WINE (CARBONATED WINE) AND BOTTLING LINE OF IMFL
[CODE NO.3737]
An Alcoholic beverage is a drink containing ethyl alcohol of agricultural origin in any percentage, derived either through natural fermentation, or addition during process. Ethanol or ethyl alcohol is produced through a natural process when the yeast converts the sugar contained in fruit, cereals and sugarcanes, into alcohol. Pure alcohol is a colorless, pure liquid. The process used for its preparation is called fermentation.
India is the third largest global spirits market by volume in the world, just behind China and Russia. It is also one of the fastest growing markets in the world. The domestic alcohol industry has recognized that the young people and women are the key target populations for them and they are assertively focusing on these vulnerable groups through their marketing campaigns.
India is one of the world‘s most restrictive places for trade and doing business. In 2014, it is ranked 110 out of 152 countries, in terms of economic freedom, by the Economic Freedom of the World Report. Its Freedom to Trade Index was 6.2 (highest score 10.0), 124 Doing business in India remains difficult for both foreign and domestic companies. The country was ranked 133 out of 152 countries by the World Bank this year in its Doing Business Score. Many studies have indicated trade barriers continue to be a major hindrance to India‘s development and prosperity, making trade liberalization and further deregulation critical to its economy.
The industry is consistently launching new products, such as flavoured alcoholic drinks, to attract the nondrinkers in this group.The availability of alcohol is increasing in India; there are more outlets in shopping malls and popular market places, which make it easily accessible. In some states, certain alcoholic beverages like wine and beer can be sold in supermarkets that further increase the availability. Increase in physical availability of alcohol leads to rise in alcohol consumption and alcohol related harm. Intensive engagement of the alcohol industry is observed in social initiatives and policy related activities under the broad framework of corporate social responsibility (CSR), which now-a-days are part of a more general strategy that is designed to further the industry’s political and economic interests.
The Indian alcohol industry is a high-risk industry, on account of the high taxes and innumerable regulations governing it. The international liquor industry, the Indian one too has seen players with strong brands; diversified portfolios and large operations achieve market leadership positions. The Indian liquor industry comprises the IMFL, country liquor, foreign liquor bottled in origin (BIO), illicit alcohol, beer and wine segments.
Indian made foreign liquor:
The maximum permissible limit for alcohol content in spirits is 42.8 per cent v/v (volume to volume). The overall IMFL market is increasing at the rate of 9 to 10 per cent annually. There is a tremendous growth in the vodka market. It is the fastest growing among all types of liquors. Vodka consumption has been growing at the rate of about 44 per cent over the past few years.
Country liquor:
The average alcohol content in country liquor is 33 per cent volume to volume. It is produced in local licensed distilleries and is made of cheap raw material, primarily rectified spirits of grains or molasses. In the southern states coconut and other palms are used as raw materials in the production of local liquor. It is called as arrack, desi sharaab, daru, tharra, toddy, fenny and tari. The production cost for country liquor is low; the excise duties are also lower than they are for other liquor. The idea behind country liquor was to provide cheap alcohol and thus check the illicit trade of alcohol.
Beer:
Beer has become a popular beverage in the country only over the last two decades. It’s growing at a rate of about 17 per cent per year. In India, beer is manufactured in licensed breweries and there are more than 60 beer brands available in the market. The growth in the beer market appears to be driven by young consumers and professionals who consider beer a trendy drink, as compared with traditional spirits. There is also a small demand for foreign beer in the up market urban areas. The highest levels of beer consumption in India are observed in the southern states.
Foreign liquor bottled in origin (BIO):
Imported liquor forms a very small part of alcohol consumption in India. It is usually consumed by the rich and upper middle class in metropolitan cities. It is also subjected to customs duty, making it much more expensive. The imported spirits market in India is growing at the rate of 25 per cent annually.
Wine:
Wine is an alcoholic beverage made from fermented fruit juice, usually that of grapes. Wines made from other fruits are usually named after the fruit from which they are produced (for example, apple wine or elderberry wine) and are generically called fruit wine. The term “wine” can also refer to the higher alcohol content of starch-fermented or fortified beverages such as barley wine, sake, and ginger wine.
