French winery Bouvet Ladubay may just be the latest casualty in the restructuring programme that involves jettisoning of non-core assets of United Spirits Ltd (USL) by Diageo that now holds controlling stake in it.
Around a month ago, USL stopped marketing of Bouvet Ladubay’s wines in India. Established in 1851 in the Loire Valley of France, the Taitinger subsidiary had been acquired by the formerly Vijay Mallya-controlled USL in 2006 in a transaction valued at around €15 million.
The acquisition was to have brought with it the opportunity to introduce high quality wines (both bottled in France and bulk imported to be bottled locally) to the emerging wine connoisseur in India as well as the chance to assimilate leading-edge viticulture in the domestic wine making industry. Responding to an enquiry on the subject, USL spokesperson confirmed that marketing of BL’s products in India had been stopped around a month ago, but declined to comment on whether the company is on the block or has already been sold.
Its winery at Baramati produces white, red and rose wines under two brand names — Zinzi (value-segment) and Four Seasons, the premium category which also has a Barrique Reserve in its portfolio.
According to sources in the wine industry, Diageo is recruiting to put into place an independent team to market the Four Seasons range of wines and strengthen the brand presence.
“Though grapes have been crushed, the wines have hardly been seen in the Indian marketplace as the marketing team has not been very strong,” the source said.
In reply to an e-mail on their plans for Four Seasons, the USL spokesperson wrote, “All of this is commercially sensitive information, and thus, we will not be able to respond.”
The proceedings are indicative of considerable ferment in the Indian wine industry that in the last few years has seen several ups and downs in its fortunes, with several of the smaller players looking for bail-out packages from the government to survive.
Strategic investors Amongst those looking for strategic investors is Ajit Gulabchand promoted Charosa Wines, which had invested nearly ₹100-odd crore to set up its winery in Nashik. COO Parag Kamat vehemently refutes talk that Gulabchand is looking for an exit and that a Sholapur-based wine brand was in talks to buy out/invest in Charosa.
“We are looking for a strategic partner,” he affirms, however, quickly adding, “But we are not desperate and I think there is no Indian company that can partner us.”
The reason being that no one has the requisite combination of money, expertise and product range, he feels.
Yatin Patil, the newly elected president of the All India Wine Producers Association points out that this is a dynamic industry and the vast majority of Indian wine makers (around 110 in all, over 75 per cent in Maharashtra) are on the lookout for strategic partnerships.
“The smaller players don’t have the financial muscle for marketing and consolidation is the next business move,” he says, adding that contract manufacturing for larger players is poised to become the order of the day.
During the 2015 season, around 15 lakh cases of wine (each case contains nine litres of wine) were produced.
The industry is seeing growth of 15-20 per cent per annum and with plenty of action poised to happen in this space, all eyes will be on the 2016 crushing season that will start in January.