Rajeev Samant founded India’s largest winery, Sula Wines, before there was even a market for wine in India. Today, the Indian wine market is growing by 25 percent a year.
Samant talks at his winery in Nashik about the challenges and successes of bringing wine to India.
For most of history, wine has been considered the province of the Western world. In Asia, wine was never considered a popular beverage. Until now, that is. Take Hong Kong, for example. Between 2006 and 2011, consumption grew by 195 percent in terms of quantity and 201 percent in terms of value. It appears as if a wine revolution is under way throughout Asia and Samant was at the forefront of this revolution in India.
As a student attending Stanford University, he grew to love the wines that were made in Northern California. In 1996, when he returned to his family in the town of Nashik, 180 kilometers northeast of Mumbai, it occurred to him that the weather in his native region would be perfect for growing wine grapes. He enlisted the help of Kerry Damskey, a master winemaker from California, and began the process of turning his 30-acre family estate into a vineyard.
This was a massive gamble, because at the time, there was hardly a market for wine in India. Even today, most Indians do not consume alcohol and those who do are more interested in drinking hard liquors or beers. Samant’s business model involved giving Indian consumers a product that they didn’t even realize that they wanted yet: high-quality, locally-produced wine.
Creating a market
Creating top notch wine in India, a feat that had never yet been accomplished successfully, was only half of Samant’s challenge. The other half of the challenge was developing a market for his wines. Samant’s strategy was to turn Sula Vineyard into a hub of wine education in India.
Today, Sula is much more than a vineyard. It is a dynamic place where people come to listen to music or to take a holiday, all while developing a taste for wine. “Our winery is in the frontline of introducing Indians to wine,” says Samant. “That along with the whole lifestyle elements – restaurants, the resort, the amphitheatre where we have music festivals – all of that is bundled up. These are the same things that makes wine a part of people’s lives, lifestyles and aspirations.”
Through these efforts, the demand for wine in India grew, though primarily in major cities. Eighty percent of wine consumption in India is confined to Mumbai, Delhi, Bangalore and Goa. Sula had to expand production from its original 30 acres to a plantation of over 1500 acres that encompasses both Nashik and Dindori. Other wineries have sprung up in the area, which has come to be known as India’s premier wine-growing region.
As if the lack of an established market was not challenging enough, Samant encountered a whole slew of stumbling blocks. One major issue for him was that the Indian government imposes many regulations on wines. India has much higher taxation on wine than most countries in the world, which drives Sula’s profit margins lower. There were also other bureaucratic problems, such as the barriers to selling wines between states. Each of India’s 28 states and seven union territories has its own regulations for the sale of alcohol. In the state of Tamil Nadu, for instance, wines from other states cannot be sold directly to consumers, so Sula can only sell wines to hotels.
While confronting these daily challenges, Samant has also sought to make it clear that he is invested in supporting the rural economy. By establishing his winery, Samant has been able to employ many local farmers who have all benefited from Sula’s success. He also brings with him a Californian focus on sustainable agriculture. Samant seeks to convince the Indian government that Sula is very much a company built by Indians for Indians.
Returns on investment
While it has been a challenging first decade for Sula Wines, it is now clear that Samant’s gamble has paid off. Sula took two years to turn a profit. Today, it has revenues of $30 million and it is growing at a rate of 33 percent. Samant’s team works very hard to continue to grow the market. “We do tasting sessions all over the country,” says Samant. “We have our own sommeliers and marketers that go out and tell people about just the basics of wine, how you should enjoy it, how you should taste it, what the different kinds of wines are and how to get the best enjoyment out of wine.”
To keep up with the growing demand, Samant has to consistently increase production. At the end of 2011, Sula produced 450,000 cases of wine and in 2012 they hope to reach 600,000 cases. That is 7.2 million bottles. However, Samant makes it clear that he is more interested in producing high quality wine, not just large quantities of it. He says, “If we were only pushing quantities we could actually sell even more. What we would prefer to do is make sure that every wine that we sell is a little bit better every year.”
Wines for the Indian palate
Samant works closely with Kerry Damskey, a renowned winemaker from California’s Sonoma County, to produce wines of the highest quality. He is also interested in creating wines that will appeal to the Indian palate. Sula Wines have a flavour profile that works well in a warmer climate and that complements the taste of spices. “At this point, Indians prefer slightly fruitier and softer wines,” Samant says, “not necessarily wines that have a lot of structure and tannin, nor ones that are meant to age.” The culture in India is to drink wines immediately, rather than storing them in a cellar to allow them to age. Sula Wines are tailored to this, and are not meant to be aged.
Samant’s team actively experiments with a range of new varietals. Currently the vineyards grow Cabernet Sauvignon, Shiraz, Zinfandel, Merlot, Chenin Blanc, Sauvignon Blanc, Viognier and Riesling. In 2005, it launched a reserve wine called the Dindori Reserve Shiraz and India’s first dessert wine, called the Late Harvest Chenin Blanc.
It is always hard for a new wine-producing region to be taken seriously. This was certainly the case with California, Australia and Chile. India is no exception. “We were perceived as a bit of a curiosity internationally,” says Samant. Gaining exposure in the global wine circuit has been a slow and deliberate process. Samant had to introduce Sula Wines to experts at international trade shows and winemakers’ dinners. “Earlier, it was a struggle to be taken seriously,” Samant recalls, “but we just went about our work as usual, trying to make our wines better every year and I think that’s paid off for us.”
Through these efforts, Sula Wines has gained global recognition. It has won a number of wine competitions, including the silver medal for its Sauvignon Black in the 2011 Decanter World Wine Awards. For Samant, these successes are encouraging, but that’s not the end of the story. He believes it is important to take a long view of these things. He says, “It’s not just about where you are right now. It’s also about the trajectory that you are on, and which then can tell you where you’re likely to be a decade from now.” Samant would like to continue the work of transforming India into a recognized wine region and ensuring that Sula Wines retains its pride of place as India’s premier wine company.
The future of wine in Asia
The wine market is experiencing significant growth in Asia as a whole. In China, Singapore, Vietnam, Malaysia and Indonesia, wine consumption is growing fast. According to a report by the United States Department of Agriculture’s Global Agricultural Information Network, there has been a distinct shift in the way that wine is being perceived in Asia. For instance, wine is considered a healthier alternative to other alcoholic beverages and creates the image of being well-heeled and worldly. Given that these Asian countries are among the most populace in the world, wine producers everywhere are beginning to take note of the market opportunities in Asia. The majority of Asian wine drinkers continue to drink imported wine, rather than wine that is produced regionally or locally. Asian wine makers have yet to truly penetrate the Asian market.
China was the first country in Asia to create its own wine and makes for an interesting case study, because it has roughly the same population as India. Samant looks to China as an example of how India’s market can develop in the years to come. In China, per capita consumption is about 600 milliliters, while in India, it is 11 milliliters. Samant believes that India has a long way to go to achieving its full potential. Still, all signs point towards more success. India is now one of the fastest growing markets in the world, on par with China, and ahead of many other Asian markets. At a growth rate of 20 percent, even the casual observer notices the increase in Indian wine drinkers. Samant is all smiles. “Things can only get better!” he says. “Cheers!”