The alcohol industry is very important for the government. It generates an estimated Rs. 18,000 crore per annum in spite of the fact that the per capita consumption of liquor in India is the lowest in the world. The total liquor industry is worth Rs. 2,000 crore. IMFL accounts for only a third of the total liquor consumption in India. Most IMFLs are cheap and are priced below Rs. 300 per bottle.
Alcohol sales proceeds account for 45% of the total revenue collection in the country. Whiskey accounts for 60% of the liquor sales while rum; brandy any vodka account for 17% 18% and 6% respectively. MNC’s share is only 10%and they have been successful only in the premium and super premium ranges. Post WTO the government may have opened India to foreign distilleries, but the duty has been increased from 222% to 464-706%.This is due to the fact that there is a 100% customs duty, 150%contravening duty, local taxes, distributor’s margin, retailer’s margin and publicity charges. The cost is finally borne by the consumer. Though the government claims that this is being done to protect the domestic liquor industry, the domestic industry accounts for 99% of the market share.
This protectionist policy could prove to be counterproductive and lead to smuggling. As of now, only 45% of the sales are through legal channels and only 25% of this is duty paid for. Within India itself, the policy of alcohol retail differs from state to state. While some states like Maharashtra. Uttar Pradesh, and Tamil- Nadu have a liberal policy, come states like Haryana and Andhra.
COST ESTIMATION
Land & Building (4 Acres) Rs. 11.07 Cr
Plant & Machinery Rs. 6.50 Cr
Working Capital for 2 Months Rs. 3.08 Cr
Total Capital Investment Rs. 21.28 Cr
Rate of Return 66%
Break Even Point 33%
INTRODUCTION
INDIAN MADE FOREIGN LIQUOR:
COUNTRY LIQUOR:
BEER:
FOREIGN LIQUOR BOTTLED IN ORIGIN (BIO):
WINE:
INDIAN LIQUOR INDUSTRY IS DIVIDED INTO TWO BROAD CATEGORIES
INDIAN LIQUOR INDUSTRY IS GROWING AT 12-15% P.A OVER LAST 2 YRS.
LEGAL ENVIRONMENT
CUSTOM & DUTIES
SOCIAL ENVIRONMENT
WESTERN CULTURE INFLUENCE
PROHIBITION IN INDIA
THREAT OF NEW ENTRANTS
BARGAINING POWER OF CUSTOMERS
BARGAINING POWER OF SUPPLIERS
PREDICTIONS REGARDING RAW MATERIALS
RIVALRY
ALCOHOLIC BEVERAGE
THERE ARE A LARGE VARIETY OF ALCOHOLIC BEVERAGES
OTHER FORMS OF ALCOHOL
DIFFERENT ALCOHOLIC DRINK
1. WHISKY
2. RUM
3. BRANDY
4. VODKA
5. BEER
6. GIN
WHISKY:-
WHISKY
TYPES OF WHISKY:
SPARKLING WINE
SPARKLING WINES
CHAMPENOISE METHOD
THE TRANSFER METHOD
METHODE ANCESTRALE
BULK METHOD
