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2008
   
 

Past Issue: March 2009

 
 

In this Issue:

 
Deepening Crisis?
Famous Grouse soars on high Scotch Sales
John Distilleries seek good brands to drive growth
NV Distilleries: Journey to the top
Amarula - The Spirit of Africa
Japanese Firms Brewing inroads in Australia
Know your Wine Quotient (Wine Quiz)
Hong Kong Says 'Kampai' To Sake
An ode to good old whisky
VINITALY - It's business as usual
Hard Drinks for Hard Times!
Alcoholic beverages output and consumption on the rise
Encounter with Next Vintage

 
 
 
 

Deepening Crisis?

"In wine there is wisdom, in beer there is freedom, in water there is bacteria"
                                                                                                           - Ben Franklin

On a more serious note, the latest IMF report reveals that the world economy is set to wither for the first time in 60 years, as the deepening financial crisis would lead to the global GDP shrinking up to 1 per cent in 2009.

The need of the hour is a more sustained and concerted policy action which will help revive the growth in the economy across the globe. According to Forbes analysis, there are few countries that are in much better position than others who have the ability to rebound from the current depression by attracting entrepreneurs, investors and service sector. The Fourth Annual Best Countries for Business ranking which looks at business conditions in 127 economies has ranked Denmark as the number one country followed by the U.S., Canada while Singapore is rated at No. 4 with New Zealand positioned at No. 5.

In such a scenario, India is experiencing a new phenomenon where we are heading towards negative inflation with a near-zero level of 0.44 per cent at present. For Countries like Japan and China already too much of water have flown under the bridge. Among the sectors that have a ray of hope to continue doing well in business include food & beverages and allied industries.

Though we continue to believe that alcohol industry is recession proof, the impact of slowdown might affect the business as usual to some extent. While the premium spirits segment is already hit with a drop in sales, due to the peculiar taxation system, wine industry has been badly affected this year calling for corrective measures at state as well as central level. Beer industry is still assessing the situation.

Coming to this issue of Ambrosia, we have tried to capture the essence of the alcobev market around the globe through the articles based on latest developments in major markets like Europe and Australia. We have interviewed few industry stalwarts and featured some interesting wine and beer articles in the current issue.

Cheers & Happy Reading!!!

- Rojita Tiwari

 

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Famous Grouse soars on high Scotch Sales

Scotch in recent times seems to have become the toast of tipplers. Not only has demand risen but it has fuelled expansion programmes back home in Scotland to meet the growing demand. According to Gerry O'Donnell, director of Famous Grouse, Geoff Kirk, Group Area Director (Southeast Asia, Africa and Indian subcontinent) and Paramjit Singh, Director, India and Area Countries, India is arguably one of the most prospective global markets to make their brands more famous.

Excerpts: Exports, which account for around 90 per cent of scotch production, rose across most regions in the world for tipples such as Johnnie Walker, Chivas Regal and Famous Grouse, with the U.S still the biggest market by value and France by volume. Now Famous Grouse hoping it will repeat its whisky story in India. Arguably one of the biggest whisky markets Scotch whisky is yet to make inroads in the Indian market on account of high duties and stiff government regulations. Says Gerry O'Donnell, director of Famous Grouse: "We are talking to the federal and state governments to rationalize the taxes and are hopeful in persuading them to do so like we did in China. It's ultimately going to be beneficial to the Indian consumer." China is another prospective market for Famous Grouse where the taxation is much lower. But the economic slowdown not withstanding, Famous Grouse is determined to ride on the growing demand for Scotch worldwide. Scotch whisky exports hit a record in 2007 with the value of one of Scotland's most famous exports up 14 per cent at 2.8billion pounds ($5.6 billion), earning Britain 90 pounds a second and industry figures showed.

Scotch volumes also hit a historic high last year, up 8 per cent with some 1.135 billion bottles of Scotch whisky shipped overseas, according to figures from the Scotch Whisky Association published recently. This year's figures likely to be published in the next two months should see the impact of the recession.

 

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John Distilleries seek good brands to drive growth

John Distilleries Limited seems to be making all the right moves. The company now would like to consolidate its position in the Indian market. Paul John, in a chat with Ambrosia outlines the company's growth plans for the near future.

