A history of contemporary Indian wine

Early Pioneers
The origins of the contemporary Indian wine industry lie in the early 1980s when two pioneering industrialists and businessmen, Shyamrao Chowgule and Kanwal Grover, set themselves the task of producing their own wines on Indian soil. All other previous accounts of wine in India, often dated to as early as the 13th century BCE by historians and scholars, have no direct connection or impact on the wine landscape today. They are of cultural-historical interest at best. Even the Indo-Italian joint venture of Shaw Wallace and Bosca, established near Hyderabad in 1966 and merged with the UB Group in 2005, had minimal lasting impact. It is remembered today only for its very poor wines and for some of its executives who may still linger in the industry as semi-retired consultants.
Chowgule was in the construction and engineering business in the late 1970s when his company was contracted to develop a military base in one of the Gulf states. As such, he regularly travelled to Paris for meetings with aircraft suppliers and it was during these trips that he started to taste wine and visit wineries in France. Realising that grapes cost six to seven francs per kilogram in France and only one or two rupees in India, Chowgule pondered the idea of producing wine instead of table grapes to add value and exploit an opportunity.
There were two major challenges to overcome. Firstly, India was not ready for wine production; it lacked the necessary regulatory environment and, besides, wine was culturally alien to the majority of Indians. Secondly, there was a profound lack of know-how as far as skills, expertise and experience were concerned. The government of India initially turned down Chowgule’s request for a licence, as it was committed to discourage increased alcohol production for reasons of public health. However, the export-oriented unit, or EOU, was a totally different matter and was Chowgule’s ticket to the wine industry. It allowed him to import all necessary machinery and materials duty free but, at the same time, it was also conditional on exports, or the challenge of having to sell wine on the world stage.
The other major challenge was know-how. The initial response of the French to Chowgule’s partnership proposal was that it was a waste of time to attempt to produce wine in a tropical country. After collecting and supplying a massive amount of meteorological data to Piper-Heidsieck in Champagne, the company agreed to provide technical consultancy. Grapes were crushed for the first time in 1982 and the construction of a winery simultaneously begun in Narayangaon, 180 kilometres east of Mumbai and 80 kilometres north of Pune on the Deccan plateau. The sole purpose was to produce traditional method sparkling wine.
Omar Khayyam, the sparkling wine, was ready to be launched in 1986, but through which distribution channels was still undecided. Chowgule, having been educated in England, soon set up an importing agency with a Kenyan friend and shipments started to the UK. With the help of a public-relations agency, Omar Khayyam was successfully launched at a five-star Central London hotel in the presence of nearly a hundred journalists who were in utter disbelief that India was producing such a wine. Earning a bronze medal in a wine competition saw Chowgule proudly collecting the award in the House of Lords overlooking the river Thames. The Selfridges department store, a British retail icon, soon came on board for exclusive distribution, and so began the rise of Chateau Indage.
Around
the same time, in the late 1980s, Kanwal Grover, a businessman dealing with and
importing technological equipment from France, fell in love with French
gastronomy and wine and made extensive winery visits. Having convinced Georges
Vesselle, technical director of Champagne Mumm, to assist with setting up
Grover Vineyard, there commenced an eight-year period of experimentation with
34 varieties in ten different locations. It was in 1996 that the first wine was
launched from grapes grown in the Nandi Hills outside Bangalore in Karnataka.
Nurturing the New Industry
India entered the new millennium with high hopes of quickly organising individual domestic-wine production initiatives into a significant new agricultural industry. There was every reason to believe in this vision and the entry of Sula Vineyards in the market could not have symbolised this optimism better. Rajeev Samant had planted wine grapes in 1997 and launched the first wine in 2000. The rise of the Sula sun has been a story of sustained growth ever since, increasing production from an initial 50,000 litres to 7,500,000 litres today.
The conversion from table- to wine-grape production spread like bushfire among farmers, all hoping for a share of the pie and larger profits. Some decided to set up their own wine production units to either produce their own label or sell wine in bulk to Indage. Chowgule initiated the formation of the All India Wine Producers’ Association in 1996 with the aim of representing the interests of wine producers at the official level. The only government initiative, however, was the foundation of the National Research Centre for Grapes under the aegis of the Indian Council of Agricultural Research in 1997.
