Strictly private and confidential

Overview of Indian wine industry

November 2008
Strictly private and confidential
Contents

Section

1 Indian Wine Industry 1

2 Taittinger SA 2
Taittinger SA Section 2

Section 1
Indian Wine Industry

1
 Taittinger SA Section 2

Indian Wine
Competitive
SWOT
OutlookANALYSIS
Industry
Landscape
Forecast Sales
STRENGTHS
Keyof
Players
Wine (2007-2012) Brand
Forecast
SharesSales
of Still
WEAKNESSES
of Wine
Light by
Grape
Sub-sector
Wine (2003-2006)
(2012)
Industry overview Sales of Wine by Sub – sector (2007)
 Favorable demographic conditions coupled1982 with rapid urbanization and Production
Sub
 %Sector
Total of wine in India is Total
Company characterized
Value 2003by small
Totalholdings
2004 which
2005 CAGR is a
2006
 The Alcohol drinks market isEstablishedsegmentedininto beers, ciders & FABs,
Alcohol Key
The market
players
Indian segmentation
wine
wine industry is improved customer attitude and lifestyle
700and wines. The wine Industry is further divided into
spirits is increasing wine Still
consumption
$662
light major
Volume Brandconstraint in economies of scale
($ mm) for processing
Volume Total Volume
(2007-2012)

S ales Value ($ in millions)

 Located in Narayangaon, Pune
industry market The
grape government
wine, in
SparklingIndia is
wine, protective
Fortified towards
wine & the wine
vermouth industry,
and as it is
Non-grape Sub Sector
In wine distribution, logistics isTotal Value
the most ($ (Liters
mm)
difficult mm) (Liters
challenge in India,mm)
on shares
Wine  600 
Beers, currently
Ciders an upswing.  32 labels
%
.2the
2spread
3to in 2500 $519 product,
hectors Sula Vineyards Samant Soma Wines sensitive
Ltd 10.9 13.7 13.9 15.7
1%
Indage
wine
labour intensive, adds a lot of value
R : primary agricultural especially
Still light grapefor temperature
wine for storing
571.6128.7 products30.5 like wine 7.2
34.7
and F&B's
Production
Others and consumption The500Indian alcoholicsource
drinks AG is currently valued at $23.5bn in 2007
Cmarket
11% Champagne
 and is an attractive  for taxes and
Production duties
capacity$398: 15 million liters  Around
Still Red80%Wineof wine consumption is Ltd
confined
271.9 60.7 4.9 to major
15.46.4cities10.4
like3.6
Mumbai
35.011.8
29% with
400a growth of 13.2% from 2003, wine representing 0.8% of this total Chantilli Champagne Indage
are expected to increase
44% by 

In India, the cost for setting
The Indian wine market currently
up
 Market
a wine
$299 plant
share:at44%
stands
is quiet low, between Rs.10–
8.2mm liters in terms of
(39%), DelhiWine
Still White (23%), Bangalore and Goa.
299.7 The non15.1
68.0 urban areas 3.6 still
34.5
Grover 300
15mm ($0.2–$0.3mm) with
$220 a capacity of 100,000 liters account
Riviera for Wine
onlyChampagne
20% of the market
Indage Ltd _ 9.5
25% to 30% over the next 5 volume, with a CAGR of 30.4% from 2002 and is expected to grow to Still Rose _ 12.3
_ 13.3 _ _11.5
Vineyards Spirits $164  Key Brands: Marquise de pompadour, Ivy, Joie,
 200 liters
Organized
32.8mm retailing
by 2012.of wine
Thishas now been
represents introduced
a growth in thesince
of 32.1% state 2007
of  Quality wines are priced relatively 81.2
high
9% Being in the early
years. stages Sparkling
Sparkling wine
wine Grover Vineyards Ltd 31.212.4 1.1 21.110.4
0.5
88% The number ofWines wineries Chantilli, Figueira, Riviera, Vino Sparkling, Vin Grover Vineyards 11.4 10.5
Samant
 100
Maharashtra. caninnow
Indiabehassoldgrown from
in supermarkets 30 in 2004 to around 62
and grocery  Land ceiling regulation imposed by61.5
Champagne the government0.3 restricts the 21.4
of market
Source: growth, the industry
Euromonitor in 2008withwithathe state of Maharashtra
Ballet, accounting for almost 97% of total
Hammer Champagne 23.3 0.1
Soma stores 0 license companies
Vino to purchase agricultural land more–than0.8 10 –hectares, limits6.5
sparkingChampagne
Other Indage Ltd 7.9 4.9
wine production with 58 wineries out of the total 62 Other sparking wine
wine 19.7 20.0
0.3
enjoys18%protection from the state 

