Title Subject Program Level / Semester Subject Tutor Name of Student

: : : : : :

Red Wine( Chateau D ori) SMBG GPBL SEM 2 Mr. Pranab Deb Girish Masur

Registration Number Date of Submission Word count Word Limit

: : : :

GPBL P/09/08 25th/Nov/2009 2380 2000

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SL.NO 1 2 3 Student Name

CONTENT Girish Masur GPBL P 09/08 25th Nov 2009

Registration number Date for submission of the Assignment The cover page is in the correct format as indicated in the Guidelines to writing assignments . Have done a complete spell check of the assignment? Have done a complete word count for the assignment

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YES

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YES

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YES

Does the table of contents include numbers? YES Are the pages numbered correctly? Are the figures numbered correctly? Are the tables/charts numbered correctly? Are the captions for the tables and charts proper? Are the references/Bibliography listed in the assignment? Are the references cited adequately in the text? Are the references in the text in the proper format as indicated in the Guidelines to Writing assignments? YES YES YES YES

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YES

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YES

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YES

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A soft copy of the assignment has been enclosed with the assignment?

No

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All material written in the assignment is my own. I have not used any material, content or information of claiming them to be mine. Wherever materials have been used, proper citation has been done in the text. I am fully aware of the rules and regulations governing YES plagiarism. Should at any point of time my work to be suspected and established to have been plagiarized, I am aware of the consequences. I have read the student s hand book in detail.

Signature of the Student

Date: 25th Nov 2009

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Table of Content

S.NO 1. 2. 3. Introduction Objective Segmentation

Content 5 6 8

Page(s)

4.

SWOT analysis

9-12

5.

PEST analysis

13-17

6.

Conclusion

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7.

Bibliography

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Red Wine
Introduction

1.1 - Wine
Wine is an alcoholic beverage typically made of fermented grape juice. Wine is produced by fermenting crushed grapes using various types of yeast. Wine has a rich history dating back to around 6000 BC and is thought to have originated in areas now within the borders of Georgia and Iran. Wine probably appeared in Europe at about 4500 BC in what is now Bulgaria and Greece, and was very common in ancient Greece, Thrace and Rome.

1.2 ± Wine industry in India

India is an emerging wine market in the truest of senses. Opportunities abound, with great potential for the growth of wine exports in the bustling markets of Mumbai, New Delhi, and Bangalore. However, risk abounds as well in the form of a protectionist regime of alcohol control and taxation, an underdeveloped supply and distribution chain that threatens product integrity, and most importantly, a population that is largely unfamiliar with wine and its place in Indian life. What cannot be refuted, however, is that the Indian wine market has shown impressive annual growth rates of 20-25% for the last 6 years, and those rates are expected to continue and potentially increase in the coming years, following in line with good projections for the overall Indian economy and rising levels of disposable income.

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1.3 Chateau dµOri
Chateau d'Ori is the creation of Mr. Ranjit Dhuru, a successful Indian business man and Wine Lover. Mr. Dhuru, along with an active team of professionals, has leapt into the Indian wine industry with a focus on quality. Chateau DµOriµs vineyards are top-notch, and the newly built winery offers a first-rate combination of tradition and technology. Chateau DµOriµs wines have already made a splash in India, winning various medals for both their red and white varietal wines and the company is actively looking to expand its role in the emerging Indian wine industry. The Chateau d'Ori establishment consists of a single piece of well developed vineyards measuring one hundred acres at the base of the twin hills of Nhera-Ori at Dindori, Nashik. Another 300 acres are under development across the twin hills and will be ready by 2010. http://www.chateaudori.com

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2. Objective
Providing detailed information concerning the regulatory environment for wines in India. This analysis includes an identification of the challenges and strategies for marketing and selling wines. Analysing strengths and weakness or the company using SWOT analysis. Analysiing various issues affecting wine industry using the PEST analysis. Forecasting developments in Indiaµs wine market, supply chain and distribution network, and trade activities; and

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3. Segmentation
3.1. Geographic
Indian wine consumption by location The two largest and dominating markets in India are not regions, but rather the city-areas of greater Mumbai and Delhi. It is estimated that as much as 65% of total Indian wine consumption is accounted for in these two locations. This number reaches an estimated 80% when including other major cities such as Bangalore, Chennai, Kolkata, Nashik, and Pune. This market dominance of Mumbai and Delhi ensures their place as the fulcrum points for any producer or distributor looking to increase sales to India. The city of Bangalore (with its high-tech industry inflows), and the State of Goa (with its high energy tourism sector), are a secondary, yet important focus for marketers as well. The cities of Kolkata, Chandigarh, Nashik and Pune are all important niche markets and should be followed and acted upon as appropriate. Chennai and Hyderabad have much potential due to the growth of their IT industry but their government policies are not yet conducive to wine sales.

