticultural practices. That’s the only way profitability will be sustained over the long term. At Sula we’ve been emphasizing quality over quantity for years to our growers, and now the lesson has hit home. Those who grow quality grapes will always find buyers even in the hard times The consumer will see more and more varietal wines like Chenin Blanc and Shiraz at prices below 300 rupees. Wines at prices above 500 rupees are likely to be of much better quality than in the past, and some of these Indian wines will wine medals at world shows in the not-so-distant future. Apart from the usual suspects, exciting new varieties like Viognier, Riesling, Malbec and Grenache will tickle the palate, spoiling the consumer for choice.
All in all, the Indian wine drinker is in for a great time in the years to come, so here’s to that!
Rajeev Samant is chief executive of Sula Vineyards, based in Mumbai.
The South Korean retail giant Lotte Group will acquire Doosan’s spirits-making division for 503 billion won, Doosan said Tuesday, in a move that will spur Lotte’s beverage business.
Lotte Chilsung Beverage, the country’s top soft drinks brand, was picked late last month as the preferred buyer for the maker of the traditional South Korean spirit, soju, beating four other suitors.
The $386 million acquisition will enable Lotte to become one of the biggest makers of soju, a clear liquor distilled from potatoes and grains, and will heat up the competition with a larger domestic rival, Jinro, a unit of the biggest South Korean beer maker. The acquired liquor business generated 341.9 billion won in sales of soju, wine and other liquors in 2007, according to Doosan’s data.
Doosan told the Korea Exchange in a filing that the sale would help it lower debt and transform into a holding company, as well as secure funding for new businesses.
It has been trying to shift its focus from food and beverage to heavy industry since it bought a domestic heavy machinery equipment maker and Bobcat, the world’s top compact construction equipment firm.
Doosan shareholders who oppose Lotte’s acquisition of its business can ask the company to buy back their shares at 89,214 won each, or at a 3.4 percent discount to the Tuesday close.
Shares in Lotte gained 2.2 percent to close at 875,000 won before the disclosure, slightly outperforming the wider market’s 1.8 percent rise. Lotte plans to begin operations of its liquor unit in March.
For most Indians, heaven is winding down with a fragrant cup of chai after a long day at work. In the west, however, divinity usually comes in a slightly stronger form, such as a glass of red or white wine. Only a decade or so ago, Indian wine drinkers and successful vineyards were non-existent. Today, it’s a very different picture – rising incomes, re- laxed government regulations and a change in consumer attitude mean more people are choosing to wash down aloo paratha with a local wine, rather than a lassi or chai.
The industry is estimated to have a value of Rs 2.75 billion per annum. Although the industry is growing at a rate of 25 to 35 per cent a year (nearly three times as fast as the beer industry), it still makes up less than one per cent of the country’s USD1.8 billion alcohol market. In 2007, India produced about 1.3 million cases (each holding nine litres) in addition to the 220,000 which were imported, compared to less than 60,000 cases in 2001. In 2010, the market is expected to almost double, increasing from five million to nine million litres.
So what makes the Indian wine industry so hot?
|Workers at Sula Vineyards|
According to the Future of Wine Report produced by Berry Bros. & Rudd, the UK fine wine merchants, the technology exchange in winemaking and viticulture from Europe and Australasia make India a likely challenge to traditional winemaking countries. With the potential to embrace wine in a big way, plus the economic muscle to dictate the wine producers make, India is expected to be a world player in the wine industry by 2058, or perhaps even sooner.
|Sula’s guest house at Nashik|
Robert Joseph, renowned wine critic, author and chairman of the India Wine Challenge, says that the market is promising and would benefit from the guidance of other New World wine-growing countries. “Look at New Zealand,” Joseph says. “They have essentially landed on top in less than 20 years by recognising the need for the right investment, technology and expertise. There is no reason why India cannot emulate them.”
