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The Uncrowned King Wine Producer

Though official statistics are not yet available, Sula Vineyards appears to have whizzed past the biggest, rival wine producer in India, Indage Vintners which has seen a dramatic fall in its sales last year and is undergoing a dire financial and marketing crisis this year, feels Subhash Arora.

Ten years ago when Sula was founded by Rajeev Samant in 1999, he might not have  dreamt that he would be able to go past the largest producer, Champagne Indage or even the second biggest wine maker Grover Vineyards both of which had established themselves very well since starting their business in the eighties.

Last year Sula reportedly sold 196,000 cases of wine despite the onset of recession in September over 6 months earlier. The company claimed to be the number one producer of premium wines (over Rs. 250 a bottle) which included its Madeira label costing around Rs. 330 a bottle.

Despite the brave rhetoric, Indage has been showing widening cracks in its financial health the day the world recession set in. Employees across India have not been getting their salaries for months; there are pending tax responsibility and various other mounting short term liabilities showing the ugly head. In fact, the company has announced plans of inducing funds by various means but nothing seems to have materialised though a few announcements have been made by the company.

Indage shut most of its offices outside Maharashtra a couple of months ago as a consolidation exercise but in the process, lost out on its marketing strength and consequently a big chunk of the market share. The biggest setback appears to be in the Delhi market where it has not been able to renew its annual excise license so far during the first 4 months of the year. This market being around 35-40% of its total revenues, has hit the total sales rather badly.

Another important market where it has lost its presence is the nearby Haryana where too the license has not been renewed. In fact, the only markets where it seems to be present according to the market are the home state Maharashtra, Rajasthan and Himachal Pradesh.

What has been the loss for Indage has been Sula’s gain as the market leader. The quality problems that landed Grover Vineyards in a quagmire last year also helped Sula to strengthen its position in the market. In fact, it has currently carved out 55-60% share of the lucrative Delhi market where it had maintained a lead in the institutional sales but was always lagging behind Indage. The absence of ND Wines, Big Banyan, Raveilo and Chateau d’Ori from the market for similar reasons might have been a minor help in the statistical calculations. Seagram’s Nine Hills (the current no.4, gaining ground rapidly), Zampa, Four Seasons and Vinsura have maintained a steady ground, but were all together on the other side.  

The comparable figures are not yet out but it appears from a prelim survey of the All India market that as on August 1 Sula is the unofficial king wine producer. At the best of times, Indage used complicated accounting practice that was difficult to decipher by most people in the industry except the authors of a few foreign research reports. For instance, the one-for- one or one- for- two offers pioneered by the wine pioneer, which had become a rule than the exception in the industry, created a marketing problem for the other players but helped Indage in its accounting charms.

Sula has reportedly resisted this tempting strategy. Rajeev Samant has been practical and prudent in other ways in projecting and promoting his brand, including the creation of Sula as a wine tourism destination. One does not often hear him blowing his trumpet and claiming his wines are the best in the world unlike some of the new generations of producers with a couple of harvests under their hat. He creates marketing hype in his own creditable way. If Sula is accused of producing sweet Chenin Blanc, he is prepared to accept that while selling increasing numbers to the novices by making them believe that this wine goes well with the spicy Indian food.

Sula has come a long way, during the last 6 years before which the company felt slightly shaky and even hedged against the expected onslaught of foreign wines by setting up a wine import division. During the early years the emphasis was not much on this division. However in the last couple of years, it started focussing on this division. In fact, last year Sula figured in the Top Ten Importers list formulated by the Indian Wine Academy based on an extensive market survey. The company is quietly working to make it to the Top Five spot this year despite the difficult conditions and Rajeev conceding that the profit margins are very thin in imported wines.

‘We have come a long way in a short time of 10 years but still have miles to go,’ says Rajeev Samant who would not like to confirm or deny whether Sula has in fact reached the top. He is quite clear that they have been the leaders in the premium wine sector for a couple of years though. However, he does admit that there are a few new producers who are making good quality wines. But they are so small in size and are not expected to be a serious threat for a long time.

Indage of course, does not share the market perception and believes it is a temporary phase that will pass. Says Ranjit Chougule, the Managing Director of Indage, who had been abroad most of the last month ostensibly looking for strategic investors, has returned to Mumbai. He informs delWine, ‘I am back in Mumbai. Business is tough but we are very clear & confident of the way forward which I will share with you shortly.’ He does not feel Sula has taken the lead when he further shares, ‘I don't think Sula has overtaken us just as yet from the all India numbers I have seen. I would love to learn differently if you have them!’

There is a lull before the storm, they say. There seems to have been months of quiet from the Indage quarters. So are they sinking or strategising to take the competition on and get back to the top once again? When delWine questioned Ranjit, he was quick to respond, ‘You will see some fireworks in that department, not to worry!’

So we might be able soon to watch the Battle of the titans. Indage has been the pioneer with 25 years of experience and the leadership. It will strike back. But after only a decade of experience, Sula may bask today in the glory of being the Indian wine producer no.1.

Subhash Arora


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