Champagne Indage – Let’s Celebrate !!

Champagne Indage Ltd (CIL) is India’s leading wine producing company with a 75% market share in the wine segment and also Asia’s largest producer of wines. CIL has been instrumental, to a large extent, in developing Indian wine industry. It produces white, red, sparkling and rosy wines of many varieties. Apart from domestic market, the company exports wine to USA, Japan, UK, Switzerland, Germany and other European countries. CIL has a total wine production capacity of 6.5 million litres across five countries. It is also making two more wineries in India, one each at Baramati and Nasik. CIL has a portfolio of brands like Riviera, Chantilli, IVY, Figueire, Vin Ballet, VINO, etc.

Subsidiaries:

Seabuckthorn Indage Ltd (Fruit juice business) - 52.63%

The juice business of Seabuckthorn Indage is growing at 400%. In the home market CIL has introduced 10 juice varieties under the brand name Leh Berry in 200-ml and 1-litre tetra packs. CIL plans to introduce line extension products like jams, jellies, marmalade, and pickles for the Seabuckthorn fruit. This is likely to expand the product range and reduce dependency on its wine business.

For more visit : http://www.lehberry.com/home2.html

Thachi Wines (Australian Wine business)

The acquisition of Thachi Wines (TW), Australia, has given Champagne Indage a global footprint. TW has contractual arrangements for vineyards and a winery in Australia, and processes 2.7m litres of wine a year. At present, TW markets its products in Australia, China and Europe under the brand name Broken Earth. Most of this wine is sold unbranded. The acquisition would provide a ready-made market for CIL to hawk its own brands in these countries through TW’s distribution channels

Indage UK (Distribution arm)

To market its product in the UK and Europe.

CMP: Rs.671

Market Cap: Rs.852 crs

EPS for FY07: Rs.15.4

EPS Growth : over 100%

ROE for FY07: 15.8

Opportunities:

- Indian demand is tiny compared to the $117-billion global wine market, but has been growing at 20 percent annually in the last seven years, according to a report by Rabo India, a unit of Dutch financial giant Rabobank. The Indian wine market stands at Rs.450 crore in value terms.

- CIL will sell its products in the supermarkets of Maharashtra, Karnataka, Chandigarh, Goa and Haryana. CIL plans to open more than 1,000 outlets and sell more than 4.5 mn litres in the current fiscal. Retail expansion which would be a mix of franchise and company-owned outlets and would be branded as 'IVY Wine Bars'.

- CIL aims for a total capacity of 14 mn litres by October 2008.

- Economy brand, Vino brings in about 12% of revenue. CIL expects beer drinkers to migrate to Vino due to the latter’s attractive price of Rs 99 a bottle.

Risks:

Q1 is the weakest quarter due to seasonality of business. United Spirits, Sula Wines, Seagram, Grover Wines and Diageo are the competitors in this space.

Prominent Investors:

Sonata Investments            820000    6.75%

Shivanand Mankekar         221420     1.82%

Interesting Links:

http://inhome.rediff.com/money/2007/mar/19wine.htm

http://indianwine.com/cs/blogs/about_wine/archive/2006/10/17/1115.aspx

No idea about the management quality, but I think it is a father-son duo running the show.