Sula vineyards - pioneers in indian wines

Business Overview

Sula Vineyards Limited is India’s largest wine producer and seller as of March 31, 2022. The company has been a consistent market leader in the Indian wine industry in terms of sales volume and value (on the basis of the total revenue from operations) since 2009 crossing 50% market share by value in the domestic and 100% grapes wine market in 2012. Sula Shiraz Cabernet was India’s largest-selling wine by value in 2021 (Source: Technopak Report). The gross billings of Sula Shiraz Cabernet amounted to ₹918.26 million, ₹475.64 million and ₹319.73million in FY2022 and for the six months period ended September 30, 2021 and September 30, 2022, respectively.

The business model of Sula Vineyards can be categorized into two divisions:

  • The Wines Division: Involves the production of wines, import and distribution of wines and spirits etc.
  • Wine Tourism: A complement of the former division, wine tourism involves wine tourism venues, resorts and tasting rooms.

The Company distributes wines under a bouquet of popular brands. In addition to the flagship brand “Sula,” popular brands include “RASA,” “Dindori”, “The source,” “Satori”, “Madera” & “Dia” with its flagship brand “Sula” being the “category creator” of wine in India. Presently, the company produces 56 different labels of wine at four owned and two leased production facilities in the states of Karnataka and Maharashtra.

The company’s wines are available at various price points between ₹250 to ₹1,895 per 750 ml bottle in Maharashtra, making them accessible for consumers with different budgets appealing to mass markets as well as having a premium product strategy. In particular, the wines are classified under four broad categories, namely the ‘Elite’ category with 21 labels, followed by the ‘Premium’ category with 13 labels, the ‘Economy’ category with 13 labels and the ‘Popular’ category offering 9 labels.

The products have been segment leaders under each of these four categories in the last six years from FY2017 to FY2022. The company also regularly introduces new products, with seven labels launched in the last five years.

The resorts under the company’s domain are the most visited vineyards in India, with approximately 368,000 people visiting in FY2020. The management launched the first wine-themed music festival in India, “SulaFest”, at its Nashik facility in 2008. “SulaFest” has been widely recognized as the largest wine music festival in India and one of the largest wine music festivals in Asia, based on attendance.

The company is one of the fastest-growing alcohol businesses in India with a CAGR of 13.3% between FY2011 and FY2022. The company emerged even stronger in the aftermath of Covid with its EBITDA moving from 9.68% in 2020 to 15.44% in 2021. The company services close to 8,000 hotels, restaurants and caterers, which makes it the leader in terms of footprint among wine players in India. The company continues to focus on its operating efficiency and tries to introduce wines to a larger portion of the population.

Industry Analysis

Macro Economy: India is the fifth largest economy in the world presently and is soon to be in the top 3. While the global economies are facing a setback, the Indian economy continues to present a favourable growth rate of over 7% which pushes demand and cash flow into the country. The growing disposable income of the population and the median age is one of the lowest compared to the western economies and China. Indian domestic consumption is going to drive the Indian economy in the upcoming years.

Alcoholic beverage Industry: World per capita alcohol consumption in CY 2021 is estimated at 6.6 litres of pure alcohol per year for the world population of 15 years above. The recorded alcohol per capita consumption for CY 2021 is estimated at 4.8 litres. The alcohol industry can be divided into 3 sub-sections: Beer, Spirits and Wine.

Fig: World Per capita recorded alcohol consumption in 2021

India is one of the fastest-growing alcohol markets among the top economies in the world. The recorded per capita consumption of pure alcohol in India has moved from 0.9 litres in 2000 to 3 litres in 2015 at a CAGR of more than 8%. The percentage drinking population of the world is close to 41.7% and is projected to stabilize at around 40%. India’s percentage of drinking population is projected to be close to ~33%.

India, just like any other developing country is a leader in the spirits market but other segments hold promise to grow, as a result of the rise in per capita income, trends and taste shifts and urbanization. India, with its share of low alcoholic beverages at close to 8%, is at a very low base and a prolonged period of correction in favour of wine and beer categories is bound to take place.