Excerpts: For John Paul to be among the top five liquor companies in the Indian market with just one brand and that too with only a strong position in the South is commendable. But now the company is changing tracks. There is a feeling the company is changing course to move ahead. But there is no due haste. Each move is being deliberated and John Paul would prefer to bide his time before making his moves. The company has recently taken over Chitali Distillery Ltd. for Rs.30 crores and will probably spend another Rs. 25 to 30 crores probably for revamping says Paul John. We have got a one lakh litre per day license for production the current capacity is 50,000 klpd. We also have the option to add one lakh klpd additional and will be adding that capacity for the new plant we are commissioning, he points out.

Although market sources may suggest that the price was high, Paul John is confident it was the right price. It depends on how you look at it since I am backward integrating, I can afford to pay more than what anybody else would be. Currently my spirits requirement per month is 40 lakh litres and this will probably cater to 20% of my current requirement. So I won't be looking at selling excess capacity outside. As you are aware, we are currently bottling at Brihans and soon we will plan to bottle our product. Probably by next month or so we should be able to start IMFL production. We have almost completed the bottling line, and the modifications of tanks and other related changes have been made.

 

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NV Distilleries: Journey to the top

It's been a long but successful journey for NV Distilleries. Sitting in his plush office in the heart of New Delhi, Ashok Jain, Chairman, NV Group, comes across as a man who's worked his way to the top and yet wants to go the distance. Amitabh Joshi, spoke to him to get the inside story on the NV Group's operations and expansion plans.

Excerpts: If you had to define grit and success, ask Mr. Ashok Jain, the pioneer of NV Distilleries. "I started my liquor career in 1972 as a retailer with only one shop in Gurgaon. The following year I had three shops, the next year we were a syndicate owning the entire Gurgaon area with a few partners. Then I took up a wholesale license in Gurgaon". From thereon his liquor career started moving up. He took up a bottling plant in Gurgaon and then shifted to Delhi. They started their liquor business in Delhi as Shaw Wallace agents. "I never looked back after that and took up a bottling license in Punjab followed by a bottling license in Goa and Chandigarh", says Mr. Jain.

In the Goa unit, they're producing Bacardi Breezer RTD, the only ones in India doing that. After that came a full-fledged distillery in Ambala district, Haryana and a full-fledged distillery in Aurangabad, Maharashtra (in a tie-up with Radico). The units manufacture alcoholic spirit (ENA), country liquor & IMFL and run mega bottling operations. The distillery in Haryana has production facilities for a capacity of about 60 lakh Cases (country Liquor) and 36 lakh Cases (IMFL), respectively. The cost of the project is estimated at Rs. 139 crores.

 

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Amarula - The Spirit of Africa

Aspri Spirits, the premium alcobev importer and distributor in India has registered a robust growth since its inception. Despite being young in comparison to the other companies who have spent decades in this field, Aspri has always maintained a more than 100 per cent growth.

Excerpts: Amarula Cream, the award winning liqueur brand from Africa saw its entry in India recently. An indigenous cream that embodies the African mystique, Amarula is the second largest selling cream liqueur worldwide. It is a major South African International liqueur brand exported to more than 80 countries. This sensuous liqueur is created by handpicking the marula, a sweet luscious and decadent fruit which grows under the baking South African Sun, distilling it first in column stills and then in copper potstills and blending it with rich cream.

The result is a luscious liquid that teases the taste buds with chocolate, vanilla, coffee, citrus and exotic spices. Man and animals alike have both been drawn to this fruit for centuries. Elephants traipse over plains to indulge in it and man has used it for everything from jams to aphrodisiacs. For decades people have tried to turn this fruit into a commercially viable beverage but none were successful until Amarula.

Somehow no matter where you drink this African spirit, it will transport you to a world where the moment is paramount, where the senses are awed and where there is a slow passing of time. It was launched in 1983 as a clear spirit and in 1989 as Amarula Cream.

 

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Japanese Firms Brewing inroads in Australia

In the space of 6 months, Japanese alcohol and non-alcohol beverage manufacturers have made aggressive merger and acquisition deals on the dairy and beverage industry in Australia and New Zealand.

