Fratelli Vineyards Limited , one of India's leading premium wine companies, reported a 16% year-over-year decline in net sales for Q1. Despite the revenue dip, the company saw improvements in gross margins and continued to focus on its premium portfolio and expansion plans.

Financial Performance

The company's premium and above segments contributed over 70% of total sales in Q1, underscoring Fratelli's strength in the high-value space. Gross margins improved by 700 basis points, supported by disciplined cost control and operational efficiency. However, EBITDA margins were softer due to increased investments in new initiatives such as Shotgun, a wine-based ready-to-drink (RTD) product, and other long-term projects.

Expansion and Innovation

Fratelli Vineyards has expanded its winery capacity to 5.40 million liters with a new 47,000 sq ft facility in Akluj, Maharashtra. The company also entered three new international markets, bringing its presence to 12 countries and two duty-free zones in Delhi and Mumbai. On the domestic front, Fratelli established operations in Chhattisgarh, reaching a total of 29 states and union territories.

In February, the company launched Shotgun, targeting presence across 15 states by the end of the fiscal year. Within three months of its launch, Shotgun secured a 5% market share in tracked states and is now present in nine domestic markets.

Future Outlook

Gaurav Sekhri, Chairman and Managing Director of Fratelli Vineyards, stated, "We remain committed to unlock India's untapped potential of wine and increasing TAM (Total Addressable Market)." The company expects 15-20% top-line growth for the fiscal year and aims to improve EBITDA margins beyond 10%.

Fratelli is also planning to invest in the hospitality sector, with plans to spend approximately Rs.65.00-75.00 crores on a 40-key property in Maharashtra. Additionally, the company is considering setting up its own winery in Karnataka.

Market Challenges and Opportunities

The company faced a temporary disruption in the Maharashtra market due to excise duty changes on spirits. However, management noted that the UK-India Free Trade Agreement, which came into effect this quarter, is not expected to have any negative impact on the sale of Indian wines.

Fratelli Vineyards currently commands roughly one-third share of the Indian wine market, which is expected to grow 15-20% annually for the next 3-4 years. The company remains focused on expanding its premium portfolio, strengthening its hospitality vertical, and widening its presence across markets.

Sustainability Initiatives

In line with its sustainability commitment, Fratelli has installed 520 kW of solar capacity, meeting 50% of its electricity needs and generating annual savings of approximately Rs.50.00 lakhs.

As Fratelli Vineyards navigates the challenges and opportunities in the Indian wine market, the company continues to focus on innovation, expansion, and operational efficiency to drive long-term growth and profitability.

Fratelli Vineyards Limited , formerly known as Tinna Trade Limited, has unveiled ambitious plans to strengthen its position in the premium wine market and drive revenue growth by FY26-28. The company's strategy focuses on expanding its presence in both domestic and international markets while capitalizing on the growing demand for high-quality wines in India.

Strategic Initiatives

Fratelli is setting its sights on several key areas to fuel its growth:

1. Premium Imports and Exports: The company aims to increase its footprint in the premium wine segment, both through imports and by boosting exports of its high-quality Indian wines.

2. Super-Premium Market Entry: Fratelli plans to develop and introduce new offerings in the super-premium category, targeting discerning wine enthusiasts and luxury consumers.

3. Wine Tourism Development: The company is exploring opportunities to enhance wine tourism experiences, potentially including vineyard tours and tasting events to engage consumers and build brand loyalty.

4. Distribution Channel Expansion: Fratelli intends to broaden its distribution network, ensuring wider availability of its products across various markets.

5. Production Capacity Increase: To meet growing demand, the company is looking to expand its production capabilities.

Financial Performance and Outlook

While Fratelli's strategic initiatives paint an optimistic picture for the future, the company's recent financial results reflect some challenges:

Factors Affecting Performance

Fratelli attributed the temporary setback to several factors:

• A slowdown in urban consumption
• Supply chain optimization efforts to maintain wine quality
• Regulatory changes in Maharashtra affecting spirit prices, which indirectly impacted overall wine sales
• Increased investments in new product launches and long-term initiatives

Looking Ahead

Despite the short-term challenges, Fratelli remains optimistic about its long-term prospects. The company's focus on premiumization, expansion into new markets, and investment in brand development are expected to drive growth in the coming years.

Fratelli's Chairman and Managing Director, Gaurav Sekhri, commented on the company's vision: "We are committed to establishing Fratelli as a leading player in the premium wine segment. Our strategic initiatives are designed to capitalize on the growing appreciation for quality wines in India and key international markets."

As Fratelli Vineyards continues to implement its growth strategy, investors and industry observers will be watching closely to see how these initiatives translate into financial performance in the upcoming quarters and fiscal years.

Investor Presentation Highlights

In its recent investor presentation, Fratelli outlined additional details of its growth strategy:

• Revenue Target: The company is aiming for a topline growth of 15-20% in the coming years.
• Capex Plans: Fratelli has earmarked ₹100.00 crore for capital expenditure over the next 2-3 years, focusing on hospitality ventures in Maharashtra and potential winery expansion in Karnataka.
• Product Innovation: The recent launch of 'Shotgun', a ready-to-drink (RTD) offering, aