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 After stagnating sales, albeit at record level totalling of 110,000-115,000 cases for 2013-14 and 2014-15, Grover Zampa Vineyards (GroverZ) is all set to achieve an annual growth of 80% for 2015-16 with 40% growth anticipated in exports.
Aal izz well
‘Last year’s sales were 80,000 cases of premium (over Rs. 300 a bottle) and super premium wines (over Rs.1200) and 33,000 cases of value-for-money wines (Santa Cruz, Villa 89 and Red Lips Ports selling for under Rs. 300). This year we have already achieved 90,000 cases sale by September – the 5 low-season months. We have no doubt we will achieve the target of 200,000 cases this year.’
What are the factors that have caused such an optimistic outlook? ‘Our quality has gone up tremendously. We have been focussing on international competitions and winning a rich haul of medals. The distribution that had gone a bit haywire in the past is back in place. The financial constraints that bogged us down last year have reduced considerably with our investors chipping in. Everyone has more confidence in our product and the growth.'
Value-for Money to Super Premium
But what made you move towards the low-ended wines, I ask when he tells me that in terms of the super-premium wines they are already ahead of everyone and in the premium wine sector they hope to close the gap with the leader Sula. ‘We realised there was a section of the market where we needed low end wines to penetrate-e.g., Kerala market. So we started to sell low end ‘Ports’ made in Karnataka and Maharashtra to such markets.'
He also clarified that the super-premiums were made from grapes in their own vineyards or the leased ones. Even the La Reserve is produced in Karnataka from vines that are already 15 years old and hence the quality of these wines is getting better and better.
‘We are already the biggest producers of age-worthy wines,’ claims Sumedh as he explains that they use their barriques for 3 years only and discard them. 'But usually they are good to use for 5-6 passes if they are cleaned properly after every pass, I exclaim. ‘We could-but we want new barrique ageing for La Reserve and Vijay Amritraj range and to give the experience of freshness and fruit in our young Art Collection wines and like them to be in stainless steel from beginning to end.’
‘This naturally requires more funds. We are looking for more investment from people who know the market sales are growing further and their confidence is building up.’
Vineyards have been one of the major weaknesses of Grover Zampa, as I have been saying about Grover Vineyards in Bangalore for years. Although Zampa Vineyards has 33 acres in Nashik, Bangalore hasn’t any ownership. This does create the problem of consistency. Sumedh concedes ‘perhaps due to limited financial resources the company did not choose to invest in vineyards. We have about 150 acres of vineyards owned/ on long term lease and 200 acres under long term agreement, though. In fact, about 45 acres of these have 15 year old vines and these are used for premium wines like La Reserve and Vijay Amritraj Reserve Collection, giving the beautiful concentration and richness.
He adds, 'we have revamped our set-up and have Manju Nath, an ex-employee of Grover, who did a short stint with Alpine before joining back the company as Vice President –Vineyards. He is one of the best persons in India today for vineyard management. Manju and his team are scouting for more land under long term lease or to buy outright’. He agrees that the quality can be best with the vines totally under your direct control. ‘We have become more aggressive in long term leases and tie-ups,’ he confides, adding ‘we fully realise that the quality of wine depends upon the vines and we are investing more to get the better quality fruit. Incidentally, we have already doubled the manpower during the last year to give support to the Vineyard team.’
How do they propose to get the extra grapes for the increased production this year? ‘In terms of production, last year we crushed over 1400 tons for the premium segment. This year we plan to ferment over 2000 tons. Manju Nath’s team is responsible for getting quality grapes organised to meet our targets.'
Exports
‘We exported about 20,000 cases last year to about 20 countries. This being at 25% of our premium wines sold, is a very good performance in exports. Our biggest markets are France, Japan and UK but we opened the US market last year as well with New Jersey, New York, Washington and California marking our presence. We are looking at Texas and will soon have presence in 7-8 key markets. We have shipped 2 containers-one in September last year and one this fiscal year. We have our team also driving it from there. In fact we have our man on board living in the Oregon Washington belt. We have an advantage in that he is capable of covering more area.’
 ‘Australia is another target market and we did our first export to the market towards the end of last year.'
But for export we want to adopt a different approach. Currently, more sales overseas take place through Retail or in the Indian restaurants where people go and order Indian wines. We find that people still don’t know if India makes good wines and the current approach doesn’t put India on the world map. We want to go directly through top Hotels and restaurants to create branding. I was at The Raffles Singapore for an Indian Cuisine and GZV wine pairing dinner. Where 54 covers consisting of mostly non- Indians paid to enjoy Indian food paired with wines from Grover Zampa at Tiffin, their Indian restaurant. Most people who attended didn’t know India makes wines but were extremely impressed with the quality of wine-paired food. Same thing happened in Dubai last year where we had successful dinners with a wine club and some other groups. We plan to repeat the experience.'
Import business
'We had initially planned to add imported wines to our portfolio as we have the domain knowledge, experience and distribution system to make it work. But as you know, it does require resources which are still limited. We feel that there is so much more potential in our existing business. So we have decided to put imports on the back burner and have no plans in the immediate future.'