Good Climate
The country’s 2007for growing2008wineinclude
3 main wineries
grapes
2009 Sula vineyards,
2010 2011
Chateau Indage 2012 wine companies
Fortified wine & vermouthin expansion 9.1 1.2 19.6
Fortified
Vin Ballet winecosts& vermouth
Champagne Indage Ltd 3.7 0.5
Source:though
Wine, Euromonitor
as itsmall in low
stands market
in cost  Five-star
vineyards hotels,
and pubs
Grover
Still light grape wine and bar-cum-restaurants
vineyards are
Sparkling wine the primary wine  Packaging
Port / Oporto account for another9.1 35% of4.0 1.2
5.1
the production 5.9
cost which5.8
19.6
 TheFortified
selling
three
outlets
players
in thetogether
country contribute
as 63% ofaround the sales 90%are of through
the market these
with Port / Oporto
are approx. 40% higher than international 3.7
benchmarks 0.5
size as competitiveness
compared to other wine and vermouth
 Established inNon 1997grape wi ne Ivy Sherry Champagne Indage Ltd _ _2.1 2.0 _ _ 1.8
when Indage Group
channels. The holding
government44%,has the allowed
majority hotelsshare to in purchase
the Indianimported
wine market Sherry _ 1.6
Indian wine companies need Vermouth _ _ _
categories in the
compared alcoholic
with the global  The
goods domestic
duty free, brands
up toare more
a limit of affordable
Located
5 to10%on the ofinoutskirts
comparison
their to the new
of Nashik
foreign exchange Vermouth _56.6
Others
Non–grape wine _ 48.9
_ 39.1 _ _36.6
to focus on theindustry,
quality ofhas
the world
earningswines from Australia and Chile
beverage benchmarks The key brands in the market  Sales: Over 2 mm bottles in 2007-08
include Chantilli, Riviera, Vino, Vin Ballet, Non–grape wine _ _
 Total 661.9 32.8 32.2
wine to compete indeal
the current Ivy and Sula OPPORTUNITIES Total
Total THREATS 100.0 100.0 100.0
163.6 8.2 100.0
attracted a great of the  Market share: 18%
Commentary
country’s market
The industry scenario.
attentionisin recent to
expected  India’s economy grewWine byanKey Sales 2002
Brands:
average – 2007
Dindori
of 6.6% Reserve
annually Shiraz,2000
between Sula Red  Global warming Brand Share Recent
is expected oftoChampagne
causeTrendsproblems (2003-2006)
for coastal wine grape
Further strategies  Wine consumption in Indiato is expected to to
triple
7%within thenext
next three years. Lifestyles ingrowers,
urban areas and some semi-urban pockets ofare developing. By 2011,
years.
evolve A CAGR
further offor
with Indian
around
intensifying and 2006 and is expected Zinfandel,
grow Sula
by 6%
Asia will account for 4.8% of world wine consumption.
Cabernet
over theShiraz , Satori
10 Merlot,
years.  Increasing
%
and
Total
is expected
awareness andtoavailability
make any
Company
sort
of viticulture
domestic
2003
brandsimpossible
2004
has enabled
2005 2006
wine companies would There is a large potential consumer Madera Red, segmentSulathat could take
Sauvignon to wine
Blanc, Sula winewine
 The salesindustry
to growisatlow double-digit rates. Wine
capital intensive whichishas
perceived to be more
made easier for the
30% overcompetition, and be
the last ten years, more  The Indian wine market is expected to reach $661.9mm in value and 32.8mm liters in terms
drinking volume
sophisticatedBrand
of volume andbyhealthier
2012, posting than a growth of 32.2% and 32.1%
spirits
Chenin Blanc, Madera White, Viognier, Dia new players to enter the market. This is expected to increase competition
based
wine on combining
has attracted
investments highof
in wineries, respectively over 2007  Affordable wine introduced in small packages and increased distribution
 There is an emergence of lounge White, bars and gourmet restaurants coupled between &the
Sula Blush Zinfandel domestic andHennessy
foreign players
 The180sales of wine through on-trade channels are expected to be marginally faster than of Moet
off-trade
wine was sales. mainMoet
the On-trade volume
reasons for sales 54.7 rates
are expected
the higher growth to55.7
beindriven
2007 56.0
by the 56.0
alternative
bottling distribution
participation from localtheir
facilities, with the new concept of wine bars $164 Wine substitutes like beer and spirits are expected
establishment of exclusive wine shops while off-trade sales will be driven by non-specialist 
 Still light grape
stores
Chandon wine India
like supermarketsrecordedLtd the highest growth intoterms
negatively
of valueimpact
and
channels,
entrepreneurs, brand
distribution,foreignbuilding,
liquorand
promotions  Wine tourism and wine tasting is becoming popular in the state of
 Organic wine is unlikely to take a significant place in the market, given the total absence
the
volume
of wine
organicmarket
from wine due
$95.4mm to and
till 2007. better availability
5.4mm
Moreover, liters
no inand affordability
2006
major to $128.7mm
domestic and are
vineyards
Sales value ($ in millions)