Excerpts: Despite the economic crisis and a pessimistic outlook for 2009, major Japanese companies such as Kirin, Suntory and Asahi breweries have made billion dollar deals in search for potential growth markets in the Asia-Oceania region. The declining birthrate and an aging population in Japan have been a reoccurring theme in Japan with regards to the country's future economic growth. Once highly lucrative markets, such as the beer and alcoholic beverage industry in Japan has been severely effected by an aging demographic, whom have changed and diversified their drinking habits to incorporate more than just beer, acknowledged until recently as Japan's most popular alcoholic beverage.

 

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Know your Wine Quotient (Wine Quiz)

We would like to thank you for your overwhelming response to the Wine Quiz which featured in the February issue. We look forward to your participation and response to the Vin-IQ quiz in the coming months as well.

The right match for the February Quiz is: (1-D/2- A/3-F/4-B/5-C/6-E). The Winners for the month of February are Philippe Thomas & Abhijit Roy Sarkar from New Delhi. Congratulations! Do share your feedback on the wines that you would receive in your hamper - shortly. To make the Quiz for this month more interesting and informative, this month's quiz centers around the wines which epitomise celebrations and romance the Sparkling wines of the World. From Champagne to Moscato to Prosecco varied names, varied characteristics and varied touch on the palate but the effervescence lives on in some cases for as long as 50 years!!

 

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Hong Kong Says 'Kampai' To Sake

Popularity of Sake is not restricted to only Japan. Places like Hong Kong are also waking up to Sake drinking these days. Kampai (cheers) to sake. Celia Cheng finds out more about this new trend.

Excerpts: Off late, a drink that has well represented Japan in the international alcobev market is Sake. The increasing popularity of Sake is as interesting a case study as the development of wine market in different parts of the world. Like the quality of grape (depends on the method, location, and climate) which determines the soul of wine, the quality of rice determines the soul of Sake. Rice is specially adopted as a meal in eastern countries over thousand of years; on the other hand, steak and seafood, spaghetti and salad are major food items in western countries. Considering the ample availability and the importance of rice, Japanese have taken professional care to plant and produce high quality rice. For the same rule, great quality rice produces unique taste of sake which is getting more popular in Japan and over other countries.

 

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An ode to good old whisky

India is a whisky market and although Scotch has not seen the growth it would have envisaged in India on account of the high taxes, the segment will continue to be a favourite tipple.

History is not clear when the first Scotch whisky was distilled but "uisge beatha" or the water of life, as it is popularly known has become the toast of the world. While the Scots lay claim to the earliest recorded history of distilling in the world the Christian missionary monks from Ireland showed the natives how to distill it as a medicinal drink. Although there is no proof that the Highland farmers' themselves developed an appropriate procedure to produce it. The earliest historical reference to it dates from 1494 but it was in September 1506 that production was on a very small scale by farmers, monasteries and privately at home. All whisky at this point was made from germinated barley, which was dried over a peat fire making the mixture of barley and water "malted". The more peaty water could be used the stronger was the smell of the whisky capturing the aromas of the vast peat bogs that existed throughout the Highlands and islands.

Therefore the Lowland malt whiskies were and are generally lighter than their Highland counterparts and more uniform in flavour. It was drunk at home much like we enjoy tea or coffee today - three times a day, and was considered medicinal as much as anything else. It was believed to preserve health, prolong life, and relieve colic, palsy, and smallpox.

Over the centuries, the Scots have perfected the art of distilling, using elements so abundantly provided for them by nature - barley and the peaty water of their burns flowing down from the hills and mountains. No wonder that, throughout the centuries, whisky has become an essential part of Scotland's history, traditions and culture. Unlike today whisky didn't get old in these times. It was drunk immediately or soon after the production so the spirit must have been rather harsh. Tradition has it that someone found a barrel of whisky that had been left accidentally for a long period, and noticed that the flavour had mellowed, and the whisky attained a pale golden colour thus creating the basis for today's stringent requirements for an excellent "aquavit".

