The growing power of India

The potential of the Indian wine market is such that international wine judges and foreign investors are starting to take note. By Peter Csizmadia-Honigh

Layout 1EVEN THOUGH India’s GDP growth rate is down to 4.99%, the slowest for almost a decade (see Table 1 – GDP and Interest Rate in India, 2006-2013), their wine industry has witnessed an average annual growth of 25-30% during the noughties according to a report published by the Indian Grape Processing Board(IGPB), an industry body. Karishma Grover, the third generation of the wellrespected Indian wine family, explains that the demand-inflected necessity to expand would endure even if the Indian wine industry’s growth has “declined” to a mere annual 20% by 2013.

For Bangalore based Grover’s Vineyards to keep their position of number one quality associated brand in India and to satisfy customer demand, they had to acquire Zampa, a boutique winery in Maharashtra state’s Nashik district.

An even more astounding growth has turned Sula Vineyards, the brainchild of Silicon Valley groomed businessman Rajeev Samant, into the largest winery just slightly over ten years with its 6.5 million bottle-per-year production. The seismic transformation has seen casualties too.

India-GDP-TableJust think of Omar Khayyam, which used to be the bestknown traditional method Indian sparkling wine until Chateau Indage – whose production accounted for 43% of all Indian wines before it was delisted from the Bombay Stock Exchange – went into liquidation in late 2011.

The potential of the Indian market does not go unnoticed by foreign investors either; most notably this year Diageo has increased its packet of shares to 25.02% in United Spirits Ltd., owner of Four Seasons, a winery in the Pune district of Maharashtra state.

India is primarily an agricultural country; nearly 60% of the workforce is employed in the sector and related industries. Commercial grape growing is widespread. The 2009-10 figures of the Indian Horticultural Database showed 106,400 hectares under vine in 11 states from Jammu & Kashmir in the far northwest or Nagaland adjacent to Bangladesh right down to the southernmost Tamil Nadu (see Table 2).

India-Grape-Table2Despite the India-wide dispersion of the growing areas, there is a large concentration with Maharashtra accounting for 76% and Karnataka for 15%. Kapil Sekhri, co-proprietor and CEO of Fratelli Vineyards, commented that the whole agricultural sector is still very socialist with the exception of Maharashtra, where progressive land ownership legislation catalysed private investment, possibly explaining the state’s large share of grape plantations.

While 80% of the national grape production is consumed fresh, a quickly increasing proportion is exported to Europe and the Middle East earning over US$200m (HK$1551m) year.

Only 1.2% of the national grape production is crushed and made into wine. Latest figures show wine is produced on 9,000 acres (3,650ha) of vineyards in Maharashtra, which is three times higher than the national average, but it is still at a modest 4.5% only.

The concept of Indian terroir may seem to be a far-flung idea, yet there are significant climatic and topographic differences shaping wine styles and impacting businesses. Jagdish Holkar, chairman of the IGPB, points out that the identification of superb terroirs will contribute to the establishment of provenance, seen as key to increasing added value in the Indian wine industry.

Based on current production statistics, four major wine regions may be differentiated: the vicinity of Chennai in Tamil Nadu, Bangalore in Karnataka; and Pune and Nashik located in Mahrashtra (see Table 3).

India-wine-table-3The Nandi Hills, 40km north of Bangalore, is a world apart from both Pune and Nashik as far as climate is concerned. Once the summer retreat of the British, Bangalore is 1,000km south of Mumbai, India’s commercial capital, but at an altitude of 1,450m it has a benign cooler subtropical climate with an average temperature of 26-29˚C during the monsoon.

It was probably one of the reasons why the experiment of the late Kanwal Grover, in co-operation with George Vesselle, formerly of Champagne Mumm; resulted in the selection of moderate climate varieties, such as Cabernet Sauvignon, Shiraz, Sauvignon Blanc, Viognier and Chenin Blanc, when establishing Grover’s Vineyards in Karnataka in 1988. Karishma Grover states that Chardonnay was not planted because simply it would not crop.

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