Sula Vineyards’ CEO Says Market Volatility Won’t Deter Winemaker From Launching IPO


Sula Vineyards Ltd. is not keen on delaying its proposed maiden offer even as a spike in market volatility has compelled many IPO-bound companies to postpone their plans to go public or reduce offer size.

A strong brand recall, a long track record of profitability and a growing appetite for wine—all of these make a strong case to pursue listing without delay, Founder and Chief Executive Officer Rajeev Samant told BQ Prime. If the plan fructifies, it would arguably be the country’s first initial public offering by a pure-play winemaker.

“We aren’t much concerned about the market ups and downs as would be somebody who doesn’t have a track record and yet looking at aggressive price,” he said. “Sula is a great play for anyone who believes in the wine story of the still-niche but rapidly growing market.”

Historically, India has been a spirit-consuming country. The share of wine as a form of alcohol consumption in India was less than 1% in FY21, whereas globally, the contribution of wines to alcohol consumption was close to 13.5% during the same period, according to a Technopak report.

“The low penetration suggests significant headroom for growth,” said Samant. “Today, India consumes less than 50 ml per capita compared to more than a litre per capita in China or 15 litres per capita in the UK.”

Drawing parallels from consumption in the world’s most populous country, he said, “In China there was no wine market a decade ago but today it is among the top eight producers as well as consumers. Their growth story as well as others like the U.K. points out that countries that produce their own wines have seen a big jump in consumption.”

The Indian alcoholic beverage market is the largest in the world after China and Russia. “The wine industry grew at a much quicker pace at 18.3% by value between FY14 and FY21 than the Indian-made foreign liquor market (10.8%) during the same period,” Samant said, citing the Technopak report. By volume, the wine category is estimated at two million cases in FY21 and projected to grow to 3.4 million cases by FY25 with a CAGR of more than 14%. “We are in a sweet spot.”

The country’s largest winemaker, which filed for an IPO last month, has a 55% share in the domestic market. “We have been the market leader for the last 13 years and today Sula is synonymous to wine in India, so definitely the brand has an advantage in this case,” Samant said.

The 25-year-old company is not looking to raise fresh funds to rev up growth. The public offer will entirely consist of an offer-for-sale aggregating up to 2.55 crore equity shares with face value of Rs 2 each led by its key shareholder Verlinvest, a Belgian investment firm, according to its draft red herring prospectus.

In FY22, the company registered an 8.6% year-on-year jump in revenue to Rs 453.9 crore. Yet, that was lower than Rs 521.6 crore registered pre-Covid or FY20, according to its draft prospectus. Operating margin improved from 9.68% in FY20 to 15.44% in FY21 and 25.57% in FY22, aided by annual price hikes of 3-6%. The company has grown at an annualised rate of 13.7% between FY11 and FY21.

“We have emerged stronger in the aftermath of the Covid-19 pandemic, gaining additional market share and accelerating profitability,” Samant said.


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