RED HERRING PROSPECTUS Dated August 24 ... - Globus Spirits

groups in urban areas. IMFL is consumed by the middle and high income groups, primarily in
urban areas.
As was found to be the case with beer; so it is with whisky. Increasingly more and more of the
major international liquor companies are introducing new brands in India through local joint
venture arrangements. These include the following new whisky brands:
• Allied Domeq with Clan Morgan & Co to produce Teachers Brand Scotch Whiskies.
• IDV (Grand Met.) with Polychem Limited to produce Spey Royal Scotch Whiskey.
• United distillers with U.B.Group to produce Black & White, Blend 69, Black Dog & Vat 69.
• Seagram with Seagram India to produce Something Special, 100 Pipers Scotch Whiskey.
• McDonald & Muir with Mohan Meakins to produce Highland Queen Scotch Whiskey.
• White spirits are considered by many observers to be the next major growth sector.
(Source: Ministry of Food Processing Industries, Government of India;
http://mofpi.nic.in/industryspecificinformation)
Wine
It is only very recently that wine has begun to be produced on a significant scale in India. Its
production takes place in both the organised and the household sectors. Sparkling wine is also
manufactured in India. However, this is intended for the export market and the volumes
involved are small. (Source: Ministry of Food Processing Industries, Government of India;
http://mofpi.nic.in/industryspecificinformation)
In growth terms an IWSR Report, 2006, noted that the wine industry in India was growing at
25-30% annually as compared to the 7-8% growth in China and 2-3% worldwide. Across India,
out-of home consumption is on the rise, which is important for the wine industry. Pubs, bars,
restaurants and five-star hotels are the primary wine selling outlets with 63% of sales volume
coming from these channels.
But compared to the rest of Asia, the percentage of wine consumption in India is still low. IWSR
2006 reported that ‘India accounted for 0.8% of the total wine consumption in Asia as compared
to China, which accounts for more than 62.7% market share’. More than 80% consumption
remains confine to metros – Mumbai 39%, Delhi 23%, Bangalore 9% and Goa 9%.
Market Characteristics
• Preference for brown spirits (molasses flavour) in Indian market
• Liquor packed in 180, 375, 500, 750 and 1000 ML bottles - glass and plastic bottles. 180 ML
and 750 ML are fast moving
• Guala caps on bottles to prevent bootlegging
• Brand building very important
• Yet avenues limited - advertising of liquor banned in most media
• Promotions, sponsorships, surrogate advertising (sometimes) done to build brands
State Specific Business
a) India is marked with state-specific business situation, which is most unlikely to change
rapidly, or in the medium-term, and possibly not at all, because:
b) Liquor is a vital element in each state’s revenue.
c) The states strongly resist Central Government dictated changes.
d) There is a strong philosophical and/or religious hostility to alcohol among many states’
voters.
e) In 1995, Andhra Pradesh voted in a government that promised and enforced prohibition and
very cheap rice. By end 1996, it was bankrupt and lifted prohibition in mid 1997. Haryana
also enforced prohibition from July 1996, but abandoned it in April 1998. Criminality boomed
in these periods.
f) Changing laws or reducing taxes on alcohol is never a vote winner; and is, therefore,
avoided.
g) Most states raised liquor taxes from 1994 onwards, with a pause in 1995, but 1997 saw
more increases, particularly in the key Maharashtra market, where the state claimed to have
increased its revenue from alcohol in 1997. Since then Maharashtra has taken a more
moderate view in order to conserve revenue.
(Source: The IWSR 2006 Report; Date of Publication March 2006)
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