While local winemaking dates back hundreds of years (it was the chosen drink of the Mughal dynasty and the British helped make it popular), the industry’s defining moment came in 2002 when the government eliminated restrictions on wine imports. A flood of foreign labels entered the market, and although taxes remained high, a greater range was made available to the Indian connoisseur.
By the late 1990s, a latent demand for wine had been created. This was partly due to a more liberal travel policy: Indians now travelled abroad for pleasure, armed with a disposable income and the willingness to spend it on good food and drink. While adventure seekers headed for Australia, vino fans holidayed in vineyards in Napa, Champagne and Tuscany. Business travellers socialised with wine lovers, and graduates returned home with degrees and a love of Bacchus’ brew.
This new love of the grape has been translated into a small but booming industry. The most influential wineries are Grover Vineyards, Champagne Indage and Sula Wines. Seeking the expert opinion of respected wine maker Abhay Kewadkar, Bangalore’s Grover Vineyards opened in 1988 and began using French wine grapes to produce wine in the 1990s. In 1987, Champagne Indage released its famous Marquise de Pompadour sparkling wine and put India on the world’s wine map. In 2000, Sula Wines launched their first wines – widely acclaimed as India’s best whites – onto a market badly needing a boost.
Indage Wines is the top dog in the Indian wine world because of its strong distribution system underpinned by the quality of its bubbly and Riviera brand – an inexpensive but pleasant table wine.
|Ranjit Dhuru, CEO of Chateau d’Ori, Dindori|
Sula Wines, on the other hand, is the brainchild of Rajeev Samant. A Stanford graduate, Samant grew grapes and made wine at his family’s orchard in Nasik rather than cashing in on his IT degree. Like his wine, Samant is somewhat of an industry golden child, and his commitment and passion are unsurpassed. He carried two bottles of Sula Sauvignon Blanc to Tokyo’s 2002 Vinexpo, the industry’s annual wine show. His wines so impressed Angelo Gaja, a leading Italian wine producer, that he immediately placed a trial order. The rest, as they say, is history. In 2008, Sula will produce over 220,000 cases of wine, giving it a clear leadership position in India’s premium wine sector.
|Sula’s Rajeev Samant|
Today, these three big wineries have attracted many newcomers to the “wine rush”, bringing their passion for wine, money or both. Some consider wine as a pure commodity, while others shortsightedly believe that it takes just a year to switch from table grapes to the more lucrative wine grapes.
Robert Joseph, a UK wine expert, believes that the wine competition he introduced to India has helped the industry grow and focus on quality – something it badly needs. “The producers are [currently] not relying on existing expertise to improve the quality of their grapes and wine. They are busy copying the Bordeaux style of winemaking. This can never give them good wine in India due to the different soil and climate.”
|Abhay Khewadkar of UB|
But Joseph also recognises India’s huge potential, which it can fulfil as long as it concentrates on three essentials of growth: quality, quality and quality. Otherwise, he fears that China’s nascent industry will overtake India and a great opportunity will be lost.
Stephen Spurrier, another wine critic, agrees. In recent years, Spurrier conducted a blind tasting of New World wines for Decanter magazine – Grover’s “La Reserva” was rated Best Red Wine in the New World. However, Spurrier warns that one small victory does not mean the end of the battle.
“Indian producers have to come out of their shell and accept that soil good for table grapes is not necessarily as good for wine grapes,” Spurrier stated. “Nasik may be the best area for consumable grapes, but not necessarily for wine grapes. You must explore other areas as well.”
Michel Rolland, Grover Vineyards’ French wine consultant, says vintners must be convinced that wine grapes are a prerequisite for good wine. However, Rolland is not convinced that Nasik has the right soil for good wine grapes. Instead, Karnataka and parts in Andhra Pradesh that have a similar soil and climate would offer better quality grapes. Other areas for exploration would be Kashmir, Himachal and Uttaranchal.
