INDIA BUSINESS WORLD - March 16th - March 31st - 2008
INDIA’S LARGEST WINE MAKER CHAMPAGNE INDAGE BUYS AUSTRALIAN VINTAGE’S LOXTON WINERY
INDIA’S largest wine maker Champagne Indage has acquired Australian Vintage’s Loxton winery for Rs 225 crore. The acquisition of the winery would increase Champagne Indage’s total production capacity from 32 million litres (3.5 million cases) to 122 million litres (13.5 million cases) per year. The deal will also allow the company to enter wider price points within Australia as well as major markets of Australian wine such as the UK, Europe, US and India.
Ranjit S Chougule, managing director, Champagne Indage said, “The acquisition will drive greater value to key stakeholders including end consumers, and partners of Champagne Indage. With an existing market share of 75%, the purchase of Loxton is meant to be a part of our larger strategy of going global.”
Loxton winery, located in Riverland, South Australia is the fifthlargest and a modern winery in Australia. It has an annual crushing capacity of over 80,000 tonne and an annual capacity of 90 million litres.
The Indian wine industry has witnessed a compounded annual growth rate (CAGR) of over 25% in the past three years in the premium wine segment mainly fuelled by the strong growth in the domestic wine consumption. Key raw materials such as grapes, bottles, and corks account for approximately 20% of the total costs and are higher than the international norms.
Currently, the industry is dominated by three players viz Indage, Sula wines and Grover wines and enjoys more than 90% of the total market share.
The company made a similar Australian acquisition by buying out Thachi wines 12 months back which will earn the company 10 million Australian dollars in revenues and profits of 100,000 Australian dollars within the first year of operations. The Thachi brands include — Broken Earth, Red Skies and South Bay that are being rolled out across the globe including India.
Champagne Indage is India’s largest and oldest wine company established in 1982. With vineyards spread over 2500 acres, CIL has its facilities in Narayangaon, Nasik and Himachal Pradesh. The company is also exporting wine 69 countries across the globe. The fortunes of the Indian wine industry are linked to the trend in the changing drinking habits of Indians, higher disposable incomes, growth in the foreign tourists, and government regulations and policies, industry analyst said.
The Indian wineries have planned expansions to meet the increasing demand. There is a strong growth in the imported wine market with Indian companies importing hundreds of brands from countries like Australia, US to Bulgaria. Some of the well-known wine producers are also present in India like Moet and Hennessey, E&J Gallo and HWWG.
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