Under the cobbled streets of L’Avenue de Champagne in Épernay, 130 km northeast of Paris, runs a 28 km long labyrinth of dank tunnels cut out of limestone. This is where the 271-year-old French champagne house, Moët & Chandon, has been ageing its bubbly. Believed to house the largest stocks of champagne in the world, the cellars were even frequented by Napoleon Bonaparte en route to battles. In 2005, four years after Moët Hennessy—one-half of the French luxury group LVMH Moët Hennessy Louis Vuitton—began selling its flagship brand of champagne in India, it took a group of food and beverage managers from luxury hotels across the country to visit these cellars. Not so much a history tour, the idea was to train and familiarise them with the culture of champagne. One of them, now a general manager at a luxury hotel in Delhi, says, “Witnessing the processes of making champagne made our understanding a lot deeper. This meant that we were able to train associates better.

“Storytelling is a key part of marketing and sales. If you go up to a customer and say, ‘I was fortunate to visit this winery and see this wine being made. I think you’d like to try it’, it makes for a very strong recommendation. That personal touch during our customer interactions brought a lot of traction for Moët.”

That’s job half done for Mark F. Bedingham, regional director, Moët Hennessy Asia Pacific. Although in the last couple of years, the demand for wine—currently at 1.4 million cases—has grown at 25%, India remains the largest consumer of whisky in the world. The wine market has slowed after 2010 due to overcapacity and heavy taxes. Scores of boutique wineries across Nashik (India’s Napa Valley, if you will) in Maharashtra lie vacant. By the end of 2010, Indage Vintners, then the country’s largest winemaker, had almost shut shop. (They eventually wound up).

Bedingham, who has been based in Hong Kong for the past 30 years, has visited India at least twice annually for the last 18 years. That’s because he’s uncorked something: Celebration is an integral part of Indian culture. “People celebrate events: family gatherings, occasions involving friends, etc. So, there should be a strong affinity for a product with bubbles in it,” he says. Even though Moët was selling less than 15,000 cases of champagne here in 2009, encouraged by his reading and its prestigious history, he took a proposal to the board for making wines in India as well as China (one of Moët’s largest markets).

Mark F. Bedingham, regional director, Moët Hennessy Asia Pacific
Mark F. Bedingham, regional director, Moët Hennessy Asia Pacific

LAST OCTOBER, MOËT LAUNCHED Chandon, a sparkling wine produced in Nashik. It hired the spare capacity of York Winery, a boutique winemaker a few kilometres from its own proposed winery named Domaine Chandon India (expected to be ready by the third quarter of 2014). Over a glass of Moët’s Chandon Brut Rosé in the Four Seasons hotel in Mumbai, Bedingham says the French company has broken a mould.

Moët was the first French champagne house to take sparkling wine outside Europe in 1959 when it set up the Bodega Chandon estate in the Mendoza district of Argentina. In 1973, it took the bubbly to Napa Valley in California and then to Australia’s Yarra Valley in 1986. And now Bedingham wants to put Asia on the global wine map. “If you went back to what Americans were drinking in the ’50s and ’60s and what the Australians were drinking in the ’60s and ’70s, it was highly fortified wine. We wanted to develop a much more sophisticated domestic wine industry in those places. That said, I hope we can make an exceptional product in India as well,” says Bedingham.

For India, the opportunity was clearly visible. Aman Dhall, the CEO of Brindco International, the largest importer of branded spirits in India, says, “With its [Moët’s] earlier products, priced above Rs 4,500, its ability to negotiate with customers and make its presence felt across the country was limited.” But Bedingham says although the wine market in India is small, lifestyles aren’t. “We’d seen the response to Moët and we’re familiar with the way people entertain. Clubs and restaurants have evolved. So, I wanted Moët to pioneer an upscale, premium, made-in-India wine, believing that we could take the risk in a wine market not that evolved.”

“Also, Indians have a more international mindset. I refer to their familiarity with what’s going on in the U.S. and Britain—not just a proximity to understanding those lifestyles, but actually bringing it back to a culture, which, in a way, I think is more deep rooted.”

The reason to enter the Chinese wine market wasn’t as obvious. “Could we convince ourselves that there is a lifestyle opportunity in China?” asks Bedingham. Research found an opportunity in China’s nightclubs. “But those were specific occasions where a particular champagne worked well, though we believe Chandon can still work in that environment,” he adds.