“The Indian wine industry is referred to as ‘25-25’, which means a yearly growth of 25 per cent for the next 25 years,” according to Kapil Grover of Grover Vineyards. “The main challenge for us will be to secure a supply of high quality grapes to keep pace with this demand. With the popularity of Indian cuisine worldwide, Indian wine has a ready market abroad.”
Sula’s founder, Rajeev Samant, agrees. He continues to be enthusiastic about the idea of a National Wine Board, which was mooted by the Ministry of Food Processing. Samant shares: “One step in the right direction to improve quality is the formation of a National Wine Board; this will bring about the best practices in the industry. I hope this will lead to greater self-regulation along the lines of what’s happened in countries like New Zealand and South Africa. On the consumer side, awareness and demand for wine continues to grow at a strong pace. There is no reason why consumption won’t grow in double digits for the next two decades.”
As wine consumption grows, new producers come into play. International spirit companies like Pernod Ricard and Diageo, or domestic companies like Goa’s John Distilleries (which produces Chateau de Banyan), have recently come on board. Similarly, UB Group – with its strong presence in the beer and spirit industry – has entered the fray. The newcomers won’t deter established industry players like Samant, however. “We have established our brand. Let these newcomers enter and create a new market. I am sure they will not be able to make a dent in ours.”
Many of the new wineries are taking wine tourism seriously, and are planning to establish tourist facilities as part of their commitment. At present, Sula has a California-designed Tasting Room, while US-educated Vikash Gupta of Vinner Enoteca Wines is working overtime to complete a vineyard resort located near Sula Vineyards in Nasik to catch the boom. Gupta admits, “By selling the Opera brand, we are also trying to create an image that we shall capitalise on when our resort is ready. We shall offer a complete vineyard experience to our clients by having visitors experiment and make their own wines.”
Robert Joseph emphasises the need for quality to grow in the export market and to make the predictions in the Future of Wine Report come true. He states that those who are already drinking Indian wine in London are doing so because they feel it is good wine, not because it is Indian wine.
Subhash Arora is the President of the Indian Wine Academy. He is also the editor of the academy’s globally distributed e-newsletter delWine.
wineries for the sampling
Grover Vineyards, Bangalore
Grover was the first to take up the challenge of growing French grape varieties in India. Nine of those 35 varieties survived, and the company that owned 40 acres of land in 1988 slowly spread across 410 acres at the foot of Nandi Hills. Grover Vineyards is proud of both its exclusive wines and its use of French grapes selected from the original varieties Vitis vinifera.
Find it: Grover Winery, Raghunathapura, Devanahalli Road, Doddaballapur, Bangalore, tel: (080) 762 2123
Sula Vineyards, Nasik
The first to open a tasting room, Sula offers tours of the winery and vineyards that are educational or suitable for the general public. The Tasting Room sits amid the vineyards and the surrounding lakes and hills. Visitors can even stay at Beyond, the onsite accommodation. Open Thursday to Sunday.
Find it: Govardhan, Gangapur- Savargaon Road, Nasik, tel: (253) 223 1663
The above article is based on the article written for Ink Publishing, Singapore for the December Edition of Spiceroute, the inflight magazine of the Spice Jet airline-editor.
The alcoholic beverage industry in India was unfazed by the global meltdown and inflation as it remained in high spirits, marking a double-digit growth in the year 2008. In a year that saw inflation touching a 13-year high of 12.82 per cent in August, the 150 million cases beer market grew by 15 per cent, according to All India Breweries Association figures.
The wine segment, which has a total market size of around 1.5 million cases, posted even a higher growth rate of 30 per cent, as per International Wines and Spirits Record, while other alcoholic beverages, with a market size of 190 million cases, grew at 15 per cent. Ironically, prices of spirits spiralled high shooting up to 30 per cent in some parts of India. The average price of generally consumed liquors ranges between Rs 600 and Rs 1,500 per bottle of 750 ml. High prices of molasses, the basic raw material for producing alcohol, had sky-rocketed forcing companies to pass on the increased input costs to tipplers.
