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Sula Vineyards Ltd – Does it have a Moat in the Rapidly Expanding Sector?

Sula Vineyards Ltd

Sula Vineyards has around +60% market share in the segment above Rs 700 wines in India.

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(A) About

Sula Vineyards - logo

Incorporated in 2003, Sula Vineyards Limited is India's largest wine producer and seller as of March 31, 2022. The company also distributes wines under a bouquet of popular brands including "RASA," "Dindori", "The source," "Satori", "Madera" & "Dia" with its flagship brand "Sula" being the "category creator" of wine in India.

Today Sula Vineyards is India's largest wine producer and holds a significant market share of 60%. They are also a pioneers in India wine and started facilities like a tasting room and at their winery in 2005.

(B) Wine Industry

India is the 3rd largest consumption of Alcobev in terms of volume after China & USA. India's per capita consumption of wine is currently less than 100ml representing less than 1% of overall alcohol consumption in the country.

India's wine market is estimated to be valued at $150 Mn, where imported wine account for 30% while the rest is catered by domestic players.

Sula Vineyards - Wine Making Process

Growth Drivers

Industry witnessing steady growth due to numerous factors such as increasing incomes, urbanization, and evolving consumer preferences.

  • Aspirational - Growing popularity of wine among the urban and middle class population.
  • Food pairing - Popularity of Western cuisines, particularly Italian & French has also boosted the wine market in India.
  • Emergence of Vineyards - Another key factor in the growth of the wine industry is the emergence of new wineries and vineyards throughout the country.
  • Favorable policies towards wines - One of the main drivers of the growth of the wine industry in India is the favorable regulations that treats wine as a separate category.


India is an expansive nation with several states and union territories that have their unique culture and traditions. With this states also have its own set of laws that control the manufacturing, distribution and consumption of alcobevs contributing to the sector's diversity.

Furthermore, alcobevs fall under the purview of food safety and standards Authority of India (FSSAI). Additionally the sector has strict direct advertising rules which makes the marketing of the product difficult.

(C) Journey

Sula Vineyards - Journey

(D) Shareholding Pattern

Sula Vineyards - Shareholding Pattern
Sula Vineyards - Shareholding

(E) Board Members

Sula Vineyards - Board Members

(F) Business Segments

(i) Products - Wine's

(ii) Wine Tourism

Sula is the pioneer of wine tourism in India. Moreover, they own and operate 2 vineyard resorts located at and adjacent to their winery in Nashik, Maharashtra under "The Source at Sula" and "Beyond by Sula" brand names, having room capacity of 57 and 10 rooms.

(G) Revenue Segment

Occupancy Rate & ARR

Sula Vineyard - ARR & Occupancy

The Two Property which Sula owns “The Source at Sula” and “Beyond by Sula” is likely to aid the growth in the coming years Due to expansion more rooms.

Manufacturing Capacities

KarnatakaDomain Sula1.14 Mn Ltr
MaharashtraDD & York15.51 Mn Ltr
Total16.65 Mn Ltr

(H) Cost Structure

Sula Vineyards - Cost Structure

(I) Financials

Sula Vineyards - Financials

Company has grown its revenue at 3.36% in past 5 years, while PAT grew at a CAGR of 35.88%. Moreover, company’s operating and Profit margins increase from 4.55% in FY18 to 17.85% in FY23

Sula Vineyards - Du Pont

Company sales to total assets is at 0.6x for the past 5 years. While its assets to equity decreased from 2.1 to 1.6 in the past 5 years.

(J) Management Discussion & Concall

  • Company's own brand grew at 26% and currently constitutes 87% of the company's revenue.
  • In Addition, company is the most visited vineyard in the world, this year they get ~3.5 lakh visitors.
  • Meanwhile management thinks they will grow as the share of wine in Alcobev grow as of now it is 1%, and hope to get it to 2% in next 6-7 years.
  • Moreover company expects around 15% volume growth in the next upcoming years.
  • Meanwhile, company will be adding around 30 rooms this quarters.
  • Lastly, Maharashtra, Karnataka, Goa are free pricing states while the entire north, east and south apart from Karnataka is fixed pricing. Company's 75% of revenue comes from free pricing states.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry Publications.

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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