In China’s 5,000-year history, the last 50 to 100 years have been so disruptive that the patterns of consumption are relatively shallow. “China is pretty different—it’s all around business or personal friendships. Not around anything like a society or celebrating with large groups.”

Does that mean doing business in India is easier? According to Bedingham, the demand in India for high-value, premium items is strong, but the number of people who can afford it is small. On the other hand, a fast-growing economy in China along with a wider wealth band means that people can afford a decent imported product. Even though import duties on liquor are a lot lower in China, having a local wine allows Moët access to a different market—one that has doubled in the past five years and is expected to become the world’s largest by 2020. Moët’s Chinese winery will launch its sparkling wine later this year.

AS THE INDIAN AND Chinese wine markets mature, Moët’s decision to make wines in Asia will have a far-reaching effect, not just on Moët’s fortunes but, more important, on the local wine industries. In India, winemakers have been around for a decade and a half, with some even producing award-winning wines. But neither Indian nor Chinese wines are looked upon as world standard. This is why Bedingham’s decision to lend the successful ‘Chandon’ tag to the Indian wine could be a master stroke. “I wanted to specifically bring the international brand name here. I didn’t want to come with some kind of a secondary brand that we just try out in India and see how it works. No, it has to be the international brand name from day one,” says Bedingham. Chandon is part of Moët’s global brand portfolio and is often used for the entry-level sparkling wines made outside France.

Deepak Roy, promoter director, Grover Zampa Vineyards, a Nashik-based winery, and executive vice chairman and CEO of Mumbai-based spirits company Allied Blenders and Distillers, says, “Once the world gets to know that Chandon is being produced in India, it will show that grapes here have come of age. It’s a major marketing tool for Indian vintners. If Chandon can be produced here, there’s a good chance other local wines are not far behind.”

Ashwin Deo, the former head of Moët Hennessy India who runs his own boutique wine business, says Moët will significantly impact Indian viticulture and winemaking techniques. “When a global champagne house starts manufacturing at a new place, they improve the quality of their vineyards by importing better root stalk as well as developing their own. They also work with farmers to improve protocols.” The result is not just better quality grapes and yields, but upgraded skills as well, which, in the long term, is better for the basic agronomy.

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The first step was to recruit Indian viticulturists, who were taken to New Zealand for training. Bedingham then flew in a team of consultants who set up camp in Nashik for months and worked with the farmers to improve the quality of grapes. Convincing the farmers to change their models turned out to be challenging. “Because we didn’t own land in India, we needed to feel confident about the farmers getting it right. We had to show them that they could make more wine by growing less grapes, because the mentality here is, ‘the more grapes I grow, the more money I will make’.”

Typically, an acre of land can grow around 10 tonnes of table grapes, or 4 tonnes of white wine grapes, or 2 tonnes of red wine grapes. Bedingham says, “We told them that we sought quality and would pay them well, but they needed to make less.” While he does not specify, market sources say Moët pays a premium of about 10% to 15% on the going price of grapes.

Farmers in Nashik welcome large champagne houses such as Moët, since big players mean long-term contracts. Even after Moët was assured of the right quality of grapes, the company stepped carefully. It leased a few hundred acres and hired the spare capacity of York Winery.

By 2011, it had installed its equipment and crushed its first harvest. Ravi Gurnani, director at York, says he was impressed with the amount of resources Moët was willing to invest, in terms of the calibre of the experts, knowledge, and machinery. “I was very impressed with their long-term commitment. They didn’t want to rush and were willing to wait for the right time to get the best blend,” says Gurnani. Typically, a wine can be churned out in 18 months. Moët took a little over three years to perfect its blend.

Moët’s commitment to build for the long term comes from its deep pockets and an unwavering focus on sparkling wine. Winemakers in Nashik talk about Nine Hills, a local winery in the region that belongs to the French spirits giant Pernod Ricard: “Pernod owns some of the big names in champagne and wine such as G.H. Mumm et Cie and Jacob’s Creek. But in seven years, they’ve never bothered to utilise that knowhow to improve their wines in India,” says one winemaker.

