Distiller McDowell & Co, part of India's United Breweries group, which has been in the whiskey business in India since Scottish redcoats arrived on the subcontinent, bought French winemaker Bouvet Ladubay for 15m.

But UB's chief, Vijay Mallya, was after an even bigger prize: Bouvet Ladubay's former parent company, which makes Taittinger Champagne. The eventual US $849m winning bid came from French bank Credit Agricole.

As consolation prizes go, however, it isn't bad. Owning Bouvet Ladubay gives Mallya quality French plonk to satisfy a growing demand among India's middle class for grape over grain, and in the long term maybe a distribution network into the biggest existing wine-drinking markets. But the move by India's top drinks magnate into the European wine business should draw attention to the burgeoning wine market in India itself.

A teaspoon per person When you have more than one billion people who are becoming increasingly openminded in a booming economy with rising incomes, it doesn't take a rocket scientist to acknowledge that even a tiny percentage of this population can become a market worth pursuing. This time the world's largest democracy, after seeing success in the BPO and financial services arena, has added wine to its economic arsenal. India's wine industry is on the up and is attracting many players, both from the home front and abroad, to cater to and capitalise on the strong growth in domestic wine consumption.

The value of the Indian wine market at the point of sale is around $50m ( 39.3m).

Comparatively the market is tiny but is developing fast; it is growing at 25%-30% a year.

The fortunes of the wine industry are linked to the trend in the changing drinking habits of Indians, higher disposable incomes, growth in foreign tourists and government regulations and policies.

Total consumption in 2005 was 600,000 cases which translates to just seven millilitres or a teaspoon of wine per capita. "The day it becomes one litre, the market will be one billion litres, " says Vikrant Chougule, COO of Chateau Indage Group, the biggest wine producer in India.

While the industry is dominated by three main players . . . Indage, Sula and Grover which together enjoy more than 85% of the total market share . . . the number of producers has increased from six to more than 40 now. Having realised the potential, bigger players like Pernod Ricard, Seagram and United Breweries are also starting up their own wineries.

Rajeev Samant, who gave up his cushy job in Oracle and founded Sula Vineyards, is also upbeat on India's wine potential. "I believe the market will triple in just six years.

The opportunity is tremendous. I don't believe the domestic players will be able to keep up with that demand and the shortfall will be made up by imports. Also as consumers get more sophisticated they will demand wines from different countries.

Right now Australia, France and Chile are doing well in the market but imports totalled just 100,000 cases last year. I see that figure increasing by 40%-50% a year."

The Bollywood influence Indian consumers are increasingly becoming more hedonistic in their consumption of products and services.

This hedonism and increasing focus on health is creating tremendous interest in wine within the alcoholic beverage industry. More and more people are drinking wine;

every new restaurant that opens in the cities has a wine list and awareness is growing fast. Women are drinking in much bigger numbers and often their first choice of beverage is wine. The cinema also reflects this change, with Bollywood actresses routinely seen drinking wine, an unthinkable scenario just five years ago.

Wine producers have also been initiating measures aimed at increasing exposure and creating familiarity. Indage has started 'wine tourism', in which people are invited to take a tour of the vineyards. Says Chougule, "It's a great way of bringing in awareness amongst consumers who are very new to wine and for regular drinkers to understand the intricacies of producing a single bottle of wine. Awareness of the wine process can help reduce the 'premium' or 'expensive' tag that has been attached to wine. We are also starting a 'wine sommelier programme, ' wherein fully trained wine sommeliers at all A-grade restaurants will educate diners about wine culture, wine etiquette and wine and food pairing."

Sula has opened two very successful wine bars, one at its winery and another in Bombay and is also doing lots of research on uncommon varieties like Viognier, Riesling and Grenache to meet the evolving tastes of consumers. With such a small existing level of per capita consumption already having created a sizeable industry, the potential for growth, both for domestic as well as international wine brands, is very large.

Government backing An added bonus is that both the central and state governments are looking at actively promoting the industry. The Maharashtra state, which houses the financial powerhouse, Bombay, has taken a very positive and long-term view of the promotion of its wine industry from as early as 2001 with excise free, negligible licence cost and no red tape for the wine business.

The stance to increase special excise duty on imported wines is merely to protect the state from becoming a dumping ground for global wineries' produce that are unable to grow in their home or other markets. Other states have already begun to recognise the tremendous value addition provided by wine as a fruit-processed product and are already forming wine policies that will encourage production and consumption.

Better with each vintage India's wine is not only booming in terms of quantity and branding but is also premium quality. With a handful of exceptions amongst newer wineries, quality is improving with each vintage. A lack of established viticulture norms in a tropical zone such as India means that winemakers are progressing from trial and error to trial and success.

This is also reflected in the number of awards that have been won. International wine industry magazine Decanter ranked Grover Vineyard's 'La Reserve' red as the best new world wine. Indage has won eight awards in the last three years at the International Wine and Spirits competition, the Oscars of the wine industry. Indage wineries have already achieved strict international quality benchmarks such as ISO 9001 and HACCP.

Sula has just completed its third winery, with a millionlitre capacity. It is concentrating on planting more vineyards, improving quality and has hired Australian viticulturist Steve Brunato, from McLaren Vale, to bring the vineyards to true potential.

It's a great time to be producing good Indian wine.

Business is booming and there is an opportunity to shape the market. Indian wine drinkers tend to be a lot more sophisticated than in other Asian countries, so the wines will have to be qualitydriven. Samant sums it up, "I like to paraphrase Star Trek

EU WINE REFORM MAY HINDER GROWTH .The European Commission's proposals for reform of the EU wine sector focus on disposing of 'unwanted' wine and curbing output to tackle overproduction across Europe.

.The plan is to pull down more than 10% of Europe's vineyards by 2011 on a voluntary basis.

Farmers willing to give up their vineyards will qualify for "nancial assistance of up to 2.4bn.

.However, this is in direct con"ict with growth plans that the EU farmers may have to import excess production to emerging markets like India and China.

.Wine makers are concerned that they are being compensated to give up contributing to the wine industry at a time when there is much potential for growth for their wines in these emerging markets.