COMPANY PROFILE SULA 2/15 MEININGER’S WBI 2/15 MEININGER’S

Sula Vineyards CHAMPIONING WINE IN INDIA

The market has performed very poorly in recent years when compared with its counterpart in China, but one dynamic company has bucked that trend. As Subhash Arora reports, Rajeev Samant of Sula Vineyards is quietly revolutionising his country.

he profitabilty and sustainability of was the unchallenged wine leader, initially as brand ambassador, happily flying from India’s young wine industry is far from with sparkling wines made from Thompson Mumbai to Delhi to address to a wine club T established. Sula Vineyards is not only Seedless grapes, followed by table wines at dinner, and thence to Canada to host a the leader in volume terms, but is also a well- various price levels. Grover Vineyards had tasting with potential customers. A keen wine established and profitable brand in both the pioneered in wine grapes and in collaboration enthusiast, he was as easily approachable domestic and international markets. with Michel Rolland had started production in as his Sauvignon, Merlot and the Brut that India’s wine drinkers consume 34m Bangalore in Karnataka in the mid ’90s, with he unabashedly admitted was made from ­bottles per year, including 16m bottles of limited distribution infrastructure. Thompson Seedless. Using these inexpensive inexpensive Goan ‘Ports’ and 4m of imported Sula’s first vintage was released in 2000 grapes kept it simple but fresh and fruity for wines. Sula represents nearly a third of the with a fresh, clean that early drinking. It was also highly profitable. total market, with annual sales of 10m bottles became an instant success in a market that Land is expensive and difficult to buy under and counting. was dominated by unimpressive Chenin the land acquisition laws in . Blanc. Keen to show the wine to foreign Samant approached local farmers who were The ground floor experts, Samant took samples to Vinexpo already growing table grapes and offered Asia Pacific in Tokyo in 2002. He tasted the them long-term contracts as an incentive to The company was founded in Nashik in wine with Angelo Gaja, who was impressed change to wine grapes. This helped to ensure the state of Maharashtra by Rajeev Samant, with its distinctive style. supply as Sula expanded. He says: “My family who entered the nascent wine industry Eventually, Gaja ordered a small quantity and friends own about 300 acres of vineyards in 1998 after returning from studying at for sale in Italy through his distribution including the original 13 acres where we have Stanford in the US. After experimenting company in Barbaresco. This helped to boost set up the winery. Around 2,000 acres have with growing fruits at the family orchard and Sula’s marketing efforts and to build demand been on long-term lease or contracts with finding the business unviable, he decided to for other styles. Samant had no red grapes, farmers in Maharashtra as well as in the state switch to wine grapes and produce wine in so temporarily decided to import Merlot bulk of Karnataka close to Bangalore.” He says collaboration with a consultant from Sonoma. wine from Chile. that an expected shortage in the supply chain Samant’s father who hails from Nashik With the aim of expanding his distribution means they are planting 400 new acres under was apparently keen to sell off the land but channels and market share, Samant added contract. failed to find a buyer prepared to pay his sparkling wines and some imported wines Karnataka is the only state other than asking price. At that time, Chateau Indage to his portfolio. He was also highly active Maharashtra where wine is produced and has

