Italian winemakers first to invest in India

Total wine consumption is expected to increase 30% in India this year

NEW DELHI — Two Italian winemakers have become the first foreign producers to invest directly in India, seeking to tap into a growing taste for the drink in the emerging market, their Indian partner said Tuesday.

Riona Wines, based in the western Indian state of Maharastra, the country's grape-growing centre, told AFP it had signed investment agreements with Italian vintners Moncaro and Enzo Mecella on Monday.

The two Italian companies, based in the region of Marche, have taken a 17-percent stake each in Riona in exchange for machinery and total investment of 42.5 million dollars to be made by 2010.

"This is the first time a foreign company is joining hands with an Indian winery to produce and sell wine," marketing director of Riona Wines, Hansraj Ahuja told AFP.

They aim to produce and market six varieties of red and white wines for the Indian market by October 2010.

"We have sold a significant stake of our company to produce the finest quality of wine in India," Ahuja said.

The Indian market is currently dominated by two manufacturers, Sula and Grover, which produce red, white and sparkling wines from their vineyards in western and southern India.

Though Indian growers have long tapped foreign expertise to develop their vines, no producer has invested directly, said the Indian Wine Academy, a research and consultancy firm situated in New Delhi.

One of the more expensive home-grown wines is the Italian-sounding Reveilo, which is produced using grape varieties imported from the southern Italian island of Sicily.

Total sales in India in 2008-2009 were 1.4 million cases, including 200,000 imported cases, according to the Wine Academy.

Total wine consumption is expected to increase 30 percent in the country this year compared to 2008 as wealthy and young Indians opt in growing numbers for the drink instead of beer or spirits.

Punitive import tariffs have restricted access to the Indian market for European or "New World' producers, while a ban on advertising alcohol also makes it difficult for all winemakers to reach new consumers.

"Indian wine makers are keen to acquire consistency for their products and are seeking foreign expertise to compete with international brands," Reva K. Singh, editor of India's only wine magazine, Sommelier India, told AFP.

Singh said young Indians were increasingly interested in wine drinking and etiquette and are even heading for vineyard tourism in Maharastra to learn more about the drink.