Rajeev Samant: Indian Wine Market cruising along with Sula in the Lead

2018 has been a very good year for us as we crossed a milestone - the million case- mark. ‘But you had reached 950,000 cases 3 years ago’, I cannot help interjecting.’ True, but that included Port wine that sold for Rs. 120-150, leaving us with not much profitability. We have been evolving our strategy to focus more on premium wines. And don’t forget we suffered setbacks due to demonetisation and the Supreme Court Ruling of 500 m highway ban. We have been increasing our prices marginally too and decided to move away from some markets with lower returns. In terms of value we have been steadily increasing our revenues.

Trends in the industry

Our market had been more white wines-almost 60%. India and Sula are going red now with 60% being red. Sula Cabernet Shiraz is the biggest single selling brand in India at 150,000 cases a year; and Sula CheninBlanc is India’s largest selling white wine. We have seen consistent double digit growth in our Cab Shiraz, and our Dindori Shiraz is another growth wine taking on the likes of GZV La Reserve in competition.

Sparkling wine is another segment that has been booming for the last 5 years; our sales have practically doubled. We have a very decent share of the 80,000 case-market that includes bubbles like Seco (Price in Mumbai around Rs. 400 and Delhi around Rs. 600). An interesting development during the last few months has been that 90% of our wines are now being produced with the Prosecco (Charmat) method-including Brut Tropicale.

Another success story has been the recently launched red sparkling Shiraz which I had been talking about with my Aussie viticulturist. Rupali Bhatnagar had been deeply involved in the project and I must say, the product has come out very well and has been received very well by the market-first in the Tasting Room and now in Mumbai market (we still don’t sell in Delhi). But this is made with the Traditional method which is the perfect method for sparkling reds. Chenin Blanc is perfect for the prosecco method. Chardonnay Brut is still made with Traditional method and is at the higher price of Rs. 1900 a bottle.

We are focusing on our ‘Rasa’ label programme with superb results. Both Rasa Reserve Shiraz and Cabernet have been excellent quality and at Rs. 1700 and Rs 1950 they are our most expensive wines so far. We have no plans to launch any higher priced wines for the moment, we want to concentrate on making Rasa the best it can be. Good  quality Cabernet as you know, is difficult and more expensive to grow even in Karnataka because it works well only when the yields are low- like 3 tons an acre, to achieve desired Brix level of 25. And of course, we require New French oak barrels and need to keep the wine for a year in the barrique-all this adding to the cost. Our basic Cabernet Shiraz hardly uses any oak, it’s a more fruit-forward red.

Management Control

You may rest assured I maintain full control of Sula’s management with majority seats on the Board and the authority to appoint the Chairman and CEO, despite Private Equity partners entering and exiting- more specifically VisVires and Reliance Capital leaving last year at good profits. Incidentally, I am glad to inform you that Mousse Partners, a family office of Chanel has taken part of their stake in the company; their first such investment in India.

Kadu Range of wines

We are very happy with the Kadu range that was introduced to offer wines in Karnataka from grapes grown in Karnataka and fermented there as well. The Heritage winery we bought last year has been renamed Kadu Winery. It is complete now and we opened to the public last month. It saw bumper crowds last month.

We are getting a very different kind of crowd as wine tourists. Wine at Heritage was selling earlier at Rs. 100 a bottle. With wines selling around Rs. 500 a bottle now, our visitor profile has also changed. The winery had to be totally redeveloped since it was producing only low-end wines earlier, of not much use to us. But the location is excellent for wine tourism and we look out for announcements on that front!

I am also very proud that we are the first “wildlife wine”, contributing to tiger conservation in Karnataka through this project.

New Launches

Besides converting our sparkling wines to prosecco method, and the Shiraz red sparkling wine which has been accepted very well in the market, we introduced Dindori Chardonnay and a Reserve Sauvignon Blanc in the ‘Source’ label both at Rs. 1050. Our “Provence-style” Source Grenache Rose has already been accepted very well by the market.

We have also raised the bar on our Port Gold that used to sell for Rs. 200. It has been packaged afresh, made with Shiraz grapes and made with a special fermentation technique this sweet red wine at 15% alcohol, sells now for Rs. 500 a bottle for customers that are looking for a good quality Port or sweet red wine which were totally missing in the market.

