Sula Vineyards expects revenue growth of 20% in 2017-18
Bengaluru: Sula Vineyards Pvt. Ltd, India’s largest winemaker, expects revenue to grow at a healthy rate of close to 20% in the 2017-18 financial year as wine consumption bounces back after a blip in the first four months of the year.
The company, which holds a 65% market share and is on track to sell a million cases in 2017-18, also plans to expand its production capacity. It has launched four types of premium wines under a new label called Kadu in Karnataka.
Like other alcoholic beverage (alcobev) categories, including beer and spirits, wine sales were also under pressure after a few key policy changes were implemented over the past year. Those include the government’s demonetisation move and the Supreme Court’s order to stop all alcohol sales within 500 metres of state and national highways.
“This year we are going to do close to 20% growth, which is a very credible performance considering that for the first four months of the year we were flat. So it’s looking great. It looks like India is drinking wine again. People have put demonetisation behind them and the Supreme Court mercifully clarified (its order), which has helped,” Rajeev Samant, chief executive officer of Sula, said.
The apex court clarified in August that its highway ban was not aimed at stretches that fall within city limits.
In 2016, India’s wine market grew 16% in terms of volumes to reach 32 million litres, according to research firm Euromonitor International. Wine sales were boosted by the strong adoption of the beverage by mid-income groups and various sales restrictions on hard liquor, the research firm added.
Sula currently has a production capacity of over 11 million litres, of which 10 million is housed in the state of Maharashtra and 1.2 million in Karnataka. Its Karnataka capacity increased after it acquired Heritage Winery, which has a capacity of 650,000 litres, earlier this year.
“We are now doing an expansion of two million litres and the biggest winery we can find out there to pick up on lease is 200,000-300,000 litres. It doesn’t make sense for us anymore. So now the time has come (to set up on our own),” Samant said.
Kadu is Sula’s first premium wine label made from its Karnataka vineyards and was launched on Monday. Under the new label, which means forest in Kannada, the firm will sell a chenin blanc, sauvignon blanc, shiraz rose and a cabernet shiraz. The range will be sold only in Karnataka initially and is expected to sell 100,000 cases within 4-5 years. It will be priced around Rs600-700 for a 750 ml bottle. The national roll-out of Kadu will begin from 2018.
Sula, like other alcobev firms, is also focusing on premiumising its portfolio. Kadu is another step in that direction, as is the fact that the firm has cut down the number of brands Heritage used to produce. From around 12-15, Sula has brought the number down to 6-7.
“For us it was a given that premium and elite wines is what we will be spending our energy on in terms of production and product development, because that’s where the market is heading,” said Cecelia Oldne, Sula’s marketing head.
Indeed, some of Sula’s best-selling wines are from its higher-end Rasa and Dindori range, which can cost between Rs900 and Rs.1,700 a bottle. Sula competes with firms such as Grover Zampa Vineyards Ltd and Pernod Ricard SA, the second and third-largest wine makers, respectively, by volumes.