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Diageo to exit Indian domestic Wine business?

Diageo India is pulling out of Indian wine market by taking its only wine brand Nilaya off the retail shelves as it wants to
stabilise the domestic operations with locally bottled brands such as Shark Tooth vodka, Smirnoff vodka, Haig scotch whisky and the import business of Johnnie Walker, said sources close to the development.

A source said that the decision followed the sharp decline of the Indian wine market and the appointment of a new management team at the company. Recently, Roland Abella took charge as Diageo’s India head, replacing Asif Adil.

Diageo, the world’s No 1 spirit company, has communicated the decision to its wholesalers, said another source. “The company does not want to focus on slow moving brands, and instead intends to pump in resources to develop Shark Tooth, Smirnoff and Haig,” he added. Diageo has not made any official statement about it’s wine business.
Diageo had entered the Indian wine market with much fanfare in November 2007, when the industry growth rate was at an unprecedented peak of 30%. But, the market began shrinking in 2008 in the wake of the global economic slowdown.

It sells wine under the Nilaya brand in India. Priced at Rs 400-500 a bottle, the wine is produced at Mountain View and Renaissance breweries in Nashik. Nilaya, which sold less than 15,000 cases last year, could not make it big in the Indian market, even when the industry sold over one million cases last year. The market shrank this year to below 900,000 cases. The size of the market is estimated at around Rs 400 crore.

The sustained growth rate of the Indian wine market, that lasted for several years till 2008, has lured most global wine majors like Moet Hennessy, Veuve Cliquet and E&J Gallo to set up in India. Seagram had moved a step further by setting up its own winery in Nashik to sell wine under the Nine Hills brand.

Not to be left behind, Diageo too joined the fray. But, its local operations have stagnated at around 1.5 million cases in volume annually for the past few years. Diageo has wine production facilities at Napa Valley, California, France, New Zealand and Italy.

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Thursday, December 14, 8:56 pm

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