The share of wine and beer is projected to increase both through the expansion of the market and by taking a share of the market from spirits. While earlier, family celebrations with alcohol were very infrequent and viewed as taboo, it is more acceptable now in all kinds of social settings, be it birthday parties, get-togethers, official meetings, etc. Beer and wine with low alcoholic content are the preferred choice of drinks in such celebrations and are big opportunities in the Indian alco-beverage industry.

India’s per capita consumption of wine is less than 100ml. The contribution of wine to overall alcohol consumption in India is less than 1% against the world average of close to 13%. Consumption of wine is higher in developed countries which is as high as close to 30% in Europe. A comparison between India and China shows that in China, even though the contribution of wine to overall alcohol consumption is close to only 3 %, China’s per capita consumption of wine is more than 50 times that of India.

Fig: Contribution of alcoholic beverages in 100% alcohol in CY2021 (volume per cent)

Indian wines industry is growing at a much quicker pace at 18.3% by value between FY 2014 to FY 2019 than the IMFL market growing at 12.3%. by value for the same period. There is growing awareness towards the perceived health benefits of wine which makes it more acceptable as compared to spirits. The supply of domestic wines that are reasonably priced and easily available as compared to imported wines has also helped expand the market as leaders in the domestic market have invested in the complete value chain of wines and winemaking. Growth in income, increasing urbanisation, a high share of young population as well as an increasing preference for wines among women are driving higher consumption of wines.

Fig: Key players in the Indian Alcoholic Beverages

Recent trends in the industry include premiumisation where people are ready to pay and consume higher-priced premium products as a result of an increase in per-capita income and urbanisation. The covid period also saw the restructuring of the distribution and delivery networks of various sectors including beverages which has allowed a lot of cost-cutting and has increased the accessibility of wines and other beverages in the country. Reduction in social taboos centred around drinking and increased in-house drinking has opened up a new line of products which are more affordable, easy to produce and store and has developed brand equity.

With the increase in disposable income, especially among women, urban earning women are driving the growth of the wine segment in India. There is a shift in trend from binge drinking towards social drinking, which has also led to a widespread inclusion of wine in parties and gatherings. Wine is becoming a preferred drink for millennials156 who look to socialize after office hours and on weekends.

The Indian Wine Market is projected to reach INR 3,785 cr by FY2025 with a CAGR of 20% from FY2022 to FY2025.

Fig: Indian Wine Industry Market Size by value (in INR cr)

The drivers of growth in the Indian Wine Industry:

  • Growing Income levels and rapid urbanization
  • Growing awareness about wines
  • Wider appeal
  • Growing perception of health benefits
  • Growth of wine tourism
  • Increase in home consumption
  • Change in social perception

Business analysis

  • High barriers to entry: The wine market in India will remain concentrated, with high barriers to entry due to the nature of the product, as well as trade barriers prevalent in the alcoholic beverage market.
    • Regulations and trade barriers
    • Initial cost of Investment
    • Long gestation period and production cycle before realising any profits demotivate new companies to venture into winemaking.
  • Branding:
    • Sula is the largest and one of the oldest producers of wine and associated products in the country
    • Sula is one of the top 10 vineyards followed by social media handles in the entire world.
  • Innovative product ideas and a portfolio of offerings
  • Caters to all income groups with products in all pricing ranges. It is also to be noted that the product from the company is the market leader in their respective sections
  • Largest Wine distribution chain and historic sales record and strategic relationships
  • The raw materials required in winemaking are rare to come by or costly to grow and procure. Sula has developed a good relationship with the farmers in the country and has a good standing contracted relationship.
  • Leader and pioneer of wine tourism in India.
  • Experienced management and the increase in EBIDTA Margins suggest a huge growth potential.

