Grover Vineyards set to sparkle

Grover Vineyards plans to sparkle, literally and otherwise. In three years, come the festive season of 2010, it will launch its sparkling wine. Plus, it has taken a series of steps which will enable it to retain its presence at the quality end of the booming Indian wine market.

This market is set to drastically change with the sharp cut in import duty on foreign wines and the launch of wines by brewers and distillers like UB, Seagram and Diageo. This is the challenge facing established Indian wine makers like Grover Vineyards, Indage and Sula.

With the focus on quality in a vastly more demanding market, Grover Vineyards expects to grow its likely present year Rs 22 crore topline at an annual rate of 25 per cent and keep doubling it every three years. Overall, price realisation will be maintained, with the fizz or premium coming from the bubblies and the rose` wines.

To make all this happen, Grover Vineyards have brought in partners, with new management blood close behind, and added substantially to capacity. Plus, promotion is to be greatly stepped up.

The hectic pace of change prompts Kapil Grover, scion heading the eponymous firm, to look back to "a fascinating and exciting year" that began with a setback in the form of a key departure but is likely to end with good luck in the form of a "watershed harvest next March when hopefully we will go to another level of quality."

The rejigging of stake has brought in two partners, Aman Dhall of Brindco Sales, the country's largest wine importer, who has acquired a 20 per cent stake and is taking care of distribution, and Jerry Rao of Citibank and Mphasis fame with a 15 per cent stake. French firm Veuve Clicquot, the second biggest name in champagne and a part of the LVMH stable, already owned 14 per cent.

This leaves the Grovers with 51 per cent, including the 2 per cent owned by the global wine expert Michel Rolland who "is like family". Thus far and no more seems to be the bottomline, as none of the partners want the firm to go public. "Wine making is ultimately a passion which doesn't go down well with having to worry about quarterly results," says Grover.

There is reason for him to be upbeat. Industry sources say the firm is valued a handsome Rs 80 crore, which works out to 14 times forward EBITDA, and with a post tax margin of well over 10 per cent, the business is highly profitable.

Grover Vineyards has already doubled fermentation capacity, which will thereafter be trebled to 1.8 million litres near Bangalore and 300,000 litres in Sangli, Maharashtra. The firm is investing Rs 4 crore at the main winery near Bangalore and Rs 1 crore at the one in Sangli.

The physical capacity building is being matched by the entry of key new personnel. A new chief enologue (wine expert) is coming in from California and a COO will be joining soon. Once new top managers are in place, "I will spend more time at the vineyards," declares Grover.

That's where both the passion and self-interest in wine-making meet because you can get good wine only from good grapes. Grover has spent most of his time recently talking to farmers in Sangli, Bijapur and Doddaballapur (near Bangalore), emphasising that they cannot hope to get quality grapes if they are bent on maximising yield.

The best vintages come when the crop has had a lot of sunshine and warmth for the grapes to ripen and the crop is controlled and concentrated. Grover Vineyards is getting into long term agreements with farmers "to pay them more per tonne in return for control over vineyards, with us removing the excess crop during flowering itself and determining when the harvesting will be done."

To keep up the supply of good grapes to produce the annual additional literage, Grovers have started another venture, Draksha Vineyards, with high net worth NRIs, in which Grovers have a 26 per cent stake. Regular crops will come from the first 100 acres in three years' time. But there are plans to double the acreage and more.

All this will likely help Grover Vineyards maintain its share - 20 per cent plus ¿ of the quality end of the market, which Grover defines as Rs 350 plus per bottle of wine. But this will not mean a surfeit of offerings as Grover Vineyards will continue to be guided by the advice of Rolland, their friend, philosopher and guide in wine making, who says "make fewer wines but make them right".