Going international
'All the shareholders as a group want to go international as the brand and expand production. The expansion plans are being discussed. We have no plans to go public at this time but the existing investors would bring in the additional equity from their resources. The investors are happy with the progress made with their investments and are keen to exploit further potential. The market is too small right now. But all of them believe that the future of the company is very bright and don’t mind investing more.
One of the key areas to expand would be in buying more vineyards. We understand that to make good wine we must have vineyards under our total control and this is possible only when we lease on a long term basis and have our own vineyards.
'Yes, it would perhaps have been nice to buy the vineyards in Bangalore when Grover was alone but it’s always a question of capital requirement. At this time I feel we have access to the resources to buy more land. Our vineyard team is scouting around. We are also looking for bigger parcels so that we may be able to experiment with newer grape varieties as well.'
But aren’t there restrictions in buying land, I ask? ‘We plan to buy in Karnataka where there are less restrictions. Even in Maharashtra buying agricultural land is no problem as the Directors are from Maharashtra. But for the same grape varieties, we believe the results are more consistent in Karnataka and our focus will be more there,’ he says.
Hospitality and Wine Tourism
Considering Grover Zampa has been in business since the early 1990s they have been distinct laggards in hospitality and wine tourism, with a mere 6000 visitors to the winery in Bangalore. ‘We understand the need to upgrade hospitality and wine tourism in our wineries both in Bangalore and Nashik. We have been planning for the last two years but we have a different concept of hospitality and wine tourism than others,’ says Sumedh who is from the F & B background, having worked earlier in Marriott International and Indian Hotels Company. 'We plan to have restaurants in both the wineries within the next couple of years. But we want to give a premium experience to our clients.‘
Shareholding and expansion
This is not directly my area of concern and I am not involved in this part but i can say about half of the equity is with the promoters, i.e., Grover family and Zampa partners. The balance 50% is with PE investors like Mr. Ravi Viswanathan and Reliance .
The outsider investors are generally very happy with the promoters and are quite involved in the business. We have our own meetings with the Directors at least once a week and sometimes even more. We have Ravi Viswanathan (one of the active PE investors who also invested in Sula last year) join us at least once a month. He has been very supportive of the company and always makes positive suggestions. He believes the current levels are negligible but has confidence in the growth.'
Governmental Support and APEDA
GroverZ has been a company run on professional standards and does not depend upon government grants. So when I asked Sumedh about their experience with the government, his one disappointment was that the embassies overseas were not supportive. ‘I remember when I was with J W Marriott about a dozen years ago, the Chilean Counsel General and the embassies would request us to taste their wines-they were not popular in the market place-and look where they have reached now! Our Indian embassies are still not actively supporting us in our endeavour. APEDA is the only contact left for us for promotion. Wines can partner with them but are not the focus in their game plan.'
IGPB
So what happened to IGPB? It was formed exclusively to promote Indian wines. Shouldn’t the likes of Sula and Grover have come forward and contributed their share of the funding required as was mandated before it started functioning? ‘That’s not entirely true,’ he says, ‘we know the government wanted us to pitch in. Firstly, the board got politicised and secondly, everybody had to chip in-not only Sula and Grover. The smaller companies were in financial trouble and perhaps still are. We went through a rough patch ourselves. Today, if someone asked us to pitch in, we could perhaps contribute our share. But the financial health of many producers is still not good and they are not in a position to fund it. The government should have done some hand holding for a few more years. IGPB is a closed chapter but the government can infuse funds and the locks could still be opened.'
Vision for Future
'We know we are at the #2 spot today in India but we hope to reduce the sales gap in future. In the next 3 years the most important mandate for us is to increase our vineyard acreage from 100 to 300 acres. I feel we have the resources to achieve that now.
We hope to have our hospitality segment going –we aim to provide a quality experience. There will be a top quality hotel in Nashik with our name jointly on it and it will target the premium clients. Negotiations are on and we shall see it on the ground within 3 years.
We will continue to improve our quality and also plan to bring out a super premium wine at around Rs. 3000. I cannot divulge details right now but it will be out in the market hopefully, next year.
 We are limited in the sparkling wine category with only 4000 cases being produced in Maharashtra. We are building the sparkling winemaking capacity in Bangalore also. By next year we shall double our production capacity and be able to meet the demand in Karnataka and double the sales.
We plan to increase our participation in Wine Festivals and similar activities-Resources were again a constraint earlier. We organised The Great Grover Wine Festival in Bangalore this year and it was very successful with around 1000 people attending it. This year we expect to attract 3000 people-we have tentatively planned for December 19 but might delay it by a couple of weeks. We had started with Nashik fest as a biennial event. We will have it in January 2016 but make it an annual event now. But here we shall have more selective audience,' he adds.
With Sula being miles ahead of Grover and everyone else, it is good for the industry for GroverZ to become stronger and give competition to Sula. Rajeev Samant, Founder CEO of Sula has always maintained in private conversation that they need someone to compete so they do not become complacent. GroverZ is in a perfect position to do just that and with Sumedh Singh Mandla being the professional CEO at the helm of affairs, it is quite a possibility-only time will tell.
Subhash Arora
GroverZ is coined by delWine for Grover Zampa Vineyards for brevity and is not a legal entity (although I feel they should consider it in the long term)-editor |