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Posted: Tuesday, August 04 2009. 11:50

Feature : 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

Comments:

 

# AMAN DEEP Says:

Rightly said Mr. Arora, some of employees had guided wrongly and projected wrong figure of industry to Mr.Ranjit. But i feel if indage wants to re bounce it should project on their quality instead of quantity.I know their sales head Mr.verma the person who drowned the company projecting primary sales instead of secondar sales.I wonder Mr.Ranjit has done MBA from renowned business school, when all this mess was going on why he was not able to track the wrong ongoing.despite all this last year Markets of Rajasthan,Uttar pradesh , punjab was open.I personally feel in current year indage will bounce back and will learn lesson not to repeat mistakes which they have done in past.lots of corrupt employees have left company and i think this is good for indage.Mr.shyamji who brought culture of wine in India hats off to him and he should personally take care of company. The brands of indage are very good. My best wishes are with indage

Posted @ April 19, 2009 10:50

 

# Sourish Bhattacharyya Says:

I must congratulate DelWine for being the first to report about Sula's climb to the top of the domestic wine business. It's heartening to see how Rajeev scripted the success story. You'd also been the first to report about the conditions at Grover. Keep up the good work of reporting without any fear or taking any favours. I only wish Indian companies were a little forthcoming with their numbers and didn't obfuscate matters with tall claims and doubtful figures. There's no way of knowing anything about the wine market, unless of course one follows your infomative newsletter. Keep more coming!

Posted @ August 12, 2009 13:22

 

# Subhash Arora Says:

Thanks for your comments Neeraj, which have been posted after correcting a couple of minor grammatical errors. I did not know the article will create such an uproar. Are you suggesting that their are factual errors in my article? I have enough data to support my assumptions and analysis. I thought it was a fairly straight forward article written with as much objectivity as possible. We would be glad to admit error if you can send me some related facts to the contrary. Since you have been in journalism, you would appreciate that nothing in the article has been directed at anyone, nor is there any sensationalism involved.I look forward to receiving from you some info that relates to factual errors. Subhash Arora

Posted @ August 07, 2009 13:43

 

Neeraj Sharma Says:

Dear Subhash, After going through the above article and the first few posted comments, it dosen't reflect good on the quality of the contents..It seems very immaturish to see someone writing about a company and you posting it without checking on the authenticity of the information. I agree that feedom of expression should be practiced but to bring about a social change in the country..not to hamper someone's reputation without knowing the facts. Today we are witnessing sensationalism in the media world but let us not go down to such levels of bringing information which may or may not be accurate. I have studied journalism since many years but what i make out from the above news piece is sheer unobjectivity. Thank you Neeraj

Posted @ August 07, 2009 13:36

 

# Subhash Arora Says:

I have no idea who Anup is. The comment was obviously received after the article on Sula appeared in delWine. If there are any inaccuracies, you are welcome to point out. We will be glad to publish them. We do not take information for our articels in delWine from anonymous sources. I dont know if you are related to Indage or Sula in any capacity, now or before. But we shall put the comments from you or anyone else received as they are. As you might notice, email of this gentleman Anup as well yours and anyone else who sends the comments, are published on the net for our readers to get in touch with each other directly. We do not, and in fact cannot check the authenticity of Comments. We do edit them for any basic grammatical errors or the use of any non-parliamentarian language or an intent to malign an individual. Subhash Arora

Posted @ August 06, 2009 17:43

 

Ajith Pillai Says:

If Anup is the same Anup Singh Bhatia who was thrown out of Indage and previous companies that he has worked in- for fraud and embezzlement on a major scale, then I'm impressed by his comments and am rather wondering whether all contributions in Delwine come from similar sources.

Posted @ August 06, 2009 17:36

 

# Anup Says:

Dear sir, having had first hand experience with Indage i would like to reiterate that Sales in Indage have never been what was being projected. The major hoopla arond a one million case market and Indage having 70 % market share is a fallacy -a far cry if you see carefully the sales are just stock transfers and in some markets the inventories of bad stocks are more than their 10 years sales.Renewal of licenses is a perpetual problem for they owe loads of money to their suppliers amd distributers.Their staff has not been paid their salaries for last nine months.They are overstaffed and many of their employees are working elsewhere.Hats off to producers like Sula and Grover who share their exact figures with all and sundry.If we calculate the actual sales ex depots indage will be a poor third.Exact inventories in many states can be given on demand. It is a mess of its own creation- so much so that even statutory payments like TDS deducted has not been deposited and all ex employees are still to get FORM 16 and reimbursement of travel -not forgetting salaries. Kudos to Mr Chowgule for having led this company to a disaster

Posted @ August 06, 2009 12:15

 

Subhash Arora Says:

Thanks for very valid comments, Phil.I agree wholeheartedly with you.I have met Mr.Shamrao Chougule and he is a man of great vision-a true pioneer. He truly brought India on the world map with his Omar Khayyam. His Riviera and then Chantilly were good wines for the time. But I do feel the compoany went overboard in expandinf-it changed from being a winery to a corportate entity which had to do things to please the shareholders more than the palate. With serious challengers coming in the field, they had become an enigma even before the recession set in. Recession just brought out the fact that the house was not in order but in a mess. But I do believe that with a strong corportate culture and years of experience, they will rebound. For the sake of industry, I hope they do. But I hope they would have learnt the lesson that to sustain in wine business , wine and the customer should take priority over the shareholders. Ranjit Chougule is a good friend and we all have great respect for Sham ji and we wish them well. Subhash Arora 

Posted @ August 06, 2009 12:02

 

# Philip Jones Says:

It is interesting to read your article about Sula vineyard. All of what you say may be true and if Indage has made some unwise business decisions, so be it. But you have to give them credit for trying to do many things no Indian winery has done. I personally believe that a great deal of their misfortune is due to the recession. More importantly, after visiting India last year, I think that all of you in the wine business in India must never forget the great things Shamrao Chougule has done for India's wine industry. His boldness in starting Indage. His wisdom in understanding the need to improve India's vineyards with certified grape stock. His venture into sustainable and organic farming. The list goes on and on. Yes, Indage may be in trouble,but I for one wish them all the best. They have earned my respect. Phil Jones Winemaker/Viticulturalist Spencer Hill Estate

Posted @ August 06, 2009 11:36

 
       

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