Moët, on the other hand, is busy building one of the largest wine cellars in India. Although company officials declined to comment on the size of the winery, saying that it’s scalable, vendors and trade sources indicate 500,000 bottles a year at the start. Although Moët did not comment, trade pundits say Moët’s equipment is the best and latest in India. But it’s the techniques mastered over almost three centuries that will prove to be the differentiator. “The amount of experience they bring along after having done this from California to Australia, where they’ve worked with different climates, soil types and varieties, eventually brings out a far superior product,” says Deo.

Bedingham says while the grape varieties, blends, and ageing are different in Épernay and Nashik, the process is identical. For example, champagnes made in Épernay are aged up to three years, while Chandon is aged between one and one and a half years. “Ageing does make a difference. And that’s why we plaster ‘Methode Traditionelle’ on the bottle,” says Bedingham. Most winemakers in India age their sparkling wines for an average of four months.

“With Chandon, Moët has created a benchmark for sparkling wines in India. Other domestic players will soon begin adapting its best practices to improve quality,” adds Gurnani. About a year ago, when York decided to develop its sparkling wine, Gurnani says it decided to age the wine longer than the industry average in India and also adopted some of Moët’s blending options. “If we had to do this by ourselves it would have taken us ages, through trial and error. We’re a lot surer of our wine now and these practices will soon become popular with other winemakers as well,” he says.

Brindco International’s Dhall says that although the race for dominating the Indian wine market is now split between Sula, Fratelli Wines, Four Seasons, and Moët, the French company’s quality and pricing has helped it create a category of premium sparkling wines. He adds that because Moët is part of a luxury group, it is not focussed on volumes, but more on building a category. “In its initial years in India, Moët put in a lot of effort on training, sometimes even helping them with the right glassware,” he says. In fact, in the last 13 years, some of Moët’s heaviest marketing spends have been around fashion events.

ON THE 10TH FLOOR of its India head office in south Mumbai, Gaurav Bhatia, head of marketing at Moët Hennessy India, is busy multitasking between calls, e-mails, and this interview. “We’d already started expanding our network to facilitate Chandon, and it has now picked up pace,” says Bhatia.

With Chandon priced at Rs 1,200 for the Brut and Rs 1,400 for the Rosé, Moët has created a new high-end, locally-made category, similar to the Indian made foreign liquor segment that dominates the whisky market. Dhall says Moët is hoping to target young consumers. “In the future, they’ll probably release a reserve variety at Rs 2,000 to Rs 2,500. This builds a ladder for the consumer, who will eventually graduate to the Rs 5,800 champagne,” he adds.

Bedingham says the experience in California and Australia demonstrates that champagnes and locally-made sparkling wines are specific to occasion. “We always, always, find people around the world who drink Moët on one occasion and Chandon on another. If it’s 12 people at a dinner table, it’s probably going to be Moët, but if its 60 people around a swimming pool with a barbecue, it’ll probably be Chandon. It may be the same people, but the occasion drives a different motivation,” he says.

Navigating the licence-led distribution and state tax system in India is daunting. Bedingham, however, views the red tape as merely an additional cost. “It’s not a barrier to entry. It’s a cost problem that you need to overcome. You need to have the resources so that you can deal with all these different regulatory regimes,” he says, admitting that this drives up base costs by 20% and pricing by at least 5%, plus duties and taxes.

But not every foreign winemaker can afford such a long-term view to recover investment. Since foreign players are not allowed to own land, and state taxes and a host of other levies add to the entry barriers, most boutique wineries can’t even consider manufacturing in India. “To set up shop in India, you need deep pockets, which only large global champagne houses such as Moët and Rémy Cointreau have,” says Dhall.

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Despite the costs, Bedingham is confident that the business will break even in five years. If the response to Chandon is anything to go by, it may happen sooner. Pankaj Sampat, general manager at Vivanta by Taj in Mumbai, says Chandon is increasingly becoming popular, especially in large gatherings.

Bedingham will be pleased to hear this. He says getting the nod from the technical teams that a good wine could be made in India was the biggest hurdle so far. “Once you’ve gone through that, the rest is just a question of having a well-organised process. I wouldn’t say it was anything remarkably difficult, you just need a lot of energy.” As he expects the first crush of grapes in March, he will also need a lot of patience.