However, on the corporate front, it was a rather quiet year in terms of big-ticket mergers and acquisitions, but the domestic landscape did feel the ripples of take-overs in the global arena. A case in point is the 7.8 billion pounds take-over of Scottish and Newcastle, which owned 37.5 per cent stake in United Breweries, by a consortium of Carlsberg and Heineken, resulting in conflict of interests in India.
In a sign of the grim times for the wine auction world, Christie’s has announced that it is closing the South Kensington wine department after 30 years as part of its restructuring of its London wine department.
David Elswood, head of Christie’s International Wine Department told Decanterthat Christie’s new strategy will focus on the Asian market where the collecting market is still strong. While European wine sales were up 10% year on year in 2008, the forecast for 2009 remians guarded.
The Christie’s London King Street wine department will carry on with its usual schedule and Christie’s Hong Kong will expand.
A quick burst of high-voltage electricity could turn a bottle of cheap plonk into a fine, mellow mature wine that will fool the most discerning palate.
Five wineries in China have started scientific trials using electric fields to speed up the process of ageing wine.
If the new technology is successful, it will enable China’s relatively young wine industry to accelerate production to meet rising demand. It will also keep the cost down, by eliminating the need to age wine in wooden barrels.
Details of the plug-in ageing process are revealed today in New Scientist magazine, but, sadly, it’s far too complicated to try at home.
Developed by a chemist at the South China university of technology in Guangzhou, Xin An Zeng, it involves pumping wine through a pipe running between two titanium electrodes fed with a high-voltage electric charge.
Batches of a three-month-old cabernet sauvignon were zapped for one, three, or eight minutes, then analysed for chemical changes that might alter ”mouth feel and quality”.
The youngest a raw wine can be drunk is six months, with most red wines taking much longer to lose the bitter taste of tannin and develop a fine aroma, or nose.
The three-month-old Chinese cabernet was given to a panel of 12 experienced wine tasters after being zapped for a blind taste test.
”The results were striking. With the gentlest treatment, the harsh astringent wine grew softer. Longer exposure saw some of the hallmarks of ageing emerge a more mature nose, better balance and greater complexity,” New Scientist reports.
The best results were achieved after ”three minutes at 600 volts per centimetre”, which gave the electrified wine an aroma similar to an aged wine, as well as the recognisable taste of a mature cabernet sauvignon. But there’s obviously an art to applying the zap. Dr Zeng’s team found upping the voltage and applying it for a longer period made the wine ”worse than the untreated original”.
Although he hasn’t yet discovered exactly how exposure to an electric field alters the wine’s chemistry. Dr Zeng says more than a decade of experiments shows under the right conditions, a quick shot of high-voltage electricity can accelerate some aspects of the ageing process.
”Not only can it shorten a wine’s normal storage time, it can also improve some lower-quality wines. It works just as well with other grape varieties such as merlot and shiraz,” he told New Scientist.
And the French aren’t sneering. University of Burgundy’s oenology professor, Herve Alexandre, has declared the zap is ”a feasible way to shorten maturation times”.
PUNE : The Sahyadri Range forms the physical backbone of Maharashtra in western India. Rising on an average to an elevation of 1000m, it falls in steep cliffs to the Konkan coast overlooking the Arabian Sea. Now this rugged mountain range is all set to lend its name to the wines produced in this region.
‘Sahyadri Wines’ is how the wines produced from grapes grown in the Nashik-Pune-Sangli belt will soon be known to the world, if everything goes according to plan.
Industry sources in the know say efforts are underway at the highest level to get a geographical indication (GI) for the state-produced wines that have already made a name world over for exhibiting earthy, vegetal aromas and flavors along with bold fruit, typical of its people and the region’s history.
The ball was set rolling by Union agriculture minister Sharad Pawar at a recently-held meeting of the country’s premier body for protection of fruits and processed fruit products, National Horticulture Board (NHB).
