Asia-Pacific News

Moët Hennessy’s Chandon: now made in India

Avantika Chilkoti
Loic Venance | AFP/Getty Images

"A bright and fresh fruit bouquet of citrus blossom, green apple with hints of tropical fruits and vanilla."

It's the sort of "tasting note" you would expect of wines from the luxury French brand Moët Hennessy – except that this one is made in India.

This week, the label launched its first products made specifically for the Indian market: its Chandon Brut and Chandon Brut Rosé sparkling wines.

Made in Nashik, Maharashtra, they are selling for Rs1,200 ($19.20) and Rs1,400 a bottle, respectively – a whole lot cheaper than the label's top-end fizzy wines sell for in the developed world.

Looking to produce sparkling wines outside the Champagne region of France, Moët & Chandon opened its first Chandon Estate in Argentina back in 1959. It now has operations in California, Brazil, Australia and China, too.

The company certainly isn't new to emerging markets. So how does its experience of India compare?

(Read more: Can emerging markets offer inflation protection?)

It can't buy land in Nashik, so Moët Hennessy has rented a vineyard and is sourcing grapes from the local area. It is working out of its neighbours' facilities but the winery it plans to open by the end of next year is a "substantial investment", Jean-Guillaume Prats, president of Moët Hennessy Estates & Wines, told beyondbrics.

Businesses moving into India often complain about red tape and bureaucracy. But Prats lauds the skills on offer. Though Moët's international team is involved in the Indian operation, including people from Australia and New Zealand in particular, the company is also hiring locally.

"It's a challenge but it's a great country," he said. "People in India probably have a more international culture than the Chinese. Just the language makes a big difference."

That chimes with recent remarks by Pierre-Yves Arzel, managing director of L'Oréal India, on the number of Indian country managers his company has around the world.

India's demographic dividend – the idea that its economy will blossom thanks to a large, young population going into work – may be dashed by failings in education, health and labour laws. But the quality of its skilled workers is certainly a boon.

(Read more: India braces for unprecedented 'silver tsunami')

The other big attraction for Moët Hennessy is the size and growth rate of the Indian market. In a report last year researchers from Technopak, a retail consultancy, estimated that between 1m and 2m people in India drink wine and valued the industry at around Rs1.75bn.

Whereas the global average consumption of wine per person is around 4 litres a year, in India it is about 4.6 millilitres. The country's first winery was established only about 30 years ago, according to the US Department of Agriculture (USDA), and at the turn of the millennium it had just six. It bears all the signs of a fledgling market with significant scope for growth.

"We are convinced that sparkling wine demand in India is a very fast growing sector-Indians love to celebrate," Prats says.

While wealthy, older customers may stick to the real thing imported from Champagne, the target market for locally-made alternatives is a working age population that sees sparkling wine in general as an aspirational purchase.

(Read more: Is China causing a global wine shortage?)

Prats is keen to point out that Indians buying luxury goods and services still prefer things produced at home. Technopak agrees, estimating that some 70 per cent of India's wine market will remain in local hands for the next decade.

But if recent experience of local wineries is any guide, Moët Hennessy isn't in for an easy ride. Wine production in India dropped to 11m litres in 2011 from 13m the year before, before recovering a bit to 11.5m litres in 2012.

The industry is hopeful for the future but the USDA's thoughts on the causes of its recent troubles – a fall in tourism following the 2008 terrorist attacks, wineries producing European dry wines that aren't suited to the Indian palate and the costliness of land – highlight some of the risks in this vast and growing market.

(Read more: Sobering thought: Low-alcohol wine set to boom?)