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Purvita Chatterjee

The company estimates a minimum investment requirement of $3 million to set up a wine business here.

Mumbai , Dec. 8

LEVERAGING Rabobank International's global clientele, Rabo India Finance Pvt Ltd, its subsidiary, is looking at offering advisory services to joint ventures in the wine industry. "We should be finalising our clients very soon for the wine industry in India," stated Mr Arend Heijbroek, Global Wine and Spirits Expert, Rabobank International.

Considering the fragmented nature of the Indian wine industry, Mr Heijbroek suggested target marketing for this niche segment. "At the moment we are offering free advice, but expect to offer advisory services for joint ventures in India," he said.

Rabo India estimates a minimum investment requirement of $3 million to set up a wine business here. This would include the cost of the wine-making machinery and vineyards required for setting up the winery.

"We would help our clients to look at export opportunities and marketing the wines at restaurants abroad as well," he said.

Explaining the impediments to the growth of the wine industry in India, Ms Sonal Shah, Head, Strategic Advisory, Food and Agribusiness, Rabo India Finance, said, "The regulatory environment for the wine industry continues to be complex. The entire cost structure is prohibitive for the wine industry in India and this mainly constitutes the steep duty structure."

Estimating the wine industry's size at Rs 100 crore, Rabo India expects growth to hover between 25 and 30 per cent this year. The total number of wine bottles consumed in India is expected to be less than that manufactured by an average wine company in the new world countries, according to Mr Heijbroek.

However, India continues to be a potential market for wine manufacturers. "The domestic wine market will grow. The wine industry, however, is a capital-intensive one with long gestation periods of three-four years," observed Mr Heijbroek. Rabobank International has already prepared a global report on the wine business in which India does not feature. "We are in the process of updating this report with an India-specific section," Ms Shah said.

The wine industry in India currently comprises players such as Champagne Indage, Grover's and Sula Wines. "Demand continues to be the main constraint and Indians still do not want to shift from consuming spirits and beer," Mr Heijbroek said. Observing the wine consumption patterns across the world, Mr Heijbroek added, "Consumers rarely want to move away from traditional beverages in their own countries. Besides wine is always more expensive than alcohol and is perceived as a lifestyle drink."

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