Interview: Indian winemaker Sula not losing sleep over foreign rivals -CEO

Sula Vineyards

15/09/2023 04:14

By Biplob Kumar  Das
       BENGALURU, Sept 15 (Reuters) - India's largest
winemaker, Sula Vineyards  SULA.NS , is expanding its production
capacity and counting on a pricing sweet spot to fend off
foreign rivals in its home turf.
    Last year, the Indian government slashed import duties for
some Australian winemakers as part of a foreign trade agreement
(FTA) between the two nations.
    "India cannot stay protected forever, and more FTAs will be
signed. But among all the Indian wine companies, Sula has the
least to fear," Chief Executive Officer Rajeev Samant told
Reuters. "We are ready to compete with foreign brands."
    He is counting on Sula's pricing strategy to thwart rivals.
    "Seventy-five percent to 80% of our sales comes from a price
point below a 1,000 rupees ($12). Even if their thresholds come
down lower, the pricing of those brands is not going to come
down much below 2,000 rupees," Samant said. 
    The winemaker plans to expand its production capacity to
18.5 million litres per year by next year, compared with about
16 million litres per year currently, he told Reuters.
    Mumbai-based Sula, which competes with smaller unlisted
rivals Grover Zampa and Fratelli, has more than 50% of the
market share in India, according to Kotak Institutional
Equities.
    Sula's stock is up about 30% from its December listing,
compared to an about 10% rise in the blue-chip Nifty 50  .NSEI 
over the same period.
    Much of Sula's popularity comes from its premium brands,
such as Dindori and Rasa, which accounted for about 90% of the
company's total revenue in its last quarterly results. 
    Wine consumers are getting "turned on" by the 800 rupee-plus
category, he said, adding that the rise in demand for premium
wines was largely limited to India's big cities.
    He is optimistic about its smaller cities too.
    "If a Black Label bottle is available in a store in any
city, our premium wines should be there too - that's a
straightforward diktat to our sales force," Samant said,
referring to Sula's growth in second-tier cities.
    Wine accounts for less than 1% by volume of all alcoholic
beverages in India, which strongly prefers spirits and beer, as
made evident by the successes of Diageo-owned United Spirits
 USPN.NS  and Heineken unit United Breweries  UBBW.NS .
    Globally, wine consumption accounts for about 14% among
alcoholic beverages, according to Kotak.
    "Wine won't compete with spirits or beers anytime soon. But
in India can we get to 2% or 3% of the market? Sure we can,"
Samant said.

 (Reporting by Biplob Kumar Das in Bengaluru; Editing by Dhanya
Skariachan and Gerry Doyle)
 ((Biplobkumar.das@thomsonreuters.com; 9101861583;))