Despite the dynamic growth driven by Indage, Grover and Sula, wine remained a problem child. Government policies continued to encourage prohibition and do so even today. Under the Indian constitution, alcohol-related authority and powers are delegated to state governments, some of which are largely dependent on revenue derived from the tax and excise levied on alcoholic products. Consequently, any attempt to regulate wine, its production and trade at central-government level would have been politically impossible, because it would have involved the much larger beer and spirits market as well.
Maharashtra, recognising the opportunity and potential of wine, was the first state to introduce a wine policy in India in 2001. It aimed to rationalise regulation, establish organisations and processes to nurture the young wine industry, and provide financial support. Non-refundable subsidies were given to farmers and entrepreneurs to create production facilities. Investment in production, marketing, sales and public relations-skills development remained insignificant, however, so a large number of producers became effectively suppliers to Indage even if they had small quantities of wine under their own label.
The domestic market grew at a staggering annual 30 per cent, but it remained fairly oligopolistic even though the balance of power had started to shift with Sula eroding Indage’s market share and Grover remaining the third largest player. On the consumer side, Subhash Arora founded the Delhi Wine Club and Academy in 2003 and also launched delWine, an e-newsletter, in 2006. Reva K Singh started Sommelier India, the first wine magazine in the country, in 2005. Both Arora’s and Singh’s initiatives are going strong and have become important platforms for connecting with consumers. In 2006 Aakash Singh Rathore published The Complete Indian Wine Guide, which listed all Indian and foreign wines available in India. By this time there were more than 20 wineries across India.
In 2006 both Madhya Pradesh and Tamil Nadu introduced a state wine policy, while Karnataka waited until 2007. Today the Karnataka Wine Board, however, is the only organisation in India still in operation, though with low levels of activity and impact.
In 2009, with the establishment of the Indian Grape Processing Board (igbp) under the Ministry of Food Processing Industries of the government of India, there was a flicker of hope for a nationwide move towards creating the necessary policy environment to guarantee quality production, consumer protection and the promotion of moderate wine consumption. India joined the International Organisation of Vine and Wine (OIV) in 2011, which signalled the country’s commitment to the industry.
Changing Landscape: Financial Crises & Rebirth
Three major events coincided to send seismic tremors through the entire Indian wine-growing industry. The global financial crisis of 2007–2008 led to a significant economic slow-down in India and, followed by the Mumbai terrorist attacks of late 2008, decreased tourism dramatically. In 2008, two companies and a bank also filed a winding-up request against Chateau Indage, who allegedly owed them a total of 150 million rupees (worth approximately £ 2 million at the time), while all of Indage was valued at seven billion rupees (or 700 crores, a crore being the equivalent of ten million).
A complicated and lengthy legal battle ensued, a key moment being when Chateau Indage was debarred from selling stock during the proceedings. In effect Rs 240 crores (£ 32 million) worth of wine, with a market value of Rs 1,000 crore (£ 133 million) rotted in tanks. At this stage Indage had 800 acres (3.23 square kilometres or 323.7 hectares) of their own vineyards, 840 contract farmers supplied grapes from more than 4,000 acres, and 15 wineries produced wine exclusively for the company. In addition to its Indian operations, Indage owned a winery in Australia, had a bottling facility under management contract in the UK, and was in talks to acquire a winery in South Africa. As a result of its frozen assets, a major player was wiped off the market over night. The Bombay Stock Exchange delisted the company, and it went into liquidation in 2011.
The fall of Chateau Indage dragged many down. Some wineries may have been able to manage production under patronage, but had no marketing skills and ended up with excess stocks. Some of the wine was still in tanks or being recycled even in late 2014. The so-called wine parks near Sangli and Vinchur, set up under the Maharashtra Wine Policy, are now mostly deserted and depressing industrial graveyards. All this while, Sula pushed ahead with its ambitious growth and filled the vacuum, while Grover got on the slow burner trying to stay on its feet.
