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Posted: Tuesday, August 06 2007. 11:00 AM

Viewpoint: Chateau Indage plans 1,000 wine retail outlets

Betting heavy on the growing wine market in India, its biggest wine producer, Chateau Indage is undertaking a big retail expansion in the country, with plans to open more than 1,000 outlets and sell more than 4.5 million litres in 2007-2008, report sources quoting PTI.

With the wine consumption in India growing at a rapid pace, the company is expecting a turnover of over Rs 100 crore (US $ 25 million) in this fiscal year 2007-08, according to a company official who did not want to be identified. "The outlets will specialise in selling and educating consumers about wines," he said.

He, however, declined to comment on investment planned for the retail expansion which would be a mix of franchise and company-owned outlets and would be branded as 'IVY Wine Bars'.

The company would showcase a wide range of wines in these outlets, including Chateau Indage's own brands and imports from Australia (where it had bought Tandu winery earlier and reported in delWine), and South Africa. To boost its sales, the company is also revamping its marketing strategy with more intensity given on below-the- line activities.

It would host Wine Fests in 25 cities across the country in a period of two months coinciding with its silver jubilee celebration this year.

The official claimed that the company already has more than 70 per cent share in country's total wine market and 75 per cent in the premium segment. Chateau Indage has a total wine production capacity of 65 million litres across five countries. It is also making two more wineries in India, one each at Baramati and Nashik.


The report is quite confusing, to say the least. A simple calculation shows that per bottle the recovery would be about Rs. 220. With their Chantilly, Ivy and MDP all selling between Rs. 400-550,(even though inclusive of duty and VAT) and even Riviera at around Rs.350, the volumes must include the low end Vino which sells for around Rs.95. and all other entry level wines. This does not make it feasible for them to have a 75% share in the premium segment, dominated by Sula and Grover (in fact Sula often claims to be the market leader in premium wines with Grover running the same lap.

Wine bars are coming up in Maharashtra and other states quite fast. But one is not sure, if they are allowed to retail wines from the bars. If it were so, the wine bars would be springing up everywhere. Places like Delhi do not even encourage opening of bars alone as the taxes are extremely high.

Why would the company officials not like to be identified? A news agency like PTI surely would have easy access to the Chougules who are quite affable - editor.

'Outperformer' Report by a Research house

In the meantime, some clarification can be seen from the Research report of a Mumbai based brokerage and research firm of Prabhudas Lilladhar ad reported in about the working of the company.

Bullish on the future performance of Indage with a verdict of ‘Outperformer’ the report says, ‘ Champagne Indage’s(parent company)Q1 FY08 results excelled our expectations. Net sales jumped 186% yoy (our expectation: 264%), operating profit shot up 146% and net profit rocketed 94% (our expectation: 94%). The operating margin dropped 380bp—from 26.4% to 22.6% (our expectation: 14.6%)— due to the change in product mix.'

The consolidated results include those of Seabuckthorn Indage, Indage UK and Thachi Wines,

' Most of growth came from the rise in volumes, as there has been no major price change. The company has initiated several retail measures like the opening of wine bars, shop-in- shop, display at shopping malls, etc. The Maharashtra Government has allowed wine as a “food” item and relaxed storage and distribution norms. It has also abolished excise duty on wines. These steps have helped boost sales growth.

The acquisition of Thachi Wines (TW), Australia, has given Champagne Indage a global footprint. TW has contractual arrangements for vineyards and a winery in Australia, and processes 2.7m litres of wine a year. At present, TW markets its products in Australia, China and Europe under the brand name Broken Earth. Most of this wine is sold unbranded. The acquisition would provide a ready-made market for CIL to hawk its own brands in these countries through TW’s distribution channels.

CIL plans to bring TW’s bulk wine to India and bottle it at its plant here. This is likely to be marketed domestically as a wine of Australian origin. This would generate additional revenue.

The company’s economy brand, Vino, has reported healthy growth in FY07 and brings in about 12% of revenue. CIL expects beer drinkers to migrate to Vino due to the latter’s attractive price of Rs 99 a bottle.

The company has set up a 100% subsidiary in the UK under the name Indage (UK) to market its products to Indian restaurants in the UK and Europe. This is likely to enhance its exports.

CIL’s established brands come at all price points. It has more than an 80% market share in the home market. With the national wine policy under implementation and the relaxation of distribution norms, the company is likely to benefit in future.

Sale of wine in supermarkets is now allowed in Maharashtra, Karnataka, Chandigarh, Goa and Haryana. This is likely to widen and deepen wine consumption.'


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