Henkell Allied JV Kicks off India Plans with vodka launch

Henkell & Sohnlein Sektkellereien KG Wiesbaden, Germany and Allied Blenders & Distillers Pvt. Ltd. which recently entered into a 50:50 Joint Venture with under the name of Henkell & Company India Pvt. Ltd. has launched WODKA GORBATSCHOW in India.

Commenting on the launch of WODKA GORBATSCHOW in India, Dr. Hans-Henning Wiegmann, Chairman and CEO of the Board of Directors, Henkell & Sohnlein said, "With the stupendous growth of the white spirits market in India in recent years, we recognized the tremendous opportunity that the market posed for a brand like WODKA GORBATSCHOW. Having achieved immense success in Germany, we believe that there is indeed no better time for WODKA GORBATSCHOW to tap the expanding Indian market than now. However we also realized that in order for WODKA GORBATSCHOW to make a serious impact on the Indian alcoholic beverages industry, we needed to gain access to a strong pan-India distribution network, which we have now achieved through our partnership with ABD."

WODKA GORBATSCHOW has been produced in Berlin since 1921 and is growing from strength to strength – both nationally as well as internationally. With a market share of over 20 per cent, it is Germany's leading brand of vodka and at the same time the third strongest performing spirits brand in Germany. The brand is now available in premium ranges at all leading licensed liquor stores in select Indian cities. Priced at Rs 570 for a 750 ml bottle, the brand is being locally bottled at its Aurangabad plant in Maharashtra.

Says Mr. Deepak Roy, Executive Vice Chairman and CEO, ABD: "Emerging markets have been the growth drivers behind the robust performance shown by international players in the alcoholic beverages space over the past 5 years. Having said that, we are privileged to partner with Henkell & Sohnlein, the blue chip in the premium alcohol beverages business worldwide. With such a booming economy, Indian consumers are increasingly connected to global trends and looking for new experiences, thus offering WODKA GORBATSCHOW significant potential. We are confident that Henkell's vast international expertise together with our excellent distribution network all across India will enable us to take the WODKA GORBATSCHOW brand to the discerning Indian customer who values excellence and nothing less than the highest standards of quality."

Spirited 'side business'

India Glycols has the largest captive distillery in Asia for manufacturing ethyl alcohol. Being the First and the only company in the world to produce Ethylene Oxide (EO) / Mono Ethylene Glycol (MEG) from renewable agro route based on molasses since 1989, India Glycols has emerged as a mega-player in the production of glycols and potable alcohol. But what many people do not know is that the company has a very active spirits division which is creating its own niche in the liquor industry. Ambrosia catches up with Mr IB Lal, President of the Spirits Division of India Glycols, to find out more.

The group has three manufacturing units-one is at Kashipur, Uttaranchal, which is basically a chemicals unit with a distillery attached to it.

"We are producing over 1400 lakh litres of alcohol per year as a raw material to the chemical and liquor industry. Out of this, 180 lakh litres is potable alcohol for supply of IMFL and country liquor", says Mr. Lal.

A Broad Stable
"In Uttaranchal, we are in the Country Liquor segment in a big way, supplying to the entire state. We sell around 60,000 cases under our own brand names", Mr. Lal explains. They are also into IMFL products, selling approximately between 20,000 to 25,000 cases in Uttaranchal which they intend to increase considerably.

"We have bottling tie-ups in other parts of the country i.e Rajasthan, Punjab and Kerala. We have done a tie-up in Karnataka as well and planning to start the operations very soon. We are also exploring possibilities in the state of Bihar", adds Mr. Lal.

The total sale of IMFL products is from two places, Kashipur and Gorakhpur in eastern UP. There the capacity of alcohol is 990 lakh litres per annum out of which 525 lakh litres is potable alcohol. "From here we supply Country Liquor and IMFL to UP. Country liquor sale is about 75,000 cases per month. In IMFL we have recently introduced our brands and are quite small presently because it's a very competitive market. We are selling about 15,000 cases per month and plan to have a reasonable share of the market in the coming years", says Mr. Lal.

Rising inflation hits the alcohol industry

The sub prime crisis triggered off a global recession and all stock markets to crash. As finance ministers muster their resources to stem the rot, captains of industry ponder as to how they can make their industry recession proof. Ambrosia collates the alcobev industry viewpoint.