Sources said the NHB, which falls under the Union agriculture ministry headed by Pawar, has already set the process to get the GI registration in motion. At present, the wines produced in Maharashtra are known as Dindori wines within industry circles.
Wine experts like Ashwini Patil believe it is important to have a GI as it helps to create a reputation for region-based wines across the world. Maharashtra may not have a long history of wine production, but it certainly can look forward to producing wines that are high quality and internationally competitive, she felt.
Wine production in Maharashtra began in the early 1980s when Chateau Indage reestablished vineyards on the upper slopes of the Sahyadri valley near Pune, which incidentally had a history of producing famous wines for courts of kings and emperors of India.
Chateau Indage initially imported grafted root stalks of different noble grape varieties with French technical collaboration and with a production around 1 million cases, is said to be the biggest winery in the country today. It was also the first to make a sparkling wine.
Latest figures from the Maharashtra Industrial Development Corporation’s (MIDC) department of wine production show that 2.11 crore litres of wine were produced across the state’s 57 wineries this year, as compared to the 1.32 crore litres produced in 2007.
The figures show that the state’s wine production continues to grow at over 40% annually, with 94 lakh litres produced in 2006. The state’s exports have also been steadily rising, from 2.74 lakh litres in 2003-04 to 5.5 lakh litres now.
According to Jaideep Kale, technical coordinator of Grape Wine Parks for the MIDC, the state’s total investment in wine-making is to the tune of Rs 328 crore and close to 8,000 acres of land is under cultivation for wine production.
But wine remains the least preferred spirit in India. While France and Italy consume 60-70 litres per person per year, India in 2001 consumed 5 to 6 ml. This year, consumption is estimated at 10 ml per person per year.
Also, wineries in Maharashtra have to cope with challenges that do not exist in wine regions elsewhere. For starters, the calendar is turned upside down. Even though the region is north of the equator, grapes are pruned in September and picked in February and March to avoid stifling heat and the summer monsoon season.
Tags: India wine
Fortune Small Business) — Looking back, Dominic Rivard has to admit that starting a business in Thailand within weeks of a military coup might not have been the best idea.
It took more than six months to find an investor willing to take a risk on his proposal to build an exotic fruit winery in Southeast Asia. And then, with the government’s ministries in some confusion, it took twice as long as expected to register the company.
“Maybe it was stupid,” says Rivard, but Thailand, with its abundant fruit harvests to supply the winery and its millions of tourists to buy the wines, seemed an ideal location. Two years later, Apsara Valley Wines, located 30 miles north of Bangkok, is distributing its first batch of pineapple, passion-fruit, mangosteen and lychee wines to high-end restaurants and resorts in the area. Rivard’s next goal: to bring these libations to the U.S. market.
A 36-year-old Canadian who has served as head winemaker for more than 10 producers in Canada and China, Rivard has spent most of his life in the business. At age 17 he made his first batch of wine from dandelions and concord grapes in his backyard. Later he took sommelier classes. After a brief stint working in a wine laboratory, he launched his own business as an enological consultant, advising companies on both sides of the Pacific.
In 2002 Rivard was offered a joint venture with a provincial agriculture ministry in China, which gave him a minority stake in the firm and second billing in the company, Tianjin Kernel Rivard Wines. Two years later the business was struggling. Investment in equipment had been heavy, but Rivard believed that essential marketing efforts had been underfinanced.
“We had a very good product,” says Arvin Tian, Rivard’s business partner at the time, “but the company wasn’t managed well.”
Rivard concurs. “By the end I felt like a puppet,” he recalls. “I was nothing more than the white figurehead.”
But Rivard had a family to support. So when the business failed, he signed on as head winemaker at one of China’s largest wineries, Tonghua Grape Wine. After a couple of years he felt restless again. A friend introduced him to Germain Bergeron, a fellow Canadian and serial entrepreneur who was based in Thailand. Bergeron, 40, needed a new venture, and Rivard wanted an ambitious partner. In 2006 Rivard moved to Bangkok to work with Bergeron, founding Hong Kong-based Oeno Wines, an importer and the parent of Apsara Valley.
