Size does matter

With a population of about 1.2 billion, in 2010 India consumed some 250 million cases of spirits, 215 million cases of beer, and 1.5 million cases of wine. Despite this disparity, the popular perception is that “wines are doing really well”, which indicates that there are many more labels now available than, say, 10 years back — and all those society photographs on Page 3 depicting all those people with wine glasses in their hands no doubt contribute to the image of wine ‘being everywhere’.

China consumed some 159 million cases of wines last year, and has become the fifth largest worldwide in both production and consumption of wine. Hong Kong alone imported nearly $1 billion worth of the stuff, and has become the world’s largest wine auction centre, ahead of both London and New York. China is the Asian ‘100-pound Gorilla’ in many ways, and is driving prices of fine wines worldwide.

India has many complications: an extremely high customs duty rate (effectively 161 per cent CIF), multifarious duties and taxes from states, and an official mindset that equates wines with spirits (insofar that rules and regulations are concerned). In this environment only companies with deep pockets and a long-term perspective can survive — and there’s nobody bigger than the UB group, whose ‘invest-grow’ strategy is likely to make it the country’s largest wine company within five years.

Interestingly, the UB group has adopted two distinct strategies. Spirit flagship company United Spirits Ltd (USL) has invested Rs 60 Crore in a state-of-the-art winery at Baramati (80 Km south of Pune) and launched a range of wines under the Four Seasons banner. It also imports and markets wines from Bouvet-Ladubay, a company from France’s Loire Valley producing principally sparkling wines that was acquired in 2006 for €15 million (then about Rs 90 Crore). United Breweries (UB), on the other hand, is getting their Kingfisher Bohemia wines bottled in South Africa and concentrating on distribution and brand awareness by selling only three variants (red, white, and rose).

The two companies have a very different approach to marketing their wares: USL is more product-oriented (witness its byline “A season in every sip”) while UB is looking to change attitudes to wine (“Skip the rituals, Drop the ceremony”). However, both are using their distribution muscle to get their wines onto retail shelves and restaurant wine lists in every single state in India (of course, barring the dry states of Gujarat and Nagaland). Pioneering stuff, as wine penetration in India is just one to two per cent at present, and can only grow. Four Seasons and Kingfisher Bohemia wines are now available in duty-free shops and bars in departure lounges across India, providing them a ‘first mover’ advantage others will find hard to emulate.

Wines I’ve been drinking: Valdivieso Caballo Loco No. Nine, a wine which ‘Wild Horses’ couldn’t keep down. A blend of Cabernet Sauvignon, Malbec, Carmenere, and Merlot “from the best vineyards of Chile”, the wine is uniquely produced through the solera system where 50 per cent of the wine is from the current vintage (2004) and the rest blended with the previous edition (which was started in 1990). Very aromatic, with notes of cherries, chocolate and sweet spices, a full-bodied taste, velvety tannins, and a long finish. Imported and sold only in Delhi by Sovereign Impex (approx. Rs 3,000). One should decant the wine about a half-hour before drinking — once it opens out the wine is quite fantastic.

The writer is a Bangalore-based wine consultant