April 20: Wine producers have been busy during the tough Covid-19 period, not only making and trying to sell wines, but also looking at the possibilities of buying out smaller wineries or merging with the bigger ones, writes Subhash Arora who reports after confirming with Rajeev Samant, Founder CEO of Sula Vineyards that their neighbouring York Winery has agreed and decided to merge with Sula Vineyards, making it a win-win situation, not only for both the wineries but also the Indian consumer by giving them a wider choice
Confirming to Subhash Arora Rajeev Samant said today, ‘yes, Ravi Gurnani and I have agreed on the merger of York with Sula, making it our wholly owned subsidiary. We have known each other for a long time and have always had amicable relations with them. We have been in talks with them over the merger for some time. You are the first person I am informing now that we have finalised the deal.’
‘The deal will also mean we can use York’s facility for wine tourism, and make Sula Wine Road a reality,’ he added. The largest Indian winery Sula has been, by far the biggest in India in terms of wine tourism, attracting 350,000-400,000 wine tourists every year, including over 15,000 visitors to the 2-day annual SulaFest. York is barely a mile away on the same road and 5- minute drive from Sula and has breath-taking views of the Gangapur Dam Backwater and a beautiful, functional Tasting Room on the first floor with a running restaurant on the ground floor) and is a must-visit winery for many visitors to Sula.
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Rajeev did not wish to discuss the financial details of the deal stressing that it was an internal matter. But, logically, if Ravi and Kailash Gurnani and family could negotiate a part of the total package as shares of the parent Sula, it would be highly beneficial to them in the medium-long term. Kailash is a brilliant winemaker who helped improve quality for York wines and help introduce several premium labels after returning from Australia post his wine studies in Adelaide. He will continue to work as the group winemaker-adding significant strength to the winemaking team of Sula. After some time (as agreed upon between the two organisations) Ravi would perhaps join the family business of manufacturing and exports.
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Sula would also find savings both in front-end and back-end expenses, thanks to the proximity of the two wineries. The buzz in Nashik for the past few weeks has been that York has been bought over by Sula but details were fuzzy. Denying the outright sale, Ravi says, ‘we would not have considered the proposition if it had been a simple buy-out. We have worked hard to establish the York brand and would not like to see it squandered away. Agreeing with the sentiments, Rajeev said, ‘we definitely want to add the York label to our portfolio and are not looking for just real estate and tanks! They do have some very good quality wines and we would like to take them higher in our portfolio. We are looking for expansion and good labels as the consumers are increasingly looking for different labels; the merger would help us attain that objective.’
Though Rajeev poo-pooed the idea today but adding Kadu Winery in Bangalore (the Erstwhile Heritage Winery bought in 2017 and now York, would logically bring Sula closer to bringing out an IPO in future if the Board so decided. Incidentally, Ravi Viswanathan, who had earlier invested in Grover and Sula, dreamt of merging them both (although stressing it would be a financial deal only and both would remain totally independent in working) and going public only to unlock wealth. Rajeev had in fact, resented the very thought and the idea never took off beyond the interview Arora had with Viswanathan. Later, Ravi sold off his shares in Sula at good profit to another PE company and bought more shares in Grover Zampa Vineyards and today he and his PE company VisVires have acquired a vast majority and he went on to buy Four Seasons, Charosa and Myra Vineyards -and even a winery in Burgundy!
Also Read : Blog: Merger of Sula and Grover Zampa on the Canvas
York has managed to be a family-owned winery with no partnership. Barring perhaps small bank loans, Ravi had told me last time when I met him at the winery that they were self-financed. But they had obvious financial constraints and Covid must have been a very big setback for them. ‘I know we had and have a great potential but there is so much financial pressure one can take and when Sula's proposal came our way, we accepted it because in the long term York label would continue to prosper.’ It might be clarified again that label rights have been sold to Sula- lock, stock and barrel.
Also Read : York beats Sula in Winefest Harvest
York is known to be a supplier of wines to the industry. Several labels like Chandon (first year production in 2012-13 was from this winery with a lot of interaction with the Australian winemakers and viticulturists), Turning Point, Good Earth and a couple of wineries from Karnataka as also a few exclusive barrels from Connoisseurs of Mumbai and some exported labels, have been crafted at the York Winery. The resultant winemaking experience would be a welcome value-add to Sula’s resources.
Arora brought up the question of Anti- Competition Law of India (2002) and asked Rajeev what would happen if smaller companies were merged with bigger companies like Sula and Grover. He clarified just like Ravi Viswanathan had in the interview that in India wine and spirits was in the same category and wine is a very small part of the total market and such deals would not be covered under the Act. He still hopes that the competition intensifies somewhat as it is good for the industry.
Also Read : York Winery’s Mantra for UK Export
As a merger, it is a great move for both Sula and York, even though it might make life slightly tougher for the rest of the smaller players. But that’s the way wine economics works internationally-especially in India where the dice is loaded slightly in favour of the bigger players because of the irrational government laws (Delhi is a glaring example). Ironically, some of the brands that could not be available earlier to wine connoisseurs in Delhi, Bangalore or Haryana might now be available as ‘York’ labels become a part of Sula stable.
I am sure the Connoisseurs would say Jai Ho to that!
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