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Sula Vineyards: A benchmark for fair trade, but also economic success

If you had to choose one person who embodies the 'self-made wine grower', it would surely have to be Rajeev Samant, CEO and founder of Sula Vineyards in India. Starting with just a few hectares of land North-East of Mumbai in 1999, he has built up a wine growing empire in a country where the links with wine are tenuous, to say the least. We asked Rajeev to share his vision of wine in India with Vitisphere.
Par Vitisphere Le 03 octobre 2016
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Sula Vineyards: A benchmark for fair trade, but also economic success
C
an you detail your wine production business?

We are the largest wine producer in India. We started about fifteen years ago in Nashik – we were the first wine producer in Nashik which is India’s number one and most important wine region. We buy grapes from approximately 1,300 hectares of vines of which a small proportion, maybe 10% or less, is owned by the Samant family and friends. The rest is all contract growers with long-term, 10-year contracts. This year we’ll sell around 11 million bottles of our own wines, over 50% of which is red, 40% white and the rest is sparkling. We make several different types of wine. Our premium wines are made from grapes that we either grow ourselves or buy. Then we have some cheaper wines which are not marketed under the Sula brand name, and we do buy some amount of bulk wines for them. Apart from producing and selling our own wines, we also import and distribute a range of international wine and spirits brands.

Where do you mostly sell your own wines?

Close to 95% of our sales are in India with 5% exports. We expect this will continue for quite a while because Sula is the number one wine brand in India and we have a market share of approximately 60% here. The domestic wine market is growing in double digits so it is a struggle to keep up. It is also to some extent a protected market with very high import duties. At the same time, we have seen quite good growth in our exports as well. Our main market is the UK but other main markets include Germany and Japan.

Who is your typical customer in India?

Urban, from one of the ten biggest cities which is where most of our sales are. Typically, somebody living in Mumbai, Delhi, Bangalore, quite well educated, often with a western education and from a fairly affluent background. We are also seeing a lot of professionals, people working say in banking and technology etc.

Are you aiming to increase domestic production to keep up with the double-digit sales growth in India?

Absolutely. We are looking to increase our production at around the same pace as the market. We are not really looking to outgrow the market because we are already quite large but at around the same rate as the market for sure.

You have focused strongly on social and environmental aspects, could you detail them?  

Social and environmental issues are paramount at Sula. They are incredibly important to me and us as a company. A large proportion of our employees , much higher than other companies we know of, come from the disadvantaged ‘castes’. Both our wineries in Nashik are in scheduled cast areas and are quite economically backward. The wineries have therefore been a great boon to the local population. At our first winery, in the village closest to it, there wasn’t a single person in the village who had any kind of formal employment before we arrived. Today, at least one member of every family works for us. That village now has bikes and cars and fridges, none of which existed before we were there.  From an environmental perspective, sustainability guides everything we do – we are one of the most sustainable vineyards and winemaking operations in the world. We put a lot of emphasis on renewable energies – we have a lot of rooftop solar plants, we do a lot of rainwater harvesting, we are constantly looking at how to reduce our water usage and we recycle every single drop of water that comes into our winery. We also recycle prunings etc from the vineyard into compost as well as the food waste from our hospitality facilities. It’s a very eco-friendly operation.

In terms of styles, do you consider there to be specific terroir aspects to your wines?

Terroir is something that you can’t really get away from. If a wine is made in Nashik or say in Bangalore, the soils are quite different and wines from the same varietals are going to taste different. That’s the definition of terroir. I would not say at this point that it is a word that we use a lot because coming from such a non-traditional wine area, our first focus is to make varietal-true wines. That’s the first thing our consumers will be looking for. A Sauvignon blanc consumer will recognise those varietal features. And we have achieved that. Now we will go on to the next stage where terroir will become more important but at this point, it’s just starting.

Do you think Sula has made an impact on India’s approach to wine and if so, how?

Absolutely. When we applied for a license to make wine, the whole process took two and a half years, because wine was lumped with hard liquor and it was basically taboo. I spent a lot of time with the authorities, explaining to them what was so great about wine. I explained how wine could really drive rural economic development and employment – which was really a focus for the government - and how the authorities were missing a trick by having all these restrictions and tying us up with all this red tape. After Sula emerged, the rules changed, there was major liberalisation and after that, 25 new wineries emerged over the next three years. The excise duty was very high and today for example in the State of Maharashtra, wine produced and sold within the state has zero excise duty.

You also have an import business. What volumes do you market annually and what are your main markets within India?

Our imports are quite small compared to our production. We import between 40 and 50,000 cases a year, but volumes are growing very fast. In the last year, I have witnessed 50% growth in our imports. We have jumped from around 25,000 to 40/50,000 cases. The main markets are again the big cities such as Mumbai, Delhi, Bangalore and Chennai for instance.

Are you looking to expand your portfolio of products and if so, what type of wines are you looking for?

Absolutely. Total sales of imported wines are not that large, probably no more than 200,000 cases. So it doesn’t make sense for an importer to have multiple wines from the same region. What we are focusing on now is to have at least one good representative from each main wine producing region and that still means we have got quite a way to go. For instance, we don’t have a Bordeaux wine in our portfolio and we have just started with our first Burgundy wine. We don’t have any Spanish or Portuguese wine. All of this will come but we are still cautious and set ourselves a target of say four or five new wines in a year. Not more than ten at any rate. So in the last year we introduced our first Burgundy as well as our first Prosecco and some more inexpensive table wines from the Languedoc region.