While oil prices and food prices greatly impact inflation, which in turn ushers in recession, liquor marketers often debate whether the alcohol industry is recession proof. Global cues suggest that the downturn in the economy, so far, is not a big deterrent for consumers when purchasing alcohol on-premise. New research from Nielsen indicates that the declining economy has only a "mild impact" on consumers buying wine, beer and liquor at grocery and liquor stores, convenience stores, warehouse clubs and other stores.

India being a price sensitive market the alcohol industry also has to face the consequences of this economic slowdown. Not only has the industry to contend with weakening consumer sentiment but also a hike in raw material costs. A hike in the price of extra neutral alcohol (ENA), a key ingredient for IMFL has resulted into a significant price rise of many IMFL brands. As per report, many brands will have to hike their retail prices by at least Rs 10 a bottle.

It is a known fact that ENA, made from molasses and grain, constitutes 35-40 percent of the IMFL industry. ENA is produced by fermentation followed by distillation of molasses. And the concerning fact is that in last few months; the price of ENA has gone up by 25 per cent. Even if some companies refrain from increasing the prices of their products, a hike in the price of 150 million cases in the spirits market would mean that consumers collectively will have to shell out an extra Rs 100 crores this year.

UB group, the largest spirit manufacturer with a strong portfolio of brands such as Bagpiper, McDowell, Royal Challenge and Signature, feels that the current rise in the price of ENA can be absorbed. V K Rekhi, who heads the spirit business of UB GROUP, opines that, "The ENA price was high during 2006-07 and it fell last year but again returned to 2006-07 level." He said the retail price went up in the year 2006-07 and his company can maintain the same price level in the current year too.

Orley's Formula

Can a mathematical equation help identify wines that actually taste good? To some extent, 'yes', says, Orley Ashenfelter, the US based economist.

Wine quality = 12.145 + 0.00117 winter rainfall + 0.0614 average growing season temperature – 0.00386 harvest rainfall. This formula may sound familiar to the wine critics and wine enthusiasts. This is the work of Orley Ashenfelter, the economist from Princeton, US who is well-known for using numbers to assess the quality of Bordeaux wines and he speaks more on this exclusively to Ambrosia.

While browsing through a recently released book called "Super Crunchers" by Ian Ayres, I came across Orley's elaborative use of statistics to find out what characteristics of vintage are associated with higher or lower auction prices. An economist by profession, for years he has edited the leading economics journal in the US- the American Economic Review.

Let's get into a little detail about Orley's formula.

Based on the above formula and by plugging the weather statistics for any year into this equation, one can predict the general quality of any vintage, stated Orley. With a slightly fancier equation, he can make more precise predictions for the vintage quality at more than 10 Chateaus. "It may seem a bit mathematical," he acknowledges, "but this is exactly the way the French ranked their vineyards back in the famous 1855 classifications".

As mentioned in the book, traditional wine critics have not embraced Orley Ashenfelter's data-driven predictions. Britain's Wine magazine said "the formula's self-evident silliness invite(s) disrespect. "William Sokolin, a New York wine merchant, said the Bordeaux wine industry's view of Ashenfelter's work ranges "somewhere between violent and hysterical." At times, he's been scorned by trade members. When Ashenfelter gave a wine presentation at Christie's Wine Department, dealers in the back openly hissed at his presentation.

Robert Parker called Orley "an absolute total sham." Even though Orley is one of the most respected quantitative economists in the world, to Parker his approach "is really a Neanderthal way of looking at wine. It's so absurd as to be launchable." Parker dismissed the possibility that a mathematical equation could help identify wines that actually taste good: "I'd hate to be invited to his house to drink wine."

Parker said Ashenfelter "Is rather like a movie critic who never goes to see the movie but tells you how good it is based on the actors and the director."

Though he has a point, the problem was how to taste a wine before its time?

InBev Acquires Budweiser – Change of equation worldwide

The deal is historic and a win-win for both because of the limited overlap of Anheuser's and InBev's markets says Dr. Mohan Krishna and adds, the two companies already share some ties. InBev distributes Budweiser in Canada, and Anheuser imports InBev beers like Bass. Interestingly, in 2006, InBev sold its Rolling Rock brand to Anheuser-Busch for $82 million.

