Indage Vintners closes offices. Financial crisis deepens
The closing of their Delhi and other regional sales offices is just the latest sign that Indage Vintners, the grandfather of the Indian wine industry is rather suddenly in a precarious position. A lot of different factors are potentially at play but what's certain is that the market was flooded with more Indage wine than it could stomach and the special two for one deals devalued its brands too.
Inflated production figures to position the company for a sale maybe part of the problem according to The Economic Times. What's in store for Indage Vintners is anybody's guess. A company official who admitted to the ongoing financial difficulties said the decision to shut many regional offices was part of a restructuring plan decided some time ago.
When Sommelier India interviewed Chougule earlier this year (March/April issue) he was all gung ho but last week he admitted to Hospitality Biz that sales volumes have fallen 60% since September 2008. Indage Vintners marketshare has apparently halved to around 20% as well. In the last one year the stock has fallen from Rs 422 to Rs.67.
In the Sommelier India interview, Chougule said that the Indage Vintners combined capacity after the three major acquisitions (two in South Australia and one in the UK) is approximately 8,000,000 cases with 3,750,000 cases in South Australia, 3,000,000 cases in the UK and 1,250,000 cases in India. He went on to say that the goal was to secure the supply of wine of all types from different regions at all price points to become an efficient, reliable global player. But just a few months later as reported in Sommelier India, shareholders were asked to approve a plan to raise Rs 110 crore by privately placing equity with institutional investors.
Indage Vintners is India's oldest and largest winemaking company with over 30 brands across all price points. It exports to 69 countries (at least it did until recently) and has received several awards including 28 awards or medals in 2008. The recent state of affairs represents a sharp turn for the worse.
Do you feel Indage Vintners will survive and if so will it be in its current form? This financial crisis is similar to what Robert Mondavi went through several years ago when it was eventually forced to sell out to Constellation. Is something similar going to happen here or will Indage Vintners survive its current financial crisis by recapitalizing and emerge stronger? It is anybody's guess.
Comments
This crisis was obvious. They had announced in their last AGM that they have 60% mkt. share in India, & they were increasing their capacity by 500%. Was the mkt growing at 200% annually? Where was the working capital? At an average of 400/500 rupees a bottle wine is a long time away from replacing whisky or beer as the Indian mans prefered drink. Also, the junior Chougules continued absence at shareholder meetings, inspite of being MD, even in good times shows his arrogance which has cost the company dear.
I wouldnt quite compare the Chougales with the Mondavis