Rivard says he’s learned from his mistakes. This time, he and Bergeron own a controlling interest in the company. They’ve invested less in production equipment and more in product packaging, a key component in Asia, where wine is often bought as a gift. Rivard has also grown used to the cultural nuances of doing business in the region.
That knowledge proved useful in a recent deal. A large South Korean importer hired Rivard and Bergeron to make a Malvasia grape wine in Italy. After they spent tens of thousands of dollars on production and packaging, and with a container loaded and ready to ship, the importer decided to cancel the order. The reason: a vague complaint about packaging that had been approved months earlier.
“It was very frustrating,” says Rivard. “A North American mind-set would have gotten mad and called in the lawyers, because there were contracts involved.”
Instead, he flew to the importer’s headquarters to renegotiate. It took nearly three months of visits and dinners to get the deal back on track, but Rivard felt it was worth it: “We built stronger relationships with the buyer and solidified future deals.”
In its first four months of sales, Apsara Valley has generated more than $90,000 from its dry and dessert fruit wines. By next year, Rivard and Bergeron hope to top $500,000. That will partly depend on their ability to tackle the U.S. market. They plan to partner with Makiko Yamashita, a Sacramento entrepreneur who will sell the fruit wine under her own brand, Radee. But marketing a largely unknown beverage – and one that sounds unsophisticated to boot – at a premium price may not be easy. Sales of fruit wine in the U.S. grew by less than 8% from 2002 to 2007, according to the research firm Euromonitor International.
“The market is tiny, and it’s hard to get money commensurate with the work you put in,” says Bill Nelson, president of WineAmerica, a trade group whose members include fruit wineries. “Most companies aren’t able to sell fruit wine for more than $10 a bottle.”
Nonetheless, Apsara Valley’s owners continue to feel bullish about the U.S. market. Says Rivard: “We just need the wine-drinking world to open up.”
Robert Joseph has just completed the 2008 India wine challenge. He shared his experience exclusively with indianwine.com. The complete results of 2008 India Wine Challenge can be downloaded from HERE.
1. How do you feel about this year competition? Like response etc.
This year’s competition was around 50% bigger, and attracted 77 Indian wines, the largest number ever judged in a blind competition. This, and the enthusiasm of the local and international judges gives me great optimism both for the Indian wine market and for the future of the Challenge. However, I was also pleased to see that the judges this year were tough in their allocation of awards. I would always rather feel that good wines were unlucky to miss out on a medal than that poor ones were lucky to get one
2. How do you compare the quality of the Indian wine from the Previous year?
There is a definite improvement, but much remains to be done. There is too much unripeness and too many winemaking faults that keep Indian wines from living up to their potential. There were many Seals of Approval; next year, i’d like to see many of these producers get Bronze medals.
3. Any wine particular wines very interesting to you this year?
I was particularly interested to see the success of Chateau d’Ori which has great potential for the future and currently seems set to take on Grover’s mantle; and the Sula Late Harvest Chenin which may do more to build Sula’s reputation than its well regarded Sauvignon Blanc
4. What is the next year goal?
The mission statement if the UK Challenge – and all other Challenges – is “to encourage more people to drink more good wine”. And that’s what I’d like to continue to do next year.
Western connoisseurs once derided Chinese as simple drinkers who mixed wine with soda, and saw the country’s top vintners such as Dynasty as local oddities serving up cheap wines in an immature market.
But a growing number of converts — investors among them — say China could become the industry’s next Chile: a font of quality and affordable wines.
Dynasty, Changyu and Great Wall, made by a subsidiary of China Foods, control roughly half of China’s grape wine market. They are angling to replace local preferences for beer and grain alcohol in a country where international wines still have a small, albeit fast growing, presence.