USES AND APPLICATIONS
CHARACTERISTICS OF THE INDIAN LIQUOR MARKET
FACTORS INFLUENCING THE GROWTH OF ALCOHOL INDUSTRY IN INDIA
URBANIZATION:
FAVOURABLE DEMOGRAPHICS:
CHANGING SOCIAL NORMS:
INCREASED ALCOHOL ACCESSIBILITY AND AVAILABILITY:
STRATEGIES FOR PROMOTION AND ADVERTISEMENT
OF ALCOHOL PRODUCTS
SURROGATE ADVERTISING OF ALCOHOL PRODUCTS:
SPONSORSHIP OF EVENTS:
PROMOTION AND THE ENTERTAINMENT INDUSTRY:
ATTRACTIVE PACKAGING AND LABELING OF ALCOHOL PRODUCTS:
NEWER PROMOTION CHANNELS:
MARKET OVERVIEW OF WINE INDUSTRY
LIQUOR MARKET IN INDIA
ALCOHOL COMPANIES AND THEIR MAJOR BRANDS IN INDIA
MARKET OVERVIEW OF IMFL (INDIA MADE FOREIGN LIQUOR)
1. AT AN INFLECTION POINT
INITIATE BUY; 50% POTENTIAL UPSIDE FROM CMP
2. INVESTMENT THESIS
2.1 INVESTMENT POSITIVES–OPPORTUNITY TO RE-RATE
RDCK’S CURRENT VALUATION DOES NOT TRULY REFLECT
ITS PREMIUM POSITIONING
PREMIUM PORTFOLIO EXPANDING
PREMIUM VODKA AND BRANDY BRANDS ALREADY POSITIONED STRONGLY
PREMIUM BRANDING AIMED AT OFFERING A WIDER PRODUCT PORTFOLIO
AND WIDEN CUSTOMER BASE
MARKET SHARE GAINS GOING FORWARD
PREMIUM MARKET TO OUTPERFORM REGULAR MARKET GROWTH
VERTICAL INTEGRATION TRANSFORMED THE COMPANY
TRANSFORMATION INTO A PREMIUM LIQUOR COMPANY FROM A BULK PRODUCER
SCOPE OF RE-RATING ON CONSISTENT MARKET SHARE GAINS
IN PREMIUM SEGMENT
25% EPS CAGR, IMPROVEMENT IN RETURN RATIOS
2.2 INVESTMENT NEGATIVES
STRINGENT LAWS MAKE LIFE TOUGH
HIGHLY REGULATED INDUSTRY
PROHIBITION HAS MADE A COMEBACK IN THE POLITICAL VOCABULARY – KERALA AND BIHAR HAVE ANNOUNCED PHASED PROHIBITION
PROHIBITION RELATED UNCERTAINTIES
VOLUMES TO BE IMPACTED IN SHORT TERM
ALMOST NO PRICE HIKES HAVE COME THROUGH IN THE PAST 18-24
MONTHS FROM STATES WITH PRICE CONTROLS
PRICE HIKE IN THE HANDS OF GOVERNMENT BODIES
GST IMPACT COULD HAVE A NEGATIVE MARGIN IMPACT
RISK FOR MARGINS POST GST
HIGHER TAXES FOR LIQUOR COMPANIES
3. RDCK’S PREMIUMISATION STRATEGY HAS BEEN SUCCESSFUL
STRONG SUCCESS IN MAGIC MOMENTS, POSITIVE EARLY SIGNS
ON MORPHEUS BRANDY
PREMIUMISATION IS THE KEY CATALYST TO MARGIN IMPROVEMENT
TRANSFORMING TO PREMIUM FROM BULK
MAGIC MOMENTS GIVING COMPETITION A TOUGH TIME
RDCK IS A LEADER IN THE DOMESTIC VODKA MARKET
FOCUSING ON BRANDY SEGMENT TO AUGMENT MARKET SHARE
TARGETING BRANDY MARKET AS WELL
MORE BRAND LAUNCHES
NINE BRAND LAUNCHES SINCE 2006
4. PRICING OUTLOOK MORE POSITIVE
GOVERNMENT CONTROLLED DISTRIBUTION
SOME PRICE HIKES IN RECENT TIMES
TREND OF LOWERING OF TAXES ON LIQUOR IN SOME STATES
OVERALL POSITIVE OUTLOOK
5. COMPETITIVE DYNAMICS
FOURTH LARGEST PLAYER IN VOLUME TERMS
