United Spirits To Hike Its Wine Portfolio

Vijay Mallya''s United Spirits (USL) will be launching two wine ranges later this year. Over the past two decades, USL has been more or less absent in the wines category. However, the company felt that it was imperative to create and introduce its own brands as wines form 50 per cent of global spirit sales.

The company operates through two wine subsidiaries, United Vintners and Four Seasons Wines. United Vintners will deal in imported wines, which the company has been doing for the past 20 years, while Four Seasons will produce and sell Indian wines straddling all price points. The company''s new range would be priced between Rs 375 and Rs 500 per bottle. This would be followed by a super-premium reserve range, which would be sent to French oak barrels. Zinzi is priced between Rs 150 to Rs 276. USL had set up its wine division in September 2006 and invested Rs 25 crore in plant machinery and equipment. The company may also invest as much as 50 per cent of its sales in advertising and promotions and an additional Rs 75 crore in the next four years to scale up production. USL currently sources grapes from a 1,000 acre land in Baramati, 120 km from Pune. The company looks to buy more 300 acres there and get into contract farming on another 700 acres in the next two years. Wines form a very small percentage of total spirits sales in India, but it has the potential to go up to 50 per cent, on par with the rest of the world, say experts.

Other players in the Indian wine industry include Chateau Indage, Grover Vineyards and Sula Wines. Diageo India, arm of global spirits Diageo, is also expected to enter the wine market in India in a big way, while Seagram India, part of the Pernod Ricard Group, launched its wine brand Nine Hills last year. The company expects Zinzi, which is priced lower than many other existing wines, to provide tough competition to other brands.

Wipro Expands Products Portfolio

The tremors of the US economy are now being felt in back offices in India where outsourcing has certainly lost its sheen and that is why aggressive players like Wipro are now clicking on products to salvage depleting margins. Wipro is all set foray into products business by expanding its R&D arm, which will include conceptualising, designing, prototyping and even manufacturing.

The product business launch is expected in next 6 months and Wipro is already in talks with local manufacturers in Taiwan, Korea and India for manufacturing tie-ups on a revenue share basis. The pilot projects are already underway in Wipro''s Bangalore labs.

Infosys and TCS on their part are looking to build a stronger product portfolio. TCS, for instance, is looking to develop platform based BPO and Infosys looking to strengthening its core Internet Banking Software - Finacle through acquisitions. The race amongst the Indian IT companies to establish presence in the product space is quite understandable given the current margins in 30 per cent bracket is on its way down.

Globally the margins for IT services are between 10-12 per cent but the product companies clock between 25 and 35 per cent. But the products also come at a huge cost, significant R&D investments have to be made upfront and the revenues will only kick in 2 to 3 years horizon.