Help from the government

Surprisingly, when you say it is the politicians who are a roadblock, in fact it is mostly bureaucrats who are the difficult ones. Ministers and politicians of all parties understand our view point - today Sula is providing jobs to around 7000 farmer families; they make around Rs. 2.5 to 3 lakhs (Rs.250,000-300,000) per acre with costs at around Rs. 80,000 an acre!). Unfortunately some bureaucrats seem intent on creating roadblocks and because they are exalted IAS officers they take illogical decisions and then stick to them, refusing to admit that they might be wrong. If we really want to double farmer incomes then we need to drop our old mindset of Kharif and Rabi crops or cotton and sugar commodity crops! Wine, cheese, yogurt, juice and similar processed agriculture products need to be promoted for better income to the farmers!

 We hope that Maharashtra’s groundbreaking Wine Excise Policy of 2001 (extended for 10 years in 2011) will be extended in 2021. They understand our contribution to the community very well and are quite supportive but we will have to wait and see. The policy has done wonders for Maharashtra and I don’t think they would want to harm the jewel in the crown.

Sustainability

This is one aspect of our business which I am totally passionate about. In fact, we even hired a Chief Sustainability Officer a couple of months ago, a young Delhiite with great academic credentials  who worked with Pepsi in the US before returning to India to join Sula.

We have a system of big victories (every few months) and small victories which are reviewed every week. We today generate 50% of our electricity through solar panels. We are already generating 1.5 mega Watts and in 18 months hope to reach 2 .0 MW. If I had my way, we would be 100% solar, which is not possible as we have a lot of work happening in the night shift.

Surprisingly, the local electricity board is worried about our continuous expansion of solar panels and is creating several road blocks to ensure that their important customer ‘does not get out of their hands.’ This despite the PM’s clarion call to promote renewable energy. Once again bureaucracy creates the problem!!

Wine Tourism

 Last year Sula saw a record number of 350,000 visitors to the winery. I believe we are the biggest winery in the world in terms of numbers visited; no one has challenged us so far. But we do not want to expand our facilities to welcome more visitors and would rather control numbers. In fact, we have started a system of entry fees that can be used to buy a glass of wine; like a cover charge. This has resulted in about 5% drop in numbers but our revenues have seen a jump of 15%. That’s my preference - so our actual wine lovers get a better, less crowded experience with like minded folks.

Our vineyard resort The Source is going great guns. We just added 8 new  rooms to the existing 25. 20 more rooms will be ready within a year making a nice sized resort. The entire area is booming with another big resort coming up just a kilometre away. Finally India has a bona fide wine tourism destination!

I am also most excited about SulaFest on 2nd and 3rd February this year because of the top quality of music artists like Jungle from UK and Shankar Mahadevan from Bollywood. DJ Sasha is my all-time favourite and though he is old school he is excellent and I am glad we have him this year.

Exports and Imports

We are increasing our exports about 10% every year but frankly we are more focused on the domestic market. You know the natural market for export is London and UK and that market is on the decline. It is anyway, very expensive to visit and conduct the tastings and promote exports. The Indian restaurants are nowhere near as supportive as one would expect and hope, they compare our wines to cheaper Chilean imports or prefer to buy wine from their supplier of Black Label Scotch!  

We would rather use the limited resources to increase our sales in India- there is so much scope to do so- there is a long way to go!

Our imports are growing steadily also and currently standat around 30,000 cases.

Long and short end of it

As we enter our 20th year we are very happy with our performance. It is not easy to sustain for 10 years in this industry-we have completed 19!.. and successfully. We are happy to be the market leader with 60-65% of the market. We shall continue with ‘premiumisation’ of our wines as that’s what consumers are looking for. We are very happy with competition today or tomorrow. I am very happy with what Ravi Viswanathan has done in and for the industry.

Congratulations for the 800th issue of delWine. Yours is not only an eNewsletter –it is a reference point for many in the industry.

Good luck, Cheers and Jai Ho!!

Rajeev Samant

(as shared with Subhash Arora on phone)  

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