RDCK’S VOLUMES STAND AT 18.2MCS, 6.4% MARKET SHARE
6. WELL POSITIONED TO CAPITALIZE ON RISING PREMIUM IMFL CONSUMPTION
INDIAN SPIRITS MARKET ON GROWTH TRAJECTORY
INDIAN PREFERENCE - HIGHER ALCOHOL CONTENT AT A CHEAPER PRICES
6.1 INDIAN SPIRITS MARKET SIZE AND GROWTH OPPORTUNITY
MARKET SALES VALUE GROWTH –6.3% CAGR FY16-20E
KEY TRENDS:
6.2 STRUCTURAL CHANGES IN THE INDUSTRY MAKES INDIAN SPIRITS MARKET MORE
ENTRY OF GLOBAL MAJORS
SHIFT FROM VOLUME GROWTH TO VALUE GROWTH
INCREASING PREMIUMISATION–IMPROVING PRODUCT-MIX
6.3 VODKA TO OUTPERFORM OVERALL IMFL GROWTH IN THE COMING YEARS
POTENTIAL MARKET GROWTH FOR WHITE SPIRITS (VODKA)
AN OPPORTUNITY FOR RDCK
WHITE SPIRITS IS JUST 3.5% OF ALCOHOL VOLUME IN INDIA
(VS 47% GLOBALLY)
6.4 KEY DRIVERS FOR GROWTH OF LIQUOR CONSUMPTION IN INDIA
INCOME GROWTH
ATTRACTIVE DEMOGRAPHICS
UNDERPENETRATED MARKET
6.5 RURAL CONSUMPTION TO GROW 3.8X AND TIER 2 & BELOW CITIES
TO GROW 4.4X BY 2025
7.0 FINANCIAL ANALYSIS
7.1 REVENUE TO RISE 5% IN FY18, 6% IN FY19
BRANDED IMFL 73% OF REVENUE; CONTRIBUTION OF COUNTRY LIQUOR,
BULK SPIRITS ON THE DECLINE
REVENUE CAGR OF 6% FY17-20E
XPECT SALES CAGR OF 6% OVER FY17-19E
WE EXPECT RDCK'S SALES TO GROW AT A CAGR OF 6%
OVER FY17-19E DRIVEN BY:
STAGES OF THE WINE MAKING PROCESS
HARVESTING
CRUSHING AND PRESSING
FERMENTATION
CLARIFICATION
AGING AND BOTTLING
MANUFACTURING PROCESS OF CARBONATED WINE/SPARKLING WINE
FERMENTATION IN SEALED TANK
SECOND FERMENTATION IN BOTTLE
THE TRADITIONAL METHOD
PRESSING
DEBOURBAGE
FIRST FERMENTATION
ASSEMBLAGE
ADDITION OF LIQUEUR DE TIRAGE
SECOND FERMENTATION
MATURATION
REMUAGE
STACKING SUR POINTES
DEGORGEMENT
DOSAGE (LIQUEUR D’EXPEDITION)
CORKING
PROCESS FLOW DIAGRAM OF WINE (CARBONATED WINE)
METHOD OF CARBONATION
PRODUCTION TECHNOLOGY OF CHAMPAGNE
THE GRAPES VARIETY FOR CHAMPAGNE
BASE WINE PREPARATION
PRIMARY FERMENTATION
MALOLECTIC FERMENTATION
CLARIFICATION
BLENDING
STABILIZATION
SECONDARY FERMENTATION AND BOTTLE AGING
REMUAGE
DISGORGING
MANUFACTURING PROCESS OF IMFL BOTTLING PLANT
PROCESS FLOW DIAGRAM FOR IMFL BOTTLING PLANT
PROCESS DESCRIPTION
DETAILED PROCESS DESCRIPTION
1. ALCOHOL MASS METERING SYSTEM (SPIRIT CONCENTRATION METER)
2. RECEPTION SYSTEM FOR ALCOHOL/WATER MIXTURES
3. BLENDING SYSTEM FOR ALCOHOL/WATER MIXTURES
4. WATER DEAERATION SYSTEM
5. FILTRATION SYSTEMS
6. EQUIPMENT FOR STORAGE TANK FACILITIES
7. BATCH MIXING SYSTEM
8. CONTINUOUS IN-LINE BLENDING SYSTEM,
9. COMBINED BLENDING SYSTEM
10. CARBONATION AND BEVERAGE ANALYSIS
11. MOBILE METERING UNITS
12. PRODUCT TRACING FOR INTERNAL DOCUMENTATION BY MEANS OF