Sula Vineyards Winery

What demographics are driving growth in the Indian wine market currently or likely to in the future?

One of the main drivers is the emergence of young women as a group of consumers. Traditionally in India, women did not drink. Now we have young women working in the big cities earning their own, pretty good salary, having a high level of disposable income, feeling very comfortable with going to a bar after work and socialising with family and colleagues, etc. That is something that just didn’t happen say fifteen years ago and it is really driving wine consumption because wine is something that is very natural for these women rather than hard liquor. This is the most important demographic for wine. A much higher proportion of Sula and other wine drinkers in India are women than whisky or beer drinkers for instance.

What are the main hurdles to wine distribution in India currently?

India is not really a country, it’s a continent. Moving wine inside state borders is like moving wine across customs borders, it’s that difficult. The regulations are extremely onerous, quite ridiculous. Each state has totally different regulations to neighbouring states. The physical infrastructure is also a problem. The lack of a cold chain so for example, a store selling alcohol is not air-conditioned in a country where ambient temperatures can easily exceed 35°C. You can imagine what that does to wine. The knowledge and awareness of wine are still tiny and that will take a long time to change.

Is there any chance they will improve in the near future or medium term?

Everything is improving all the time. The growth rate in India is 7% plus, therefore every day, new wineries are being built and people are putting in air-conditioning where they never used to, for example. As far as wine knowledge and awareness are concerned, those people are very keen to educate themselves and see how wine is considered to be better for health than hard liquor. This is why we have had a consumption growth rate of between 15 and 20% for the last decade.

A Google search comes up with more references to your wine tourism activities than to your wine production business. Why such a strong focus on wine tourism?

Today, if you want a strong successful model of producing wine you cannot neglect wine tourism. Most successful wine producers, especially in the New World, have focused a lot on wine tourism. In the Indian context, we are not that far away from Mumbai, which is one of the world’s biggest cities. We have a beautiful vineyard and property. I studied wineries in California – it was really a cradle of wine tourism. Sula is one of the most visited wineries in the world. We had 220,000 visitors last year. It’s definitely the best way to introduce wine to people who know nothing about it. The place makes people very empowered to taste their first glass of wine. Everything is set up for them to enjoy it and they never forget it. They then become customers and ambassadors for life.

Where do most of your visitors come from and what is their profile?

95% of our visitors are Indian. Even the foreigners tend to be Indian ex-pats. There may also be some overseas visitors too, we have a lot of Japanese tourists for instance. 

How do you see the future for wine tourism in India?

The future for wine tourism in India is very bright. We are only just scratching the surface. If you look at Nashik, apart from Sula, there’s not a lot else going on. If a new winery opens every year, it would become natural for there to be a sort of wine route. People want to visit two or three wineries, not just one. There are also a lot of vineyards around Bangalore, so there’s huge potential there too. As wine consumption in India increases, wine tourism will boom too.


Sula Vineyards grape picking

You recently won the first Drinks Business Award for an Indian company in the wine tourism category. Can you explain what you think appealed to judges?

Our wine tourism offer is multi-pronged. We of course have a tasting room, which is where it all started, we have a huge bottle shop, a nice store for all sorts of goodies for enhancing the wine experience and an amphitheatre where we do the big SulaFest every year, visited by around 15,000 people over a weekend, which is huge for a winery. We also have an Indian and an Italian restaurant. We have a hotel. There is so much on, you can spend two days here easily. To have so much going on at a winery is fairly unique, particularly in India, so it was a little bit of a no-brainer to award us a prize!

What are your plans for the company in the near and longer term future?

The trajectory that we are on right now is the right one. I want to try and keep up with the market growth here in India and that in itself is a big challenge. To expand from 200 to 230 hectares if your company is growing at 15% is one thing, but to go from 2,000 to 2,300 hectares - to add 300 hectares a year – will obviously start to become very challenging, particularly to maintain quality at the same time. Apart from that, we don’t have a winery in Karnataka outside Bangalore. We have such a successful model here outside Mumbai, with our winery and our hospitality facilities, it makes good sense for us to be replicating that down south. That is probably the big project for the next three years. For the rest we are just going to continue growing as we are.

How do you see the Indian wine market moving forward?

At the moment, wine is less than 1% of alcohol consumption, therefore the sky’s the limit. It has been growing in double digits over the last decade and even that is showing absolutely no signs of slowing down. The overall demographic is very favourable. If you look at the number of young people entering the alcoholic drinks category, the number of people who turn 21 every year, the potential is huge. We are not going to have any problems finding those future consumers of wine. The issue for us is to do more and more tastings which is a very important part of our marketing strategy. We have a team of tasters across the country. We are concentrating on consumers as well as the trade. We have ambitious targets of 2,000 tastings across the country not including those at our vineyards. The total is well over 10,000. We do very simple tastings with three or four wines, just basic information so that people can feel comfortable with them and go into a restaurant and order their favourite Sula wine. If we carry on doing this, the consumers are there.

How do you see Indian wines in the international marketplace in the future?

There is a consumer of Indian wine abroad too. If you take the UK, which is the most natural market for us, we have nevertheless witnessed issues with currency recently and the fact that profit margins are very slim. So India is definitely my priority market. Exports come second. Having said that, as quality improves, exports will also become very interesting and important for us.

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