3.2 Demographic
Upper class Indians as wine consumers This level of growth in the Indian wine market is in large part driven by the upper class Indians, which is widely understood to be 2% of the population and therefore approximately 20-25 million people . Many of these Indians have increasing levels of disposable income and international experience and lifestyles (either through studies, travel or work) that they have brought back to their country. These changing tastes and preferences, coupled with higher levels of disposable income and the increasing availability of domestic and imported wines, have resulted in the emergence of India as a viable wine market.

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4.0

SWOT analysis
Environmental Scan / Internal Analysis /\ Strengths Weaknesses | SWOT Matrix \ External Analysis /\ Opportunities Threats

4.1 Strengths      4.2 Weaknesses   4.3 Opportunities    Cutting edge over foreign wine makers in Indian market Growing popularity of red wine in the country Expansion opportunities Low on production capacity Less overseas supply Penetration pricing State of the art Winery Largest market share in red wine segment Strategic alliance with Grand Hyatt and Indian hotels Excellence awards for fine quality

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4.4 Threats    Strong competitors in India Regulatory bodies in India Natural calamities that can affect the production of grapes

Detailed SWOT analysis

Strengths
y Penetration pricing Setting lower, rather than higher prices in order to achieve a large, if not dominant market share. Chateau D¶ori is relatively a new player in market and to gain the market share uses penetration pricing where it offers good quality wine at a cheaper price. State of the art winery This ultra modern winery is an adaptation of the latest concept in winery designs in Bordeaux, France. It is a huge circular building that can accommodate 72 large stainless steel tanks for fermentation and storage. The wine making process is not restricted to just "gravity flow" and some of the latest trends in oenology are being used to create great quality wines. Strategic alliance with Grand Hyatt and Indian hotels. Chateau D¶ori has tie-ups with some of the finest hotels in India. The company has tie-up with some of the 5-star hotels like Grand Hyatt, Sommelier, Taj group of Hotels. Excellence awards for fine quality Chateau D¶ori has won Silver Medal for India at 'Wine Olympics¶ in the year 2008. Chateau D¶ori won the medal for their Cabernet Merlot which a very famous Freanch style Red wine.
http://www.delhiwineclub.com/news/Three_Silver_Medals.aspx?serialwise=859

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Weaknesses
y Low on production capacity
Chateau D¶ori has an overall production capacity of around 100,000(9L cases) which is very less as compared to its strongest competitor Chateau Indage which produces around 300,000(9L cases) of wine.

y Less overseas supply
Since the production capacity of the company is less it is not able to supply a large amount of red wine in other countries. It instead has a good market share in India.

Opportunities
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Cutting edge over foreign wine makers in Indian market

Chateau D¶ori has a very strong hold in red wine selling in Indian market because of the regulatory bodies governing and controlling the imports of wine and other alcoholic beverages in India. The total import duties imposed on the foreign wines are very high. The import duty varies between 175% to 260% which makes is very expensive and hence most of the importers are now moving to the Indian wine makers for the distribution.

y Growing popularity of red wine in the country
India is a very fast growing market for the red wine. People are now a days are more aware about Red wine and are slowly accepting it in the Indian culture. In the last five years, India has seen a phenomenal growth of more than 25% in the consumption of wine. According to the year 2008 the total consumption of red wine crossed the astonishing figure of 600,000. Where the consumption of wine from the domestic maker were 480,000 and 120,000 for the imported makers.

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Expansion opportunities Chateau D ori has a vineyard which is spread in the area of 100 acres. Currently it is trying to expand the farm by 200%. The plant is expected to be up and running by the end of 2010. This will definitely help the company to reach to the global market by empowering its production capacity.

Threats
y Strong competitors in India India is a strong market for wine production and consumption. At present there are more than 45 wine manufacturers in the country. The demand for wine in the country is increasing at a great rate. There are few other strong competitors who are fighting hard to capture the market share. Sula and Chateau Indage are among the top wine makers in the country.

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shifts in consumer tastes away from the firm's products

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emergence of substitute products

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PEST Analysis
Environmental Scan
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External Analysis
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Internal Analysis

Macroenvironment |
P.E.S.T.

Microenvironment

Political/Legal (PEST)
Trade Policy Review
Trade Policy disputes have emerged due to the fact that India, in order to reap the benefits of expanding global trade, became a member of the World Trade Organization (WTO) in 1995. As a member of the WTO, India committed itself to specific bound tariff rates for all products that would not be exceeded. Despite this commitment, India (at both the Federal and State level) has enacted highly protectionist policies that negate their concessions to the WTO and ultimately function as price distorting trade barriers for wine.