56 an integrated wine policy; Bangalore is the Vinoteca, a Spanish style wine and tapas bar in increased presence of non-wine beverages at third biggest market in India after Mumbai Mumbai, didn’t take off. It closed last year and the Sulafest. and Delhi. Both states have protectionist plans for further bars were shelved. Samant Sula has also been working closely with policies that deter the import of out-of-state does not like quasi-government bodies and Remy to make grape brandy for the first time wines by imposing hefty import taxes. To decided against becoming actively involved in India and is rumoured to be set to announce avoid these, Samant signed contracts with with the Grape Processing Board – IGPB - a that Sula has bought the total share of this 2/15 MEININGER’S WBI 2/15 MEININGER’S farmers there as well and leased a winery in government body formed with the intent of business. Remy has announced that they are which to produce his Karnataka wine for the partnering with private industry closing their office in India but local market. This strategy was similar to the to help promote Indian wines. they are expected to remain as one adopted by Grover when it merged with Despite his import distribution consultants on this project. Zampa Vineyards in Maharashtra. business, he is vociferous In less than a decade, Sula has The big moment for Samant and Sula against any cuts in import duties. become the market leader with came in 2008 and 2009 when the wine “I have no problems with the a 30% share of the total market. industry took a nose-dive, partly because of more expensive, higher quality The company continues to buck the terrorist attack in Mumbai in November imported wines because we negative trends by registering 2008, and followed by the global meltdown don’t make that high quality and steady annual growth of 15% to that swallowed Indage Vintners and drove these are not our competitors,” 20%. Samant insists that their it to facing bankruptcy. Samant introduced he says, “but we cannot let the focus is on premium labels. several new labels and prepared to fill the government harm the local “India has moved “There has been a 17% increase vacuum left by Indage. industry.” He also takes up into mainstream in volume in 2014 to 2015, but During the period of expansion, Samant cudgels for the Indian producers markets during a 21% increase in value. carefully watched the private equity market, and meets senior government the last couple has registered a jump in sales raising funds when necessary to enable frequently to impress upon them of ­years from the of 75% to 80% even though the him to grow the company. While he is the need for five-star hotels that niche market of volumes are small. It is our policy unwilling to discuss figures, it is known that are able to sell import duty- Indian expats or to increase sales value and not he started with an investment of less than free wines, along with Indian restaurants.”­ volume. For us it is making good €1m ($1.05m). Based on the last infusion, wines. He explains that the wine or none at all,” he says. the present capitalisation is estimated to be current arrangement means that Rajeev Samant, Thanks to Sula’s efforts. around Rs. 7.5bn (€118.5m). Encouraged by cheaper foreign wines cost even founder and CEO Indian wines have now found a of Sula Vineyards the strategy, newer producers like Fratelli, less in these establishments niche in international markets. Charosa and Alpine are also seeking strategic than the Indian wines and are Sula Dindori Reserve Shiraz was alignments. generally preferred by customers. listed at number 25 in The Wine Enthusiast However, Samant avoided contributing 100 last December. Sula already exports half- Wine politics financially to the IGPB as expected by the a-million bottles to 30 countries, making it government. Encouraged by his refusal, the most recognised Indian brand globally, Having seen the cellar door sales success other producers, already strapped for funds, despite low margins in exports, no subsidy or enjoyed by California wineries, Samant are similarly unwilling to contribute, and the help from the government. opened a smart tasting room at a time when survival of the board hangs in the balance. “The good news is that India has moved his competitors were struggling to cover their into mainstream markets during the last day-to-day overheads. This was followed by Unchallenged leader couple of years from the niche market of pitching tents to allow overnight stays and Indian expats or restaurants,” says Samant, then ‘Beyond by Sula’, a TripAdvisor-award- One of the reasons Sula has been profitable outlining the achievements: “We have winning luxury 32-room resort, conference is because it’s a lean outfit. Taking a dig at exported over 15,000 nine-litre cases to centre and spa. His experience at Stanford Indage and possibly Chandon with their big Marks & Spencer and Direct Wines in London, where they used to have regular rock concerts PR budgets, he says, “Unlike some of our who are retailers of premium wines and not encouraged him to start a wine festival in competitors we have kept our overheads as only to the Indian food segment.” He says the 2008. While the first Sulafest only attracted a low as possible and we spend minimally on company will finish the year with exports of few hundred people, there is now a purpose- PR. I believe each of our marketing persons 40,000 to 50,000 cases, which they hope to built amphitheatre and an annual two-day has a positive PR role to play.” He also boosts take to 80,000 cases in three years. “However, festival held during the first weekend of profitability by including beverages such as the strengthening of the Indian rupee against February that brings in 15,000 people from beer and Cointreau in his imports portfolio. both the British pound and euro might make India and overseas every year. “We are never going to produce spirits but if the task more difficult, especially because we Not all his experiments have been as we can increase our leverage by adding these were obliged to increase our prices by 15% to successful as the festival, and Samant has products, why not? I am not a purist in the partly offset devaluation. We are waiting to learned the limitations of the Indian market. strict sense,” he says, justifying the gradual see how the market responds to that.” W

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