Risks associated with the business:

  • Subject to licensing, excise regime, rules and regulations, including the adverse application of corporate and tax laws
  • Adverse climate conditions could affect the harvest of grapes
  • Supply restrictions or delays could seriously impact the business
  • Revenue is dependent on a limited number of customers. The inability to diversify into new relationships or the failure to keep up with the existing customers could seriously impact the business
  • The wine market is relatively young in India
  • Advertising or promoting alcohol products is discouraged in India and the wine market needs more awareness among the population. Thereby any promotional effort taken by the company will be subject to great risk.
  • There are outstanding legal proceedings involving the company, its promotors and its directors
  • Against the company – 1 criminal proceeding and 9 tax proceedings
  • Capital-intensive business is subject to seasonality in its sales.
  • Business nature requires inventory build-up which increases storage risk, insurance and risks
  • Two vineyards and a few offices, resorts and guest houses are not owned by the company and are taken on lease


For detailed financials: Sula Vineyards Ltd financial results and price chart - Screener

DISCLAIMER: This is for educational purposes only and is NOT a buy or sell recommendation.

Disclosure: I am a SEBI Registered Research Analyst - Registration Number: INH300006607. I have no position in the stock at the time of publishing this article.


Thank you for this well written article Sir . With all Alcohol companies focusing on going for premium and prestige brands , Wine stands at the top . I hope you you are having as much wine as your writing Sir good for health :grinning:

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Thanks, @basumallick for the detailed post on the company. Overall seems like a good business with more than 50% market share in the wine industry and operating margins of 20-30%. Given the high market share, they are largely dependent upon the growth of the industry for Sula Vineyard’s revenues to grow. I believe the wine industry will grow faster than the overall industry in India with the increasing women representation in the workforce and urbanization and premiumization of consumers. Some of the concerns I see for the business are:

  1. Low promoter stake at 27.3%
  2. Promoter have pledged ~22% of their shareholding
  3. IPO was entirely OFS, with the promoters selling a substantial stake, questions can be asked about the long-term prospects
  4. The mandatory 6-month lock-in period is still not over and existing promoters can sell more stake once the lock-in period ends.

Shobhit Jaju


Seems this got enforced recently and could pose some challenges to business like Sula … Wine bottles above 5$ pricing import duty is reduced. image

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Thanks @basumallick for initiating this thread. Some notes / thoughts:


Promoter selling in the IPO was 9.37 lakh shares out of the total OFS of 269 lakh shares sold. Out of the total shares outstanding, the promoter sale was around the 1% range - this seems quite normal. They would have got approx 33.5cr of liquidity from this transaction.

The shareholding pattern for Mar-23 shows 22 lakh shares have been pledged out of 230.08 lakh shares held by the promoter - which is about 9.56%. At the current market cap, the value of pledged shares would be around Rs 350cr and they might have borrowed maybe Rs 150-175cr against this. Could be one of the things to check - what this side project might be.

PE Overhang

PE funds’ selling overhang is the key risk in the recent IPOs. Verlinvest is the main investor in the case of Sula and they sold roughly 750cr worth of stock. They still own about a 20% stake in the company and could potentially sell post the one year lock-in (Dec-23). The shareholding of MFs and a few other FPIs are well disributed and is not much to worry about.

In this context, its important to note that

  • Verlinvest is owned by the founding family of Ab-Inbev and has a structure where the capital is permanent - unlike private equity funds which necessarily need to exit.
  • Verlinvest is generally consumer focused and have also invested in Veeba and Epigamia in India in the food sector. Remy Cointreau is one of their other investments in the alco-bev sector - they sold this fully in 2014 after investing in 2004.
  • In the case of Sula they invested in 2010 and IPOed in 2023 - which is already longer than the horizon of typical PE investors. I would imagine with the 750cr selling which they already did they would have earned a good multiple on their invested capital.

It would seem therefore that while there is potentially a supply overhang, at-least there is no ticking clock which is waiting for the lock-in to expire regardless of price.

Business Risks

From a business perspective, I believe they booked 45cr subsidy revenue in FY23 (according to the latest concall). For FY22 this amount was 35cr. There is a risk of this subsidy going away and as per the last available news item on this, its renewal was rejected by the cabinet in Maharashtra. Link

It appears no final decision has been taken on it yet, and the management said in the call that they are optimistic on this based on recent developments. They also believe that if it doesn’t get renewed in the worst case, the level of incentives in the market (distribution channel) will go down and make the impact on EBITDA minimal.

