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Posted: Saturday, 13 October 2018 22:10

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Blog: Amongst Confounding Statistics Ravi Viswanathan is the King of Indian Wine Industry

Oct 13: It is interesting that more reports are appearing overseas about the Indian wine industry with the latest being a lacklustre Report by the Drinks Business yesterday, parroting a summary of what has already been written in India but it is a good sign for the industry which has now woken up after slumber, but my conclusion is that Ravi Viswanathan from Singapore is emerging as the Top Dog of the Indian wine industry thanks to his intelligent analysis of the industry and pouring investments that will give his investors rich dividends in times to come

Did you know there is a brand called Sauvignon imported into India? And it is the 3rd highest selling brand in India-after Jacobs Creek and Moet Chandon , followed by Dom Perignon and Carlo Rossi, the ubiquitous brand that was the darling of 5-star hotels’ wine list in the early 2000’s and now sold mainly in Canteen Stores Department (CSD) on an annual rate contract and imbibed by our Defence  officers at cheaper rates?

And guess how many importers we have in India today! 20, 40, 50?? No siree Bob!! There are 300 wine importers. I am not sure if the number includes an acquaintance of mine, who imported a palate for his own consumption by paying duties, just like perhaps a few others (anyone can import wine in India by following some rules). This is what a Report by some Export Genius avers.

This Report published in August 2017 puts ICD Tughlakabad as the busiest Port in India (during Q2, 2017) more than even Nhava Sheva Sea Mumbai , by around 50%-which however, could be the peculiarity of the period in question and misleading if considered for the year. Here is the List of Top Importers provided by the exportgenius.in

  • Brindco Sales Pvt. Ltd.
  • Pernod Ricard India Pvt. Ltd.
  • Delhi Duty Free Services Pvt. Ltd.
  • Sula Vineyards Pvt. Ltd.
  • Aspri Spirits Pvt. Ltd.
  • Moet Hennessy India Pvt. Ltd.
  • Lakeforest Wines Pvt. Ltd.
  • Air India Ltd
  • DFS India Pvt.Ltd
  • Radico Khaitan Ltd

Amazon : Millions of products at great pricesThe Report in Drinks Business quotes the figures by Austrade in an Article which is undated but a paragraph that exhorts people to register for a Seminar in May, suggests that it was dated March- April  2018.

This Report warns Australian winemakers that the customs duty on wine is 150 per cent on CIF-cost, insurance and freight (Actually, for some strange reasons this tax in India is on Assessable Value arrived after adding 1% to the CIF value-editor).

‘The final cost to the consumer would thus be around 9 to 11 times of FOB in Mumbai, around 7 to 8.5 times of FOB in Delhi and around 6 to 7 times of FOB in Bangalore,’ claims  the Report. In fact, many other hidden taxes including the ‘cost of doing business in India-every step of the way’ and the varying, and always escalating excise duties are also the culprits in cost build up. For instance,  Delhi increased the Label Registration charges from Rs. 10,000 a label to Rs. 60,000 a label for imported wines w.e.f from the current year’s policy which as usual was announced 5 months late with no one accountable for the delay causing loss to the importers and distributors and eventually the consumer).

However, as a rule of thumb- the Retail price is only 7-8 times for cheaper wines and less for more expensive wines and the difference is not so much as feared by this Report.

The Report by Austrade, also claims that’ the hospitality sector (hotels, restaurants, catering, clubs and pubs) has a larger market share than the organised retail sector, as the Indian Government allows hotels to import alcohol duty-free (equivalent to 5 per cent of the average foreign exchange earned in previous years).

‘This means much of the imported alcohol consumed in India is in five-star hotels in major cities.’ However, the reality is that for reasons not gazetted, hotels with foreign interests-like Hyatt, Westin, and Marriott etc rue that they are not able to get their duty-free licenses renewed since last year. No reason is given to them officially except what one learns through the grapevine: instructions have been given not to give these benefits to the foreign chains as they take the monetary benefits away-a highly absurd policy since they are now generally out-priced in the market in wines. (delWine does not carry truck for this category because en masse, most of them had failed to pass on the benefits to the consumers, as the policy mandated).

The report in Drinks Business takes these other reports and the news report in the Mint last month and talks of the investment in Grover Zampa, taking the sales from the current 200,000 cases to 500,000 cases in 5 years- an annual compounded growth of over 40-45%, a highly ambitious target, even if we consider the additional capacity being generated by investments into wineries like Charosa which have good quality, low production and small market. The market is not growing at such a fast pace and it may not be possible to create such an additional demand of 300,000 cases in 5 years even with ‘marketing rather than selling their wines’, as Vivek Chandramohan, the new CEO quoted to have claimed.