Though a near-term sales slowdown is possible as U.S. woes fan out across the world, analysts say long-term prospects for China’s homegrown wines are strong as disposable incomes surge and the country’s booming middle-class demands healthier and ritzier lifestyles.
“It should be a gradual process,” Shanghai-based Credit Suisse analyst Shanshan Lu told Reuters.
“The key opportunity comes from the low base, and the key challenge should be competition from foreign brands that are imported into the China market.”
International spirit and wine behemoths Diageo and Pernod Ricard are also aggressively expanding in the world’s fastest growing major economy, but are focusing on high-end whisky brands such as Johnnie Walker and Chivas Regal.
China’s wine industry is expected to grow to roughly $13.7 billion in 2010, up from $10.5 billion in 2007, according to research from Euromonitor, and experts say it could be the world’s eighth largest wine consumer by 2012.
Grape wine, however, is still a small portion of China’s market. Non-grape varieties such as yellow wine and rice wine will still account for almost two-thirds, or $8.8 billion, of the market in 2010, Euromonitor says.
By comparison, the global wine market was worth $234.7 billion in 2007, with “still light grape wine” accounting for $164.2 billion of that market, Euromonitor says.
Ninety percent of grape wine consumed in China is red, which unlike white wine is considered a symbol of class and luxury. But even with such an image, Chinese wines are relatively cheap, averaging less than $3 a 750 ml bottle.
Shares in Chinese vintners have also gotten cheaper after steep falls this year and now trade roughly in line with much larger global peers. Dynasty trades at 10.1 times forward earnings, and COFCO’s China Foods trades at 17.4. That compares to Diageo’s 15.6 times, and U.S. giant Constellation Brands’ 16.1 times.
Despite strong long-term prospects, China’s consumer firms are struggling now to pass costs on to customers in a year inflation hit 11-year highs, even as incomes rise.
On Wednesday, Dynasty — 27 percent owned by French wine and spirits group Remy Cointreau — said volume sales for 2008′s first half rose by less than 1 percent to just shy of 30 million bottles, citing keen competition and poor sentiment after floods and a massive earthquake rocked China this year.
ABN AMRO, however, has a “buy” on Dynasty, citing increased sales prices and the company’s commitment to improve its marketing and distribution capabilities.
Rival Great Wall — which controls 15 percent of the market and was an official supplier to Beijing’s 2008 Olympics — is seeing stronger demand.
Its sales rose 92 percent to 94,000 tonnes last year, yielding a 19 percent increase in turnover to HK$2.14 billion, according to CIMB-GK.
Lehman Brothers has an overweight rating on Great Wall owner China Foods, which is backed by state behemoth COFCO.
And dominant player Changyu — partly owned by Italian liqueur maker Illva Saronno and the World Bank’s International Finance Corp — saw revenue leap 27 percent to roughly 1.8 billion yuan in the first half of 2008 on the back of a gross margin of 67 percent.
Further out, there are fears foreign wines could eventually beat China’s vintners on their home turf as tastes expand among a burgeoning middle class.
Wine imported into the country leapt more than 19 percent to 163,600 tonnes in 2007, according to UBS, and the segment is growing faster than domestic wine.
But contrary to popular perceptions, foreign wines have not penetrated China as deeply as other international luxury items such as BMWs and Louis Vuitton leather goods.
“Considering that wine makes up 5 percent of alcohol consumption and imported wine makes up not more than 6 percent of wine consumption, I do not see imported fine wines eclipsing the big domestic brands anytime soon,” said Don St. Pierre Jr., Managing Partner of China-based wine importer ASC Fine Wines.
Still, for China’s richest, the lure of the world’s most famous wines is too strong to resist, no matter how high the price tag.
In March 2007, for example, a Chinese oenophile bought carry-on wine and spirits worth a record 23,000 euros at a Paris airport’s duty-free shop — including a bottle of epic 1945 Chateau Mouton Rothschild red wine costing 13,800 euros, airport officials said.