(LMVH Moet
bottling of imported bulk wine Maharashtra,
135 in organic
involved whichfarming
contributes 97%high
and the of total wine production$123 in further
India discourages its 7.2mm
The liters
wine in 2007
industry respectively.
in India has always Thisfaced
represents almost
the threat 34.9% growth
of prohibition to
companies and Such
advertising. private equity
investments  Established inprices
1988 of organic wine  demand
Hennessy
in value and 33.4% in volume
 With the entry of new players such as Seagram and United Spiritsofin 2007, and a number
 Organized retailing of wine has now been introduced in the state drinking alcohol.
of other players Despite
such as theDiageo
increase saidin to
awareness,
be keen tomany enterstates still
the market,
and strategic alliances for  India’s
thewine
 Located Louis importsimposed
Vuitton) in 2006 amounted to $9.9mm as against $1.16mm
firms.
will Thisinhas
result thecaused
expansion Maharashtra
competition isWines
expectedcan to
now be soldininNandi
intensify
Hills, Bangalore
$93
supermarkets and grocery stores face prohibition by the government
selling of exports. This is positively impacted by the ruling of the WTO in favor of
increased
phase in imported
local interest
the wines.
in
lifecyclethe
of the with90a license
 Indian  Wine Production:
companies like Champagne $68Indage and 10United
lakh cases  The
Spirits through acquisition of foreign unit prices
companies
an appeal madeof are
bywinetrying
the are
UStoexpected
setEU
and to increase
up against
production in future
the facilities
high indue
customs to increase
countries
duties like
Indian government
 Australia, Argentina,through
France, its policies,
Italy and encouraging
South Africa, the
where growth
domesticof wine
consumption is in
strong Dom Perignon
input
imposed prices
by Indiaof raw
on Moet
wines Hennessy
materials
and and
spiritsincreasing 43.8
overheads 41.5like 41.5 42.0
various
industry, growth
leaving drivers,
the emerging $51  Over 200 acres under plantation
industry Key policies
$41 include, Wine(LMVH
transportation Moet
consumption and in India
India
storage Ltd
is still
costs
 Support measures from the government in policy and infrastructure provision will be an incentive for more investments particularly from liquor players who have
 in its infancy with manufacturers are
Foreign
industrywine companies
structure and
phase 45  Market share: 9%
License todistribution
established
– set up wine bars and permission of wine sale in beer bars
networks focusing
Hennessy on providing wine at economical prices. Within Still Red wine,
targeting
strategic the Indian
decisions wine
shaping – Licensing
 Currently theprocedure
wine market for Key
setting
 is Brands:
up wine
expanding Launits
with Réserve,
newsimplified
entrants Sauvignon Blanc, awareness among
and increasing Rs300-500 ($6-$11)
consumers. The is highly
the most popular price
concentrated band,dynamics
industry in which almost
are set59% to
Louis Vuitton)
of the wines sold in India are priced
market, strategic alliances for
the Indian wine industry – 100%
change0 exemption
with the from
entry of excise
several duty
Cabernet for
spirits 10
majors
Shiraz, years
and
Shirazfor the
foreign
Rose, state of
entities.
Viognier More
and fragmentation is expected in the industry with several competitive groupings
 In India, the cost for setting up a wine plant is quite low, between Rs10–
comprising
Maharashtra many players entering the market
import and distribution could 2002 2003 Clairette 2004 2005 2006 2007 15mm ($0.2–$0.3mm). As a result many entrepreneurs,
Others 1.5 Indian and
2.8 2.5 2.0
Foreign direct investment (FDI) with no approval from government
 The positioning of Indian wine as a high-quality product is a critical factor in making wine
– / more popular
foreign, are entering in India. However, mass marketing could lead to a
the market
be the suitable mode of entry situation
RBI where the brand image of Indian wines is lowered to just an alcohol substitute, whereas
 Wine imported
drinking wines served
is becoming in elite restaurants
more acceptable and homes
in restaurants. have a
The on-trade
higher
– valueof
Provision perception
infrastructure facilities such as wine parks and wine Total have played the most important role
channels 100.0 100.0 100.0 100.0
in the increasing
institutes
Source: Euromonitor, Rabobank research dated February 2008, press awareness and sales of wine in India
Source: Euromonitor, press
Source:
Source: Rabobank research
Euromonitor, press dated February 2008, press

