Only quality is sustainable

IN CONVERSATION

Kapil Grover talks to Business Standard about increased production capacity, connecting with the consumer, the swap of cork for the Stelvin cap, and Grover Vineyards' foray into cheaper wines

On producing and selling...

We have been increasing production capacity by 25-30 per cent year on year. This year we added 135 acres to our vineyards, taking the total acreage to 400 acres by end 2006. Our net sales this year will close at Rs 15 crore, up from Rs 12 crore in 2004-05. We hope to sell 7,35,000 bottles by the end of 2005-06.

You lose some, you win some...

We are currently in talks with a couple of investors to disinvest a 35-per cent stake, made up of 18 per cent of a Venture Capital investor's stake and 17 per cent of our own.

Although the valuation puts us at Rs 150 per share, we're really hoping to look beyond that at an investor who has strengths in marketing and distribution that we can hopefully leverage. Verve Cliquot (which own a 14-per cent stake), for example, has brought much to the table.

The French drink Grovers...

We currently export 30 per cent of our produce, and hope to stabilise it at 40 per cent in two years. Our largest market is France, where we have an excellent distributor.

I have a great personal interest in the UK market because I really believe we have a readymade market there with the popularity of Indian restaurants. We will begin exporting to Japan by the end of 2006.

But in India Grovers is still only the third-largest selling...

The local consumption for Indian produced wine is about three million bottles and growing exponentially, so all our attention should be focused here. I agree that in terms of brand building and customer connect, Grovers has been a sleepy brand.

We have been focussing so much on the grape, that we have ignored consumer marketing, although we host several events with the trade.

But to be fair, we don't have the kind of promotion budgets that our competitiors have. They sell a Chenin Blanc made from table grapes at Rs 400, and have Rs 200 of that to spend on marketing. But we do intend to start focussing on brand building events.

But really, quality is the only sustainable strategy. Because retailer schemes and smart marketing are all very well... but what when the big guns in wine come into the market, their big budgets will swallow you.

What's new?

What we're really looking forward to this year is our accessible range of red and white wines in the Rs 200-220 range that will be out by September.

This will compete with Sula's Madeira and Indage's Vin Ballet, but will be a superior product because it will use local wine grapes; using table grapes though is non-negotiable.

Also in our premium range, after 24 years of experimenting with Chardonnay, we finally see light at the end of the tunnel. Grovers Chardonnay will be out in the market by the end of 2006. Unfortunately, despite our best efforts, Merlot and Pinot Noir just doesn't grow in India.

Screw for cork...

Grover Vineyards will be the first Indian winemaker to offer our customers the ease of the Stelvin cap, which despite all the debate, is making swift progress even in old world wine producing nations like France.

We're introducing screw caps for white and rose immediately, and will then introduce it to our reds because they are all meant to be drunk fairly young, and the screw cap allows natural ageing only up to 3-4 years.

La Reserve will keep the cork because it is a wine that can be aged. Internationally, cork production is unable to keep pace with wine production and as much as 5-7 per cent of all wine is tainted by bacteria present in cork. It's a huge problem. But the Stelvin cap is also practical for the end user.

Now, plastic bottles we will never introduce. But then, who knows... five years ago, I would have said the same about the screw cap!