13. CLEANING SYSTEM
PACKAGING
PACKING STANDARDS:
GREEN COLOURED BEER BOTTLES
CLEAR COLOURED BORDEUX BEER BOTTLES
PACKAGING REQUIREMENT:
DETAILS OF CITRUS WINE
MANUFACTURING PROCESS OF FRUIT WINES FROM FRUIT JUICES
OF LOW SUGAR CONTENT
SWOT ANALYSIS OF ALCOHOL INDUSTRY
STRENGTHS:
WEAKNESSES:
OPPORTUNITIES:
THREATS:
LIST OF MACHINERY AND EQUIPMENTS USED IN ALCOHOLIC
BEVERAGES PLANT
MULTI-TUBE COAXIAL HEAT PASTEURIZER
ACCESSORIES
BALANCE TANK
PASTEURIZER FEED PUMP
HOT WATER PREPARATION SYSTEM
MULTI COAXIAL HEAT EXCHANGER/ HOLDING TUBES
HOT WATER RECIRCULATION PUMP
CIP SYSTEM (FULLY AUTOMATIC)
CIP SYSTEM CAN BE CONFIGURED WITH THE FOLLOWING OPTIONS
TO SPECIFIC NEEDS
ONLINE DUPLEX FILTER
ROTARY BOTTLE RINSING MACHINE
UNI BLOCK FILLING AND CAP SEALING MACHINE
SLAT CHAIN CONVEYOR
INSPECTION CONVEYOR
ROTARY LABELING MACHINE
CASE PACKER MACHINE
AUTOMATIC CARTON SEALER MODEL
PROCESS FLOW CHART OF ALCOHOLIC BEVERAGES PROCESSING PLANT
B.I.S. SPECIFICATIONS
RECTIFIED SPIRIT
PRODUCTION OF BRANDY
COMPONENTS OF BRANDY:-
ETHYL ALCOHOL:-
OTHER ALCOHOLS:
METHYL ALCOHOL (WOOD ALCOHOL):-
ALDEHYDES:-
ESTERS:-
COLUMN STILLS:-
CONDENSERS:-
PRODUCTION OF RUM
TYPES OF RUM AND THE RAW MATERIALS:
PRETREATMENT OF RAW MATERIAL:-
FERMENTATION:-
1. FERMENTATION TEMPERATURE:-
(2) PH VALUE:-
(3) FERMENTATION TIME :-
(4) YEAST :-
THE BEST YEAST ARE FROM MOLASSES.
DISTILLATION:-
CONTINUOUS DISTILLATION:-
MATURING:
PRODUCTION OF SPIRIT FOR GIN
RAW MATERIAL:
PRODUCTION FROM GRAIN:
1 COOKING:-
CONVERSION:
FERMENTATION:-
MANUFACTURING PROCESS OF WHISKY
1. PRESSING:
2. FERMENTATION:
(A) ALCOHOLIC FERMENTATION:
(B) ACIDIC FERMENTATION:
3. BOTTLING:
VODKA:
TREATMENT METHODS
MANUFACTURERS OF ALCOHOLIC BEVERAGES
LIST OF IMFL/LIQUOR MANUFACTURER IN INDIA
SUPPLIERS OF RAW MATERIALS
GRAPE FRUITS
ENA
GLASS BOTTLES
SUPPLIERS OF PLANT AND MACHINERY
SUPPLIERS OF COMPLETE PLANT AND MACHINERY
SUPPLIERS OF PLANT AND EQUIPMENTS
COLUMN
CONDENSER
BOTTLE FILLING MACHINE
BOTTLE SEALING MACHINE
BOTTLE WASHING MACHINE
LABELLING MACHINE
CONVEYOR BELT
STAINLESS STEEL TANKS
APPENDIX – A:
01. PLANT ECONOMICS
02. LAND & BUILDING
03. PLANT AND MACHINERY
04. OTHER FIXED ASSESTS
05. FIXED CAPITAL
06. RAW MATERIAL
07. SALARY AND WAGES
08. UTILITIES AND OVERHEADS
09. TOTAL WORKING CAPITAL
10. TOTAL CAPITAL INVESTMENT
11. COST OF PRODUCTION
12. TURN OVER/ANNUM
13. BREAK EVEN POINT
14. RESOURCES FOR FINANCE
15. INSTALMENT PAYABLE IN 5 YEARS
16. DEPRECIATION CHART FOR 5 YEARS
17. PROFIT ANALYSIS FOR 5 YEARS
18. PROJECTED BALANCE SHEET FOR (5 YEARS)