Taittinger SA 2
Taittinger SA Section 2

Taittinger SA

Company overview Key management and board members

 Headquarters: Reims, France Name Position Experience/Affiliation
 Founded: 1734
 Description: Founded by Jacques Fourneaux, the company produces Pierre Taittinger Director General Domaine Carneros,
and distributes champagne and wines in Europe and the US Executive Samazeuilh
 The company was acquired by Starwood Capital Group, a real estate
investment company, for $3.2bn on January 3, 2006. Thereafter, on June Gérald Frère Director Groupe Bruxelles lambert
1, 2006, French bank Credit Agricole du Nord Est bought the Taittinger SA, Chrome Corporation
champagne house and associated vineyards for $849.6mm
 Taittinger group operates through 290 subsidiaries involved in hotels and
Gerard Mestrallet Director Paris EUROPLACE, Suez
restaurants, light industry and luxury and real estate activities. Hotels &
SA, Compagnie de Suez
Restaurants accounted for 71% of 2004 revenues; Luxury Goods 16%;
Champagne & Wines 12% and Finance & Real Estate 1%. The company Investors:
specializes in Bordeaux wines and its champagne is distributed in
Caisse Régionale de Crédit Agricole du Nord Est
around 120 countries across the world
 Taittinger’s key brands include Vins De Bordeaux, Vins Du Monde,
Niepoort Port, Defender Scotch Whisky, Glengoyne, Calvados, Brandies
and Vodka Krakus & Kalinka
Competitors Financial Information ($mn)

Company Country Sales (mm) Assets (mm) 2003 2004 LTM (June 2005)
Moet & Chandon France $1,777 $2,316 Revenue $1,020.2 $1,108.4 $1,123.5

Boizel Chanoine France 492 1,265 Growth% 8.6% 10.2%

Veuve Clicquot France 446 902 EBITDA 216.1 230.1 178.4

Vranken-Pommery France 393 1,419 Margin% 21.2% 20.8% 15.9%

Yantai Changyu China 359 445 EBIT 110.0 124.0 77.2

Laurent-Perrier France 353 960 Margin% 10.8% 11.2% 6.9%

Champagne Vranken France 300 628 Net Income 31.6 51.4 36.4

Schlumberger AG Austria 285 174 Margin% 3.1% 4.6% 3.2%

Maison Burtin France 221 565 EPS $9.10 $14.81 $10.48

Source: Company website, Capital IQ, press