Rajeev Samant, CEO of Sula Vineyards,Nashik, has been passionately involved in all aspects of the wine business. Sula has grown from 30 to 1,500 acres (owned and contracted); from a production of 5000 cases to 200,000 cases; from two wine varietals to a portfolio of 18 wines since its inception in 1999. Samant shares his thoughts about his company and the Indian wine scenario with Brinda Gill
Sula is now 10 years old. How does that feel?
It feels great. It has been a wonderful experience getting people to drink and enjoy wine and Indian wine in particular. A decade ago there was a small segment of wealthy and well traveled Indians who were familiar with the best French wines. But now a new class of successful urban Indians, for whom wine drinking was not a tradition in the family, is keen to learn about wine. Sula has significantly raised the quality of Indian wines.
What challenges did you face in the early years?
The first couple of years involved a lot of hard work, particularly until the state government’s wine policy (of excise duty exemption on wine) came into effect in 2002. Before that, we really didn’t know if we would survive. There was a sigh of relief when the exemption came. There have been many changes along the way. It used to be a huge challenge to persuade farmers to grow wine grapes, for example. Till 2004 they would only sign up for it acre by acre, but in the past couple of years there has been a big switch.
Are there any particularly defining moments you can recall?
It was one morning some time in 2004, when I got up and thought to myself, “I don’t really need to go to work today. I can take the day off!” It brought a smile to my face. It took almost five years to reach that point. Another defining moment was in late 2000, when Sula made it to the wine list of the restaurants of the Taj Hotel in Mumbai. I left a bottle of Sauvignon Blanc with Mr Jamshed Lam who seemed sceptical about it. He said he was having some friends over for dinner and would open it in the evening. The next day he said he was impressed by it and it would be on the hotel’s wine list. It was a Eureka moment. Getting on the wine list of Zaika, London, a Michelin-star restaurant in 2003 was another milestone.
How do you see Sula positioned today?
Sula is in a fantastic position. We are number one in premium wines, that is wines priced above Rs 300. What’s more,today we are on the verge of becoming the overall number
one wine company. Sula is the strongest brand, with hardly any competition. In the last two months Sula has sold more in rupee value (not volume) than any other brand. We don’t discount much. In fact, we are the least discounted wine.Is producing quality wine an on-going effort?Out of 260 employees at Sula, 255 probably had never tasted
wine before joining us. So it continues to be a challenge to train people about wine, its production and marketing.
You have been credited with great marketing acumen. Do you agree?
Marketing turns me on. For an engineer and an economist like me, the mathematics and science of winemaking, its production and technical aspects are not a challenge. I find a great, albeit subtle, challenge in marketing; in conveying a message to people. In the wine business, both these aspects are important; you need to produce good wine and you need good marketing.
What eco-friendly measures in viticulture and wine production is Sula adopting?
Eco-friendly measures have a different connotation in India vis-à-vis the West. In India we need to focus on sustainable and low-impact viticultural practices. A certain minimum amount of chemical input is necessary, otherwise one runs the risk of not remaining viable. In the West, four months of snow kills pathogens, whereas here there is continuous growth of vines through the year due to the climatic conditions.However, being environment-friendly is personally very important for me. It is important for the country and the world. It sustains business and the planet. Global warming is leading to changes in climate across the world; temperatures in Nashik too have been going up. Vermiculture of grape skin, seeds and stems; watershed management and an integrated pest- and nutrition-management system are in place at our vineyards.Conserving water and using solar energy are very essential. Reduce, renew and recycle are the buzzwords that are very important to us at Sula.
What do you think of Indian wines in general?
We have come a long way in a short time, but still have many lifetimes to go. There are only two or three big players so it is not like an organized industry. We need to grow as an industry. There are some wine producers who are producing good quality wines.However, the quantities are small. They need to produce good quality consistently for four to five years to establish themselves. The better Indian wine producers are set apart by their consistency in producing large volumes of quality wines.
What do Indian wine producers need to do to produce better quality wines?
They need to concentrate on quality and not on quantity.They need to commit time and fi nancial resources for four or fi ve years before thinking of profits.One hears of a surplus of wine grapes in the market.
How did this come about and what is the way out?
The 2008 the harvest was up by 70% from the previous year.Unfortunately, the subsequent economic slowdown and the November terror attacks have also affected the wine sector, so this year wineries are looking to crush less fruit. Growth is down,
some wineries are sitting on wine stocks, and banks are not lending. Farmers who have not signed contracts with wineries are facing a difficult situation. At Mahawine (an annual expo on grapes and wines) I have repeatedly asked farmers to sign
contracts. My fear is that the present situation will turn off a lot of farmers. Shortage and glut do occur. Production just needs to be managed better by planting the correct amounts of vines, signing contracts with wineries, focusing on the quality of grapes, and following required viticultural practices in terms of water schedules and pesticides.
Small wineries face difficulties in marketing their wines. Does Sula buy from other wineries?
Presently smaller wineries are having a tough time. Yes, Sula has bought some wine as part of a tie-up with one winery. Our team is present during wine production to ensure our standards are met.
What do you feel about the taxation on imported wines? And on the whole is the Indian wine industry also constrained by the taxes?
This is a delicate issue because we do have excellent potential to build a wine industry here, but very cheap imports wouldn’t allow that. The taxation in some cases is quite high; for instance as opposed to the prevailing 200% tax in Maharashtra, a duty
of Rs 300 per litre is being proposed across wine categories. This will make the more expensive wines cheaper, but will give us some protection from cheaper subsidized imports. Even with regard to customs duty, we support a specific duty rather than
an ad valorem duty. At the same time local producers should take the opportunity afforded by the protection right now to produce quality wines, so that at some point in the future when duties are lowered, domestic producers won’t get wiped out.
What is your view regarding bottling imported wine in India?
I feel quality suffers due to the long voyage leaving the wine not quite as robust as it should be.
How do the Indian and Chinese wine markets compare?
There is no comparison between the two markets. China’s market is presently 50 to 70 times bigger in terms of consumption as well as production. China has had a culture of drinking rice wine and other wine, and now the large middle class has taken to drinking wine made from grapes. It is one of the world’s ten largest wine-producing countries. Hopefully, India can move that way soon!
Do you feel there is healthy competition between Indian wine producers?
Right now, because of the tough market conditions and the large number of producers who’ve entered the market, there is heavy discounting being resorted to by some producers. This is spoiling the market. Retailers, hotels and restaurants have got used to demanding big discounts which makes it very hard for the business to be profitable. Producers have also been demanding protection from their local state governments, which is a matter of grave concern. These problems will persist through 2009 since there’s a grape glut. We also need a good all-India forum for issues to be sorted out, which doesn’t really exist at the moment.
How do you view the launch of the Indian Grape Processing Board?
Bold decisions need to be taken at the top. If the word “wine”can’t be used in the very name of the Board, it has a certain kind of impact on the wine sector. Calling it a Wine Board would have gone a long way towards legitimising the consumption of wine and other mild, fermented beverages.
What do you like most about drinking wine?
Opening a good bottle of wine after a long day and enjoying it with some good food and good conversation with friends is what makes wine special.