Sula vineyards – pioneers in indian wines

Some of the highlights for Q1 FY 25

Financials

Net revenue: 10% YoY (Rs. 129.7 Cr)
EBITDA: 10.3% YoY (Rs. 35.2 Cr)
EBITDA margin: steady at 27.2%

Wine portfolio

Elite & Premium: 8.6% QoQ (Rs. 81.36 Cr)
Economy & Popular: 24% QoQ (Rs. 33.2 Cr)

Wine Tourism

Revenue: 2.3% YoY (Rs. 11.3 Cr)

Launches and Expansion

Milestone cellars – New tasting room and restaurant near Nasik airport.
Have planned expansion of wine tourism facilities at Domaine Sula near Bangalore
New resort coming up next year next to the York winery in Nashik – this will expand room capacity by 30% and also add conference facilities.

It’s for the first time in the last 8 quarters that the Economy & Popular brands has grown ahead of the Elite & Premium.

The wine tourism business had declined because of some headwinds and that in turn impacted the sale of elite & premium wines. Majority of elite wines has a much higher proportion of sale (D2C) at wine tourism than any other category.

The headwinds include the following:

1. National elections leading to heavy restrictions on AlcoBev movement
2. Several dry days
3. Severe heatwave in the key markets (climate change in general and this can continue)
4. Deterioration of road infrastructure
5. Pune Porsche incident led to a large closure of bars and restaurants in the two major markets

This was a pause on the premiumization phase. But regardless, the focus on the premiumization shall continue as mentioned by the management.

Shift to third-party sales model for Maharashtra

Have decided to shift to a third-party sales model for the economy and popular brands in Maharashtra. This would enable the internal sales team to focus on the elite and premium categories. This strategy has has shown promising early results in Maharashtra. In fact, this strategy was earlier adopted in Karnataka and Telangana, and had yielded good results, hence confident of the strategy.

Positive trends

1. Resort occupancies have been going up in July and August compared to Q1
2. Hoping that with the completion of the last stretch of Samrusshi Mahamarg and with the repair work that’s going on in full swing, travel conditions should improve soon. This should help improve the pickup before and during the upcoming festive period.
3. Monsoon is on track and expecting a healthy 2025 grape harvest.
4. Continues to get international recognition for the wines – medals at both Decanter World Wine Awards and The Asian Sparkling Wine Masters
5. Plan for multiple bottling units is on track. Dispatches from York winery (Artisan spirits) began in May and ND wines have commenced too in late July.
6. Capex project for low-cost cellar (Rs. 80 per litre as against 120 per litre of others) for cheaper wines at DD unit is on track and should be in time for 2025 grape harvest.
7. There is news that Pernod has sold off their wine business in India, not finalised. Jacobs creek of Pernod is number two in terms of sales in India after Sula. This can be a great news depending on the terms of the sale, i.e., if they give a master franchisee option or so, then it’s still competition. Else they lose their clout in India and the market share is up for grabs.