Nothing says 'I am American' more than cracking an ice cold Budweiser or Bud light-the Great American Lager! Hot dogs, apple pie, and Route 66 rank high as emblems of American culture. Some might say that brands associated with them-Oscar Mayer, Sara Lee, and Chevrolet are no less representative of America's national identity. As well "Bud", but what happens when a beloved US brand is acquired by a foreign company? The height of consumer patriotism… "The Anheuser-Busch brand has a lot to do with American culture and American life".

The Belgian-Brazilian brewer InBev has just secured its biggest deal to-date: the $52 billion (£26bn) takeover of America's iconic beer-maker Anheuser-Busch. At $ 52 billion, the value of InBev's offer for Anheuser, the maker of Budweiser beer, is the new champion of all-cash deals, topping Cingular Wireless's $40.8 billion purchase of AT&T Wireless in 2004.

Not surprisingly, some of the biggest all-cash bids were made by groups of private equity firms during the height of the recent buyout boom. There was a consortium including Providence Equity Partners and Madison Dearborn that bid for BCE, the parent of Bell Canada, and the group led by Kohlberg Kravis Roberts and TPG that bought TXU, the big Texas utility company.

With InBev winning its battle for Anheuser-Busch, Yahoo bashing the latest offer from Microsoft and Waste Management making an unsolicited run at rival Republic Services, it may seem as if unsolicited and hostile deals are on the rise.

The all-cash deal, for $ 52 bn at $ 70 a share created the world's largest brewer, uniting the maker of Budweiser and Michelob with the producer of Stella Artois, Bass and Brahma. Together, the two companies would have sales of more than $36 billion a year, surpassing SABMiller of London.

A Bittersweet Crisis

A shortfall in molasses production and rising inflation are pushing the Indian spirits manufacturers towards hard times during which much re-thinking will be taking place. That's the situation which the All-India Distiller's Association is looking to contend with. But even with the rough weather, AIDA President Devin Narang assures that the impact on demand will be minimal, with the industry itself having to soften the blows.

The situation with sugarcane & molasses production currently….

The sugar/alcohol season 2008-09 commencing from 1st November 2008 to 31st October, 2009 is going to be a season of further short-fall in production of sugar and molasses. Therefore the production of alcohol will also be comparatively much lower than the last year 2007-08 which was already lower than the production during the earlier year 2006-07. The estimated production of sugar, molasses and alcohol for this season of 2008-09 is: Sugar-22.5 M.T; Molasses-10.0 M.T. & Alcohol -2250 million litres.

Sugarcane and molasses production are already low, despite increasing demand. As it is, the molasses production scenario is weak. In 2007-08, alcohol production from molasses was roughly 2,632 million litres as against a demand of 2,810 million litres. That's a shortfall of over 177 million litres.

Macau's wine connection

Situated on the south coast of China, Macau (Macao) is almost directly opposite to Hong Kong. It is the oldest European settlement in the Far East. However, in spite of its proximity to the Mainland China, the place has a strong connection to its European root, especially Portuguese culture and wine, says, Celia Cheng.

Wine culture and development is impervious to changing political climate. This could be absolutely applicable to Macau from the days of colonial reign of Portugal till its return to the control of Mainland China in 1997. Even as a colonial city, life and culture of the people is deeply rooted to Macau including its wine and food aspects.

As described by local people of Macau, it all started during the Portugal dynasty. When I visited a local Chinese at Macau, I was amazed to see his father's wine and food preferences. The cooking included a typical Portuguese cooking method, with popular Portuguese sauce, strong flavour and taste etc. And the reason behind this is the impact of Chinese official on Macau government. When they interacted with authorities and working levels of Portuguese on daily base, Chinese people learnt a lot out of the Portuguese style of living. Gradually, they spread out the living culture to all Chinese in Macau by generations quickly. This phenomenon was also explained by my friend's father who was an intermediate official working for Macau government during colonial days. Instead of a Chinese culture of living, it is Portuguese which is strongly rooted in Macau.

Why US Barred The Tuscan King?

Brunello di Montalcino wines, also known as the Tuscan King, got into controversy earlier this year on the grounds of quality and US blocked its shipments of the 2003 vintage. Subhash Arora found out more about this during his recent trip to Montalcino region in Italy.

