While Grover Vineyards had a good product, it failed to communicate with the Indian wine drinker. Post its merger with Vallee de Vin, the new brand Grover Zampa is looking to market itself better and be a worthy challenger to the number one player
DIVYA M. CHANDRAMOULI
When you’re treading down the road of mergers and acquisitions, there’s always talk of the bigger guy consuming the smaller guy and how the latter’s identity is at stake. And a merger between equals is a rare sight in business. Then again, there are cases where the coming together of two entities isn’t about size or equality but about making optimum use of resources to meet an opportunity. The merger in 2012 between Bengaluru-based Grover Vineyards Ltd. and Nasik-based Vallee de Vin Pvt. Ltd. and the resultant brand, Grover Zampa, is seen as best positioned to take on the market leader, Sula Vineyards (Sula), which currently owns 60 per cent of India’s wine market. “Sula’s quality is excellent, so the biggest challenge for Grover Zampa will be achieving and maintaining consistent, quality wine that is in a style that consumers enjoy,” asserts Harshal Shah, sommelier and wine consultant to hospitality brands such as Hilton Hotels and Shangri-La Hotels.
Since 1970, Grover Vineyards has produced quality wine but a serious lack of marketing effort has hampered its growth. “On the one hand, you had a brand that was well-established in the minds of the consumers and on the other, you had a brand that held the brand building capacity,” explains Ravi Jain, CEO, Grover Zampa. Jain and Deepak Roy (founders of Vallee de Vin that makes Zampa wines) were set to enter the wine industry but felt it was sub-optimal to do so with a new brand. Instead, the duo looked to merge forces with Grover Vineyards to create India’s second largest vintner.
In its first year, Grover Zampa has seen better efficiencies in operation that are helping it bridge the wide gap between the number one player and the rest of the market. One of the advantages the merger accords the brand is that of dual location, with wineries in Karnataka and Nasik, both regions with good grape cultivation. “Grover Zampa is the only wine producer in India which is able to offer consumers a regional selection of Indian wine; from Karnataka and Maharashtra. That can be quite a USP, if it sells its products well,” says Shah. This move also helps get a better handle on interstate taxation and improves cost competence. Alok Chandra, founder of wine consultancy, Gryphon Brands, says, “For Grover Zampa, cross-production will significantly reduce costs in both locations.”
There’s this notion that wine does not pair well with Indian food. If you look at wine consumption across the globe, in most countries, people drink wine as an aperitif. And if we encourage this trend and worry less about pairing, there’s no reason why we cannot sell more wine.
One of the salient differences as Jain asserts, is the creation of a complete portfolio of wines – from sparkling and still wines to port wines. The endeavour here is to offer quality at different price points. “You can sell wines that cost Rs. 500 and more to only a handful of people. If we have to get more people to drink wine, we can’t sell only at higher price points,” says Jain while justifying the introduction of two port wines to Grover Zampa’s portfolio.
Opening up markets
Jain states that the wine story in India can be written only if wine drinkers from all parts of the country are brought to the fore. Like many of his peers, he believes that India’s potential lies in the lesser reached corners. In order to increase reach, pan-India, Grover Zampa has focused on creating quality wines at varying price points; it currently has eight wines in the price bracket of Rs. 200 to Rs. 1,100 alongside two port wines in the price bracket of Rs. 100 to Rs. 150. Additionally, it is also looking at creating a widespread distribution network by placing promoters in tier-II cities. “Starting with the states we are most familiar with, we are looking to push our port products in Karnataka at places such as Hubli and Belgaum. Similarly, we are eyeing Nagpur, Solapur and Kolhapur in Maharashtra,” shares Jain. Even in the metropolitans, Grover Zampa is taking steps to ensure that it is available at all places where there is a high footfall, from hotels and restaurants to clubs and wine shops, allowing the consumer a wider choice.
Jain reasons that consumers are open to trying new products that come well-packaged and puts the onus on wine makers to create the reach. Elaborating on changing mindsets, he says, “There’s this notion that wine does not pair well with Indian food. If you look at wine consumption across the globe, in most countries, people drink wine as an aperitif. And if we encourage this trend and worry less about pairing, there’s no reason why we cannot sell more wine.”
In the same vein, Jain talks about Grover Zampa’s brand building activities. He’s quick to admit that Grover, by itself, failed to market its brand although the product had impressed Indian wine drinkers. Post-merger, the company is still looking at leveraging the Grover name. “Even today, we are making a conscious effort to talk Grover to our consumers,” says Jain. Earlier this year, it organised ‘The Great Grover Stomp’, a day-long interactive event which showcases the vineyards at Nasik and the complete product range to wine enthusiasts. This event will continue to be an annual feature. Additionally, the brand sponsors an annual golf tournament and this year, it is looking to conduct an event in Bengaluru on the lines of its philosophy, ‘fellowship of the finest’. This in tandem with participation in wine festivals and art promotions will create recall for the brand amongst consumers. As Jain suggests, wine lends itself beautifully to all things fine – be it art, sport or tourism. “In the past, I have had big successes with other beverages, be it beer or hard liquor but wine is a product with soul and this experience has been far more interesting,” he shares.
Phase of consolidation
The Indian wine industry is at a nascent stage where companies must first look to grow the market before they look to outdo each other. Experts across the board remain optimistic about the market potential on offer. “I’ve always been bullish about the prospect of wine in India, and think that volumes will continue to grow at about 20 per cent annually,” says Chandra. Interestingly, Jain says that this is a phase of consolidation where it makes business sense for smaller wineries to be taken over by profitable enterprises. “Right now, the gross margin pool of the industry is negative. There is a need to reformat and reconstruct or everybody is going to lose out,” he opines. Jain also hopes that the Grover Zampa merger has set the tone for future collaborations in the industry. As for the company to consider growing inorganically, Jain asserts that it needs time to settle down and “pass this year in the way that we believe we can.” “In time, if we see that a good asset is available, we are always open to that possibility,” he adds.
At present, Grover Zampa has a long road ahead. First, it needs to gain momentum and assert itself on India’s wine map. Second, it needs to present itself as a worthy challenger and take the fight to Sula. Jain takes a realistic stance and says the company is looking to master the basics before realising greater ambitions. In terms of immediate growth, Grover Zampa aims to grow sales volumes by close to 50 per cent, over the combined sales of the two entities from last year. “We are looking at selling about 1,60,000 cases this fiscal,” says Jain. In order to achieve this and chart future growth plans, the founders have brought in a professional management team. “While I will remain with the company, our COO, Sumedh Singh Mandala is likely to take over in six to nine months,” shares Jain. He believes that a professional team led by Mandala is best suited to take care of the day-to-day operations of the company, leaving him and his founding team of liquor connoisseurs including Kapil Grover and Deepak Roy, to work out strategy. In this regard, the company has brought in Singapore-based wine investor, Ravi Vishwanathan, as an investor, guide and mentor. Besides Vishwanathan, Reliance Capital has also invested in Grover Zampa and holds an 18 per cent stake in the company. “While Ravi has a worldwide vision of wines that we can benefit from, we expect Reliance Capital’s financial muscle to be of tremendous use in the future,” concludes Jain.
Grover Zampa Vineyards
Founders: Kapil Grover, Ravi Jain, Deepak Roy
Investors: Consortium led by Ravi Vishwanathan, Reliance Capital ( 18 per cent stake)
Focus: Taking the challenge to current market leader by tweaking its wine portfolio, introducing two port wines and marketing better