Grover Vineyards, the only domestic wine major to not own a production facility in Maharashtra, might soon be cutting loose from native Karnataka.
Well, at least in part. Starting February 2007, Grover Vineyards will be crushing and bottling wine at a hired bottling plant in Maharashtra while simultaneously completing registration prerequisites to put up its own winery later that year.
The reason for this upheaval?
The need to fight the pricing battle, as price-sensitive consumption volumes rise. By the turn of September, Grover's second line of wines, christened Sante, aimed at the the entry-level consumer, will be on retail shelves.
Tagged some 60 per cent cheaper than Grover's existing line, the Chenin Blanc and Shiraz varietals will be available in all states save Maharashtra.
"Maharashtra's vexing excise duties, aimed at protecting local producers, will take up the price of a Rs 220 bottle of wine to Rs 370, and that will completely destroy the price competitiveness," says Kapil Grover, CEO Grover Vineyards.
The solution? Bottle wine in Maharashtra, of course. It's a matter of natural progression, given that the company is already sourcing grapes from the Nashik region for the new brand.
"The only reason that the wine is priced so aggressively is that we have now begun sourcing from Nashik. We pay our farmers in Karnataka Rs 45 per kg of wine grape, whereas in Nashik we pay Rs 20 a kg; farmers
in Nashik extract up to eight tonnes per acre against four tonnes in Nandi Hills," explains Grover.
He adds his claims to quality: "At that price segment, we're the only wine to not resort to a mix of table and wine grape."
Grover is the second among the troika of wine majors to introduce a second line of wines. Chateau Indage has Vino, which, marketed in a PET bottle with a screw cap, is priced at Rs 90 for a 750 ml bottle."
The hired bottling facility will eventually make way for a self-owned winery on a three to four acre plot, at an investment of about Rs 4 crore (Rs 40 million). "It's the license approval that's tedious procedure," says Grover, "capital expenditure is not prohibitive."
For the first batch of 200,000 bottles of Sante, production has been carried out at Grover's Bangalore winery. Sales for 2006-07, predicts Grover, should touch a million bottles (in 2004-05, it was roughly 780,000 bottles, of which exports was roughly 25 per cent).
"We're hoping Sante will account for at least 150,000 of that," he says. For that, access to the Maharashtra market would be key, since Grover's chief consumption is split evenly between the Bangalore, Delhi and Mumbai. Concludes Grover, "The delayed launch in Maharashtra will have already cost us."
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