Top three varietals red wines Italy can boast of are Barolo, Barbaresco and Brunello di Montalcino. While the first two are produced from the indigenous grape Nebbiolo, Brunello as the name suggests, is made from the grape known as Brunello, in Montalcino and is the king of Tuscan wines. Unfortunately, the real Brunello got into a controversy and US blocked its shipments of the 2003 vintage a couple of months ago on the grounds that the wine contained some other grape varieties as well. More than four Montalcino wineries including Antinori and the American owned Banfi were implicated in the probe.

According to the strict rules of the appellation, 100% Sangiovese from the designated and approved vineyards can only be used. The yield must be less than 8 tonnes a hectare from 25 year old vines and after a minimum aging of 2 years in oak casks, the bottling must take place within the production area.

During inspection last year it was discovered that 17 h/A of about 2000 h/A designated Brunello vineyards were growing grapes other than Sangiovese, including Cabernet and Merlot giving rise to the speculation that the exported wines had used small quantity of unauthorised grapes. The magistrate of Siena seized a million liter of wine pending investigations for fraud. Getting a wind of this the US authorities had blocked the imports and threatened to ban the import.

However, earlier this month an accord was reached between the two countries and the issue seems to have been amicably resolved. As a part of the agreement, the inspection certificates for all Brunello shipments to the USA will be issued by the Florence-based agency of the Agriculture Ministry that monitors food quality and the US will allow all the unclear shipments.

Tipplers Sign

Ever wondered why some people are at their worst after few drinks where as some are at their best even after gulping down bottles of alcohol. It is interestingly true that the after drinks behaviour of a person could be judged through his sun sign.

Your sunsign can determine how you would behave after getting drunk. Which means you can also predict your drunken friend's behaviour. Exciting enough is not it?

Impulsive Aries: Drinking style of the impulsive Aries is predictable. They like to party and sometimes don't know when to call it a night. Their competitive streak makes them prone to closing-time shot contests. They're sloppy, fun drunks, and they get mighty flirty after a couple tipples. Getting Aries people drunk is a good way to get what you want out of them, should other methods fail. Aries can become bellicose when blotto, but they will assume that whatever happened should be forgiven (if not forgotten) by sunrise. They can be counted on to do the same for you so long as you haven't gone and done anything really horrible to them last night, you sneaky Gemini.

Squiffy Taurus: Taurus prefers to drink at a leisurely pace, aiming for a mellow glow rather than a full-on zonks. Since a truly intoxicated Taurus is one-person stampede, the kind of bull-in-a-china-shop inebriate who spills red wine on white carpets and tells fart jokes to employers, the preference for wining and dining (or Bud and buddies) to body shots and barfing is quite fortunate for the rest of us. This is not to say that the Bull is by any means a teetotaler. A squiffy Taurus will get, er, gregarious (full of loud mouth soup, some would say) and is extremely amusing to drag to a karaoke bar when intoxicated.

Current Delhi Rage: F Bar & Lounge

New Delhi's latest elite hangout finds place in Ambrosia

Saturday evening, closer to midnight bordering on Sunday morning, surrounded with Delhi's young and fashionable, during a lull in the loud music I heard the next table babe in little black dress declare – 'let us go to F Bar. My friends are there and say it is much more happening.'

Nothing unusual in that for bar hopping is a serious job with the young and happening crowd anywhere in the world. However, this babe and her coterie was the variety that could make any place 'happening' and if she wanted to move from this five star hotel's watering hole where the music, crowd, bar… everything seemed fairly pulsating with life, to yet another place, definitely F Bar & Lounge had to be checked out!

FTV's launch of 'F Bar & Lounge' in Delhi happened exactly five months back (in February 2008). The venue is Ashok Hotel – the most lavishly spread impressive and imposing hotel property in Delhi's prime area where all the embassies are located. Right at the launch Bharat Sheth, COO of Fashion TV had declared, 'All our F Bars and lounge are an extension of the channel's cutting edge persona and brand mix. It is a blend of style, fashion and luxury, spiked with true blue class.'

So, no grungy or ill dressed people can be seen here and the classy labels of clothes, shoes, style statements, accessories are taken as de rigour rather than exception.

The Unusual Décor

The L-shaped venue is spread over many split levels that add to the mystique of the place. Metallic hues with optic fibre lighting, mixed with the same on the walls and on the floor make for very intelligent lighting solutions to a place such as this. Even the astute use of the same in optic fibre, ever changing curtain style hung from ceiling ending at different levels rows make the ever changing shades of crimson to green or a blue rather mesmerising.