Sula Vineyards: Premiumisation to drive further growth

16 Feb 2024 , 10:54 AM

Analysts of IIFL Capital Services hosted Mr. Rajeev Samant (MD &CEO), Mr Karan Vasani (COO), and Mr. Abhishek Kapoor (CFO) of Sula Vineyards at IIFL’s 15th Enterprising Bharat- Global Investor’s Conference in Mumbai. Sula has been betting on the uprising of wines as an alcoholic beverage, it is looking to shift its focus to more premium wines and is hopeful of a demand boost due to increased cultural acceptance and penetration into non-metro cities. 

Focused efforts on premium side: 

Management expects double digit growth in the Elite and Premium (E&P) wines category, says popular wine segment has become too competitive (many wine producers have launched products at ~400/bottle) and would be margin dilutive to keep focusing on popular segment, . Premium wines would drive further growth, and popular segment is in fact expected to register de-growth, company has recently launched three iconic sula brands in cans format. 

Export, Inorganic growth opportunities and Expansion of wine tourism business: 

Management iterated that exports would primarily remain a brand building exercise, currently company exports to Europe, Japan and UAE through distributors. Company recently acquired a winery near Nashik, management will remain open minded towards such acquisitions but focus remains on wine business only, and would not enter into other categories. Company looking to enter wine tourism business in Karnataka. The opening of new Bangalore-Mysore expressway has boosted tourism around these region. Wine tourism contributes ~95 crores to the topline if wine sold at sites is also included. 

VAT refund scheme and Online sales: 

The total VAT refund due is ~146 crores, the VAT Scheme revival is waiting for Maharashtra cabinet meeting, last was 40 days ago, confident of scheme to be revived and will include past payments as well. Currently, In all states there is restriction on online sale of alcohol except West Bengal (wherein consumers can also order through food delivery platforms like swiggy and zomato), if online sale allowed, it could be a major demand driver.