A mere 10% annual growth for Sula would mean an increase of 100,000 cases a year and even if Sula is not overly ambitious, they are competitive enough to want to maintain growth at this rate. And let us not forget that Sula took 3 years from 925,000 cases to cross a million in 2017-18.

Fratelli Vineyards is another sleeping giant not mentioned, that woke up a couple of years ago and is ready to overtake Grover Zampa any time. ( In fact, it is an open secret that Fratelli plans to compete with Sula directly in terms of being number one in premium brands, at least). Smaller players like York may reach 50,000 cases a year but will be no-where near Grover Zampa or Fratelli-because of their limited resources and penchant to move slowly up the ladder. One must also not lose sight of the fact that Sula has already tied up with all the ‘defunct’ wineries (for want of a better word) and leased their wine making capacity and their vineyards so there may not be much capacity available outside to reach this number.

Chateau Indage is already shut down. Alpine Industry is practically dead as a capacity resource . Four Seasons is straddling between ‘barely surviving’ to ‘practically closed’ and desperately looking for buyers. There is a strong rumour that a deal may be struck between Ravi Viswanathan’s Singapore group and Diageo to sell it to Grover Zampa/Ravi and the industry is watching with curiosity the progress.

Ravi Viswanathan- King of Indian Wines

One thing that does emerge out is that Ravi Viswanathan is the dark horse and the uncrowned king of the Indian wine industry. He has fingers in many pies. He is a shrewd man who knows how to play a long term game, He had told me in an extended interview that he had being studying the Indian wine industry since the 1990’s and was clear on what he would do.

A smart man in the Private Equity business, he has been able to enter Grover Zampa, Sula and now more into the former, as the Report by the Mint/ Drinks Business had indicated. Whether it is Charosa or Four Season or even Château d ‘Etroyes in Mercurey, Burgundy he bought by their French partners, making Grover Zampa a part of the winery and diluting stakes of the promoters, he is the man behind it all. Combined with the might of Reliance (Anil Ambani group), there is every likelihood that he emerges the king of the industry in times to come with the implicit support of the Reliance group for a common causeof increasing the valuations.

Fortunately, it will be good for the consumer-good for the industry and even the all-obstructive government which will earn more taxes than it could ever imagine.

Before I end, I must add that I am gratified that one of the reference Articles used by Austrade has been the Top Importers 2016-17 List produced annually by the Indian Wine Academy as follows:

Table-Five years of Top Ten Importers since 2012-13

Importer 

2012-13

2013-14

2014-15

2015-16

2016-17

Rank

1.

Brindco

63,000

80,000

60,000

71,500

76,000 

2

2.

Pernod Ricard

35,000

50,000

65,000

65,000

78,000 

1

3.

Aspri

30,000

30,500

21,000

28,500

28,500  

4

4.

Moet Hennessy

34,000

38,000

30,000

25,000

25,000

6

5.

Prestige

14,800

17,500

17,900

23,800

25,500 

5

6.

Berkmann India

14,200

16,000

16,000

23,800

22,500 

7

7.

Sula

14,000

15,000

16,700

22,000

31,000

3

8.

Hema Connoisseur

12,200

15,200

12,900

18,500

18,000

8

9.

Wine Park

 

6,000

7,500

9,000

-

-

10.

Mohan Bros

8,500

10,500

8,000

8,000

-

-

11.

Global Tax              

7,500

-

-

-

-

 

12.

Radico Khaitan

 

 

 

 

17,000

9

13.

Ace Beveragez 

 

 

 

 

11,500

10

 

Total

233,200

278,700

255,000

295,100

333,000

 

 

Growth y-y

 

19.51%

( 8.33%)

15.72 %

12.84 %

 

Interestingly in 5 years from 2012-13 to 2016-7, the Top Ten increased their business by merely 100,000 cases from around 233,000 to 333,000, indicating a simple growth of 43%. This also accounts for a dip in sales of 8.33% in 2013-14-a disastrous year, thanks to the spoke in the wheel by FSSAI.

I believe this is the most credible list in this category in India and relied upon by many Research companies overseas as it is based on the data collected throughout the year. It must be pointed out that this is the list of imported wine consumption and not necessarily the imports.

For a few earlier Articles, please visit;

Grover Zampa plans Ambitious Growth from Bangalore to Burgundy

Reliance Capital to sell stakes in Sula and Grover Zampa?

Labruyeres of Beaujolais and Burgundy Invest with GroverZ

Star Interview: Ravi Viswanathan- Co-owner of Grover and Sula –Part I

Global Perspective: Sula Stake Sale shows Industry has Bright Future

Subhash Arora

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