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Posted: Friday, October 30 2009. 11:35

Sula plans to expand & increase Lead

Rajeev Samant, owner of Sula group of companies announced last week what had been published in delWine over 2 months ago, that Sula has officially emerged as the number one wine producer in India and is charging ahead with faster expansion than planned earlier to leapfrog and increase its lead.

Rajeev Samant sharing Sula's plans with members of DWC at ai Restaurant

Making the announcement at a special dinner hosted by the Delhi Wine Club at the award winning Japanese Restaurant ai in the Metropolitan Mall, Delhi Rajeev made the special announcement to a full house- of members who had come to meet the number one producer and enjoy his wines paired successfully with the Japanese cuisine the restaurant has become famous far, in a short span of a little over one year.

Despite the industry facing turmoil and many producers facing a shut down, Sula managed a sales increase and sold about 194,000 cases; less than 225,000 cases planned but nevertheless showing a growth of over 10% over the previous year.

The shortfall might have affected the contracted farmers and the wineries from whom Sula has been buying but the vendors had been warned about the change of plans right at the beginning of recession last September, though this could hardly have helped the farmers and winery to change their plans.

The damage has not been as severe as caused by the crisis Indage has gotten into- the crisis that has been building up for the last one year. ‘Wineries like Flamingo and Rajdheer wines have been dependent upon Indage and will have tough times ahead,’ informs Pradeep Pachpatil, President of the Nashik vintners Association. ‘Worse is the plight of the contracted farmers who have not been paid by Indage for their crops this year and are already facing a crisis,’ he added

Sula has been steadily building up its capacity and the market. Says Rajeev with a big smile, ‘The Delhi market has been absolutely rocking for us. We have clocked a 30% gain during the last 2 months. If nothing untoward happens, we should be able to record a 25-30% growth this year.’ This seems to be a very ambitious target when one considers that the market has still not recovered from the recession. But Sula has chipped off a major portion of Indage’s market share in the market, due to their being absent from most markets due to the inability to get fresh licenses and other problems.

Indage is not out of wood and unless it is able to restructure itself soon, the near term situation is very unenviable for them and quite precarious.  They keep on announcing something positive happening in the ‘next couple of weeks’, but nothing concrete has been announced by the company.

Taking advantage of the gap in this supply, Sula is advancing its expansion plans which include adding acreage under contract farming, increasing capacity at its facilities and also introducing mid-priced range to attract new client-base. As a part of increasing the portfolio, it has recently launched three new blends labeled as Mosaic wines. These are fruit forward wines with soft tannins for daily drinking and will be kept at the mid- price range, keeping in mind the market conditions. White is a blend of Chenin and Sauvignon Blanc while the red will see the blend of Rhone varietals, Shiraz and Grenache. The same blend will also be used to make the Mosaic Rosé which might well eventually replace the current Blush-a white Zinfandel Rosé which is a rather tired wine now.

Sula also entered the lucrative CSD (defense canteens) business a couple of months ago, where Indage used to rule the roost. ‘Last year, we launched Samara and Port Wine 1000 to beat recession. The response has been tremendous and we are looking to add few more brands to our portfolio,” says Rajeev, adding they plan to add more of low end wines as well. He does not like to talk too much about the low end wines as Indage did though. Sula is known as a premium producer and at some point, it might start affecting the premium wine business. He must also be well aware that what passes of Port in India is not only illegal (from EU and Portugal standpoint) but it is not actually wine, in the strictest sense of the word. But in the absence of any wine laws, it will certainly add to the top line and the number of cases sold.

Rajeev with AD Singh (r), owner of ai - a part of Olive group of restaurants

Sula has 1,500 acres under contract farming. “We will increase it by 20 per cent this year to meet the demand for our premium wines, adding  ‘we have been very successful in adding some Malbec to our red wine and I believe this is the grape of the future. We plan to grow more of this varietal.’  Sula has been growing Cabernet Sauvignon, Shiraz, Zinfandel and Merlot along with Chenin Blanc, Sauvignon Blanc. During the last year it added a Riesling and a Viognier which is sold as Dindori Reserve. Whereas Riesling needs to be worked on, the success obtained in the quality is tremendous as was obvious at the special tasting at the ai dinner-the full bodied spicy wine is well concentrated, has complex aromas and the flavour is very enticing.

Grover Vineyards who have gone past their quality problem of a year ago are girdling up to give Sula a run for the money and are planning a steady growth. But the company could be scouting around to buy troubled wineries and try to leapfrog into the number one position by increasing the portfolio and the consequent revenues. UB has ambitious plans and they could turn out to be the dark horse during the next 3 years, if the plans they boast of, actually fructify.

With Indage crisis changing the wine scenario considerably , a lot of action will be seen in the Indian wine market in the near future, despite the current slowdown- which has shown signs of recovery since August with most producers seeing a revival in their stagnating sales.

Subhash Arora

Comments:

 
 

Bharat Deshmukh Says:

A detailed article and encouraging one for the wine industry and enthusiast. All the best Sula Vineyards

Posted @ November 03, 2009 13:36

 
       

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