But still, 45cr is a big amount on the Rs 157cr EBITDA in FY23. It’s not fully convincing how this cannot easily shave off a year of growth even in the presence of mitigating factors. If anyone has any further insight on this, it will be very useful.

The other (relatively minor) risk is weather conditions and how it affects the harvest etc. For now, the reservoir levels are quite good and a year of below normal monsoon shouldn’t have much of an impact.


Sula Vineyards Q4 and ending FY23 concall highlights-

Revenues For FY23-

Consolidated sales- 553 vs 453 cr
EBITDA- 160 vs 117 cr, Margins at 29 vs 25.5 pc !!!
Net Profit- 84 vs 52 cr

More than 72 pc sales from Elite and Premium brands vs 70 pc LY with a vol growth of 20 pc

Selling of own brands now constitutes 87 pc of company revenues vs 63 pc three yrs back. 5 pc sales come from selling third party brands. 8 pc sales from Wine Tourism

Wine tourism revenues up 30 pc for FY 23- includes stay at their resort + F & B sales

Sale from Economy and Popular brands at 27 vs of total wine sales vs 29 pc LY

Vineyard resorts - “The Source” and “Beyond by Sula” recorded 82 pc occupancy for FY 23 with ARR at 10.5k !!

Vineyard footfall at 3.4 lakh visitors

Final dividend of Rs 5.25/share

Sula’s Mkt share in Wines > Rs 700/bottle at a staggering 60 pc

Marketing expenses to go up in FY 24 to push growth. Should lead to slight moderation in margins by 1-1.5 odd pc

Grape season has been strong. Company is secure on supplies for the next 18 months

60 pc of company’s sales come from Karnataka and Maharashtra. Have taken a 5 pc price hike in these Mkts. Mkt has accepted the price hike with no moderation in demand

Wine is currently only 1 pc of total alcoholic beverages industry. May grow to be 2 pc of Industry in 6-7 yrs

FY 24 Capex projection at around 55 cr

Expecting a 15 pc CAGR volume growth in Wine Industry for next 3 odd yrs with value growth being higher than that

Plan to launch various brands in Cans format and popularise this concept just as it happened in Beers 15 odd yrs ago

Number of ppl entering drinking age in India/year > population of many developed countries. These are the primary targets for the company. Plus the women Folk, who are likely to find Wine far more palatable

Wine tourism revenue for FY 23 was 80 cr. Aiming to hit 100 cr in FY24

This is a big deal for a wine company

Export sales were about 3 pc of total. Company’s main focus for foreseeable future is domestic Mkt

Company currently has 70 odd rooms at its Vineyard at Nahsik for Wine tourism. These r simply not enough due surging demand

Putting up another 30 rooms to cater to the demand. Company not spending on Capex. Company just manages them so as to remain capital light

Disc: looks like a very interesting opportunity to me. Initiated a tracking position Yesterday


I have a couple of questions.

  1. Why the EPS is very low or in negative range for year 2020,2021 and in 2023 it also does not reach the level of 2019?
  2. Why the Sales Growth is very low or in negative range for year 2020,2021 and in 2023 it also does not reach the level of 2019?
  3. Why the Reserves is very low?
  4. Do we have any data or projection on wine culture of India ?
  5. Why the promoter having a separate port wine business ? Which is a high margin one and operate in the same segment.
  6. Why IPO proceeds does not got much to Company for it’s growth ?

Any idea why there are so many resignations in the top management?

While there are multiple clear MOATs for Sula, I think earlier this year, their CFO resigned and now the COO. This tells that the management/work culture is not right and raises an alarm.


can you share the link for this comment, Tq.

Nashik Vintners Pvt. Ltd you can check it if you buy a bottle of Sula Port Wine …

I think they incorporate Sula as Nashik Vintners Pvt Ltd. My understanding is it is a public listed only as per articles on Internet. History of Sula Vineyards Ltd., Company - Goodreturns

Maharashtra govt issued demand notice for recovering of excise duty worth Rs. 116 Cr.