The Indian Constitution: promoting prohibition of alcohol consumption 13

State authority over alcohol production, distribution, and sale. Control over selling, distribution, and pricing of alcoholic beverages belongs to state governments under Section 47 of the Directive Principles of the Indian Constitution. India is a federal nation, and like the U.S., the Central government has empowered states to generate revenue and control sales. Alcohol sales fall into this category. Each state therefore determines its own excise policy which is declared annually between March and April. Marketing Regulations Marketing of alcoholic beverages, including wine, is largely a state subject in India. The state governments heavily depend on revenues from the liquor industry. Every state (29 in number) and Union Territory (8 in number) has its own excise policy on manufacturing and marketing of alcoholic beverages that includes warehousing, distribution, retailing, and labeling and disclosure requirements. The state excise policy is reviewed annually, and the State Excise Department monitors and implements the excise regulations.
http://www.international.gc.ca/trade-agreements-accords-commerciaux/ressources/fcm/annexC.aspx

Economic(PEST)
Subsidiary by the government to encourage wine production in India The GOI provide support to the nascent Indian wine industry in the following ways: Direct subsidies for winery development - payment for to 25-33% of the start-up costs for capital investments of wineries (to a capital of US$ 160,000). Capacity building initiatives technical trainings on viticulture, enology, and winery development. Proposed formation of a National Wine Board, which will be arranged as a Private-Public Partnership that will support growth initiatives for the Indian Wine Industry Employment India has always been a major producer and exporter of grapes. Due

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to a heavy demand in the production and sales of wine, grapes are produced in bigger quantity. Most of the grapes are taken up for the production of wine by the domestic wine industry. This demand has increased a lot of production of grapes which has attracted a great number of farmers and generated a lot of employment.

Inflation This is one of the factor that can heavily impact the wine industry. With the current scenario we can say that so far there is no impact of inflation on the buying capability of customers. If the inflation increases, the consumers will cut down their expenditure on expensive items such as Red wines and other type of wines.

Economic growth India is growing at a phenomenal rate with the GDP at 9.5 increasing rate. The lifestyle of the people has also changed with the growth in the economy. Most of the low income people has moved to high earning class. This has brought in a lot of culture shift in the lifestyle of people. This has lead to an increase in the acceptance of wine in the Indian culture. This is one of the reasons of the growing rate of consumption of red wine in the country.

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Social factors(PEST)
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Health consciousness
India is a country where people are very health conscious and where alcohol consumption is considered as unhealthy. 74% of the Indian population is from the rural area where people are more conscious. People are not aware of the good effects of wine.

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Age distribution
This is one of the social factor which plays an important role in the consumption of red wine. India has the second largest population in the country. But the best part is that 40% of the people belong to the age group of 16-40 yrs. This indicates that there is still a lot of scope for the wine industry to flourish because it¶s one of the drink largely consumed by the youth public.

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Lifestyle
India is a trillion dollar economy with a total population of 1.1 billion people. This level of growth in the Indian wine market is in large part driven by the upper class. Indians, which is widely understood to be 2% of the population and therefore approximately 20-25 million people. Many of these Indians have increasing levels of disposable income. These changing tastes and preferences, coupled with higher levels of disposable income and the increasing availability of domestic and imported wines, have resulted in the emergence of India as a viable wine market.

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Technological factors(PEST)
Laboratory development assistance for wine analysis Additionally, a Grape Processing and Research Institute (GPRI) has been established by the government of India. The objectives of GPRI are: 1. To give formal training to farmers through courses. The successful candidates are awarded certificates, diplomas and degrees in winegrape cultivation, winemaking, and wine marketing. 2. To set up a quality control laboratory for wines. 3. To impart wine blending techniques. 4. To explore domestic and international markets 5. To help farmers by setting up of a ´Mother Unitµ for manufacture of wines. Chateau D¶ori has an ultra modern winery is an adaptation of the latest concept in winery designs in Bordeaux, France. It is a huge circular building that can accommodate 72 large stainless steel tanks for fermentation and storage. The wine making process is not restricted to just "gravity flow" and some of the latest trends in oenology are being used to create great quality wines.

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Conclusion

India presents tremendous opportunities and challenges for the wine producers. Traditionally, wine does not figure greatly in Indian culture with very low per capita consumption rates. The country represents a vast and largely untapped market. In addition to the present market dynamics in India, wine consumption is rising at a rate of 20-25% per year. Also, demand for imported wine is increasing at similar levels and there is a definite market opportunity in India for foreign wine producers. In future, Indian wine producers will have a tough time fighting with the international wine producers who are try to build position in India. These producers are in a strong position to take advantage of opportunities in this emerging market.

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Bibliography
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http://www.chateaudori.com Business Today( June 1 2008) http://www.international.gc.ca/trade-agreements-accordscommerciaux/ressources/fcm/annexC.aspx http://www.delhiwineclub.com/news/Three_Silver_Medals.aspx?serial wise=859

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http://indianwine.com/cs/blogs/about_wine/archive/2007/07/30/vinsur a-is-introducing-new-brut-sparklinghttp://www.rediff.com/money/2007/jan/16wine.htm

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