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India a minnow in the world of wine

Alok Chandra in New Delhi | May 21, 2005

Time, I think, to move out from the cosy niche of Indian wines to the big wide world. There is an awful amount of wine out there: in 2004, nearly 29 billion litres (bl) of wine were produced worldwide, of which only 7 billion litres were traded (ie imported or exported) -- which means that the vast majority of wine gets consumed locally.

The biggest wine producers are France (4.75 bl), Italy (4.4 bl), Spain (4.0 bl) and the US (2.5 bl), with Argentina (1.3 bl), Australia (1.25 bl), South Africa (1.0 bl) and Chile (0.6 bl) catching up fast.

In comparison India produces only about 5 million litres (ie 0.005 bl), of which 3 million litres are cheap wines made from table grapes (and some reportedly just flavour, sugar and alcohol) that barely qualify for the moniker.

I'm sure that readers are aware that 95 per cent of all wine produced worldwide is 'still' wine, and all other categories (sparkling, fortified or speciality wines) constitute only 5 per cent  -- still a huge 1.5 billion litres.

What is also interesting is that, of the still wines produced, the vast majority is meant to be consumed within a few years -- only about 5 per cent (again about 1.5 billion litres) of all still wines are good enough to be kept for more than 3-4 years.

In fact, the aphorism "old wine in new bottles" grew out of a practice in Europe in the early 1900s to try to pass of old (and bad) wine as new (and drinkable) wine by putting it into a new bottle!

Many people tend to think that the older a wine, the better.

Not true: the wine has to have the potential to age, and wines with ageing potential tend to be expensive, so if you've been saving that $15 bottle you bought 10 years back for a special occasion, do quickly open and drink it before it deteriorates further (it may be undrinkable even now).

As may be expected, France, Italy and Spain are the three biggest wine exporters; what is interesting is that Australian wines have leap-frogged into fourth place (ahead of both the US and Argentina) with exports of 650 million litres of wine worth $2 billion in 2004.

The US is the world's biggest import market for wine -- in 2004 it imported about 635 million litres at a total cost of over $4.5 billion; surprisingly, the UK is the world's second-largest importer of wine at $4.2 billion in 2004, followed by Germany ($2.3 billion) and Japan ($1.1 billion).

At last count, E&J Gallo (US) sold the most wine (over 65 million cases or 585 million litres), followed by Constellation Brands (UK) with about 62 million cases.

With the recent acquisition of Southcorp (Australian) by Foster's, the combined entity will have the highest sales revenues for wine -- likely to exceed 2.3 billion Euro.

The rankings will change again once the fate of Allied Domecq (21 million cases / 1.2 billion Euro sales) is decided -- Pernod Ricard had bid the equivalent of $14 billion for Allied Domecq, but others (including Constellation and Diageo) have now thrown their hat into the ring and everyone is watching the fun with bated breath. Whew!

What does all this mean for Indian winemakers and consumers?

Merely that: (a) we're small fish in a very large pond, (b) it's early days yet for the industry in India, which is hamstrung by rules and regulations in most states, and (c) there's enough wine available internationally to meet any conceivable demand, so the number of imported wines available in India will continue to grow.

So will the wine market in India, which is growing at over 30 per cent annually -- my own forecast is that it will reach 10 million cases in 10 years.

Which leaves enough scope for both home-grown wines as well as 'all the wine that's good to drink' from overseas. Oye' Bubbly!


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