If we notice in AR23, the government grants are supposed for wine produced by blending grapes procured within the state of Maharashtra.

The contention by govt is on the blends on grapes procured from outside of Maharashtra.


The company is contenting this notice. If the WIPS scheme is withdrawn, the impact on profitability and net profit margin will be severe.

Disc: Less than 3% of portfolio

Sula was 10% of my portfolio. Yesterday after the news came out, I put an AMO order for exit and exited with 35% profit. I believe, the case will go on for at least 2 months in high court and under such uncertainty, the share price may tumble. Will look for fresh entry if company is able to win the case in court.

Not sure, but are such tax/duty notices not common among corporates? I guess even United Spirits or United Breweries got some or other notice…Are these not just tax related issues which can either be paid or cases won/lost…

Business vise nothing changes…so should such issues warrant an exit for long term investors?

Firstly a disclaimer. I am not a very experienced investor. I have been in market for 3 years only. I too made position in sula with long term view only. I believe that with increase in wine consumption and premiumization, this company has the potential to reach new heights.

However, the rational for my exit was that the tax that is imposed is of 116Cr and the company’s one year PAT is in the same range. In relative terms, the financial implications seem high to me. Since the company has a market cap of around 4000Cr only, I felt it is risky for the time being to continue for long term. Contrary views are welcome.


In my view, there are a couple of things due to which I am still positive about the company:

  1. The contention seems to be on whether Sula blended grapes from other regions. So, even if they did, they now need to stop doing it to enjoy the grant on WIPS.
  2. In worst case scenario where WIPS is withdrawn, Sula will be forced to reduce input cost and increase product price. We can’t just take current status quo and subtract the grant to project the future profit potential of Sula.

Besides, Wine is still a soft liquor as it has only mild levels of alcohol. Also, it is more of a premium alcohol.
If there are any strong regulations coming up, it will likely be on distilleries first.


Firstly, congratulations on having built a good position and making a decent profit. Cannot fault exiting a company if it is not letting you sleep peacefully (subject to general points about long term compounding of course)

However, I have a contrary view on the opportunity presented by the news. I had an initial tracking position in Sula and was looking for an opportunity to build to the next stage of my position size at a more reasonable valuation. The decline has provided me the opportunity based on my internal valuations. I am sharing my interpretation of the news purely to provide an alternate view (this does not mean the view is correct) and my subsequent actions

  • I would like to differentiate an unpleasant surprise from a disclosed risk vs an undisclosed risk. The management had already disclosed this risk in their annual report - and it is unfortunate that the risk has materialised (although it seems the management is still confident of challenging and overturning the payment). If this was an undisclosed risk of this magnitude, there would be more concerns on the management

  • The current management view is that this does not have any implications for the future operations of the business. My interpretation of this is that this is a historical dispute and does not have implications for excise for the future. This definitely needs to be confirmed (perhaps in the quarterly call on Aug 10), as there is a difference between one-off and on-going. As a one-off you could argue this is a 2-3% impact on Enterprise Value (Rs 115 cr on Rs 4000 cr). And of course, dividend payments for FY24 would likely be impacted

  • Liquidity risk seems low - ability to pay the disputed amount if it becomes due. It seems they should be able to pay this off based on cash and other financial assets (and Q4 is peak working capital due to grape payments)

So overall the risk from the news, subject to further management confirmation, does not seem to merit a breaking of the business (but affect FY24 dividend). I have added to my position and will add to the next stage of my position size of if it drops further.

Wish you the best

Disc. Invested and likely to be biased


I have a very similar view on Sula if WIPS is withdrawn

Just making sure I understand your perspective on the WIPS issue. This notice seems to be related to a historical excise duty payment. As I understand WIPS, this is a rebate on VAT. So these are not related?

Thank you for your detailed analysis. I believe it will be a new experience for me in this journey of investing. I am not going to do new entry as of now but will keep tracking the company and how management reacts to this in the concall.
This has been a long standing confusion of mine to evaluate how much a news will effect the share price. So I will observe this story unfold and take the learnings for the future ventures.