 

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VINITALY -It's business as usual

Vinitaly in 2008 saw 157 thousand specialist visitors, of whom 43 thousand from 110 countries. The latter included 49% wholesalers, importers/exporters and agents, while 35% represented large-scale distribution, retail sales and the horeca channel. This year should see expanded and rationalised facilities in response to growing demand among exhibitors. A major tasting presented by Jancis Robinson will also see Gaja celebrate 150 years of its history exclusively at Vinitaly.

Vinitaly starting from 2-6 April 2009 is now in its 43rd edition. The event confirms its international capacity to create a system of initiatives and events that over time have transformed the exhibition of wines and spirits from a simple showcase into a network of contacts between trade operators. With competitions, tasting, internet services for B2B meetings, seminars focusing on consumers and new markets and the huge trade offering (which also includes spirits) have seen the Exhibition successfully combine business with product promotion and company training.

 

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Hard Drinks for Hard Times!

Alcoholic beverages are withstanding the economic slowdown very well, compared to other categories that might be considered indulgent. To many consumers, alcoholic beverages are an affordable luxury says Dr. Mohan Krishna.

Excerpts: What do people do for fun during a recession? They certainly aren't buying cars and eating out. Whether the drink is whisky, brandy, rum or vodka, chances are consumption hasn't fallen with the economy. Alcohol is not totally recession proof, but we can call it recession resistant. The impact of the economy was probably most noticeable on premium products that indicate some shifting as people try and stretch their buck.

The numbers of customers are up slightly from a year ago, but they're buying fewer or low-value drinks. They seem to be changing their buying habits for a budget adjustment. Customers are talking about staying home and entertaining rather than going out for the holidays.

 

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Alcoholic beverages output and consumption on the rise

A dominant producer of alcohol in the South-East Asian region with 65 per cent of the total share, India contributes to around seven per cent of the total alcohol beverage imports into the region. More than two-thirds of the total beverage alcohol consumption within the region is in India, according to figures supplied by Alcohol Atlas of India.

Excerpts: There has been a steady increase in the production of alcohol in the country, with the production doubling from 887.2 million litres in 1992-93 to 1,654 million litres in 1999-2000 and was expected to triple to 2300 million litres by 2007-08. The consumption is two litres per person per year.

However, though the overall consumption is low, patterns of alcohol consumption vary throughout the country. Punjab, Andhra Pradesh, Karnataka, Goa and Northeastern states have much higher proportion of alcohol consumption in the country. A substantial portion of family income is spent on alcohol, more so in rural households, which also tend to be poor, and marginalised (32 per cent urban and 24 per cent rural).

 

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Encounter with Next Vintage

The world of wine is charming, eclectic, challenging and enigmatic. It is expected to be consistent yet bound by changes brought by nature in the vineyard.

Excerpts: When the week long exercise in Italy's three appellations, Chianti Classico, Vino Nobile di Montepulciano, and Brunello di Montalcino was experienced at one level it was intimidating in sheer scale of numbers of wines showcased, on the other, it was an exceptional chance to taste, compare, nodding with admiration and share notes with more knowledgeable people who have done this exercise for far longer. It is at these showcasing that wine analysts and experts decide the stars for a vintage, the points are granted by professionals that make or break a label. Technical aspects of a vintage are declared in advance as the year's rainfall and heat, cold and snow, winds and pickings have already been documented and dictated a major part of it but then come the human endeavour, the technical effort exercised in the winery where the winemaker, the oenologist, decides when to bottle, how much longer to leave it in oak, how to balance the flavours and aromas to bring out individuality of the winemaker in your glass.

Chianti Classico Collection

Firenze (Florence) over two days had 358 labels in addition to the Anteprima Chianti Classico 2008 barrel samples from 70 wine makers. The 358 labels were further segmented under 'Chianti Classico DOCG 2007' (with many barrel samples as these wines are yet coming to maturity before bottling as decided by individual wine makers), 'Chianti Classico DOCG 2006 (with fewer than earlier segment but nevertheless some barrel samples). We went on to Chianti Classico DOCG 2005, 2004 and Riservas of 2007 (of course only barrel samples), 2006 (quite a few barrel samples again), 2005 (barely 3 barrel samples with over 50 labels in the category) and 2004 (of course no barrel sample here). Then there were two labels under 2003 and one of Il Poggiolino under year 2001.

 

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