Other serious winery projects, such as Alpine Wineries, Fratelli Wines, Charosa Winery, Four Seasons, KRSMA, Vallonné Vineyards and SDU Winery, surfaced about this time. A new breed of winery owners appeared in the form of Indian industrialists and businessmen who combined a great passion for wine with deep pockets. They applied modern management practices to operating their wineries, imported cutting-edge technology and employed consultants from countries such as Australia, South Africa, France, Italy, Germany, the USA and the UK. A massive upgrade of know-how and capability was in silent progress within the Indian wine community.
Multinational drinks giants began to take an interest. As foreign corporations cannot buy agricultural land in India, they had to develop their individual groups of suppliers, who grew grapes to their technical specifications. Pernod Ricard set up Nine Hills, its winery operation, in 2005, and has since gradually increased production. Diageo launched the Nilaya brand in 2007, but was soon forced to exit the market. Moët Hennessy India launched Domain Chandon in 2014 after experimenting for years to ensure the same high quality as in Argentina, California and Australia.
Financial investors started to take an interest despite the apparent difficulties and challenges faced by the nascent Indian wine industry. Sula fuelled its development through investments from Reliance Capital and Verlinvest. Later, Ravi Viswanathan’s private equity fund from Singapore took to investing and is now a stakeholder in both Sula Vineyards and the merged Grover Zampa business. Diageo’s gradual acquisition of Vijay Mallya’s UB Group meant a change of ownership at the Four Seasons winery. Industry consolidation through mergers and acquisitions is firmly on the cards in the Indian wine industry as is the utilisation of excess production capacity, either through leasing and managing non-operational wineries, or in the shorter term, by buying up stocks from wineries unable to build a market presence to sell their own wines.
Négociants, or entrepreneurs with marketing and sales expertise, have shown an interest in Indian wine by setting up brands. They source wines from business-to-business wineries that make wines to clients’ specifications. Turning Point by Ashwin Deo was a pioneer in this field though it has remained modest in size, as is the case with Mandala Valley Wines and Fusion Wines as well. Myra Vineyards is a dynamically growing wine brand propelled by the ambitious ex-investment banker Ajay Shetty, while Soul Tree is a UK-headquartered Indian wine brand set up by two Indians who completed their mba in Oxford. Soul Tree focuses on the UK and other western markets with over 95 per cent of its sales in these regions, and it is the first winery in India, and one of the first in the world, to have raised capital through crowd funding.
As I write these lines in the summer of 2015, the Indian wine industry is still relatively small. Statistics can be unreliable, but the figures I have collected show that vineyards used for wine production in India cover approximately 2,331 hectares and produce 28,626,000 bottles per annum. In comparative terms, the vineyard area of all India accounts for only 1.94 per cent of Bordeaux’s vineyards. A look at productivity, however, reveals that Bordeaux produces approximately 5,883 bottles (44 hectolitres) per hectare, while in India the figure is 12,280 bottles (92 hectolitres) per hectare. I need to emphasise that these figures provide just broad guidelines as precise national data are shockingly difficult to obtain in India. Moreover, there are a number of premium producers with significantly lower yields (see pages X–Y).
Despite its small size, the Indian wine industry is becoming sufficiently diversified to make the leap when the government no longer blindly constrains national ambitions. The ailing igpb will need proper funding and an effective senior leadership team will need to work closely with all industry players. Success will hinge on legislation that ensures uniformity of treatment across all states of the Indian union as far as production and trade are concerned. It will, for example, have to simplify and rationalise national and state regulations as far as licensing, quality standards, supervision, promotion, taxation and excise are concerned. Recognising wine as a special alcoholic product needing separate treatment will be key to the industry’s development. In place should be institutional structures that operate efficiently. Much energy is currently lost because of cumbersome production and trading environments, whilst international recognition continues to grow with accolades earned at prestigious wine competitions, such as the Decanter World Wine Awards, the Decanter Asia Wine Awards, the International Wine Challenge and the Cathay Pacific Hong Kong International Wine & Spirits Competition.
The future for Indian wine is bright. Many wineries have proved their resilience despite the growing pains of the young industry. There is an ever increasing number of delicious wines to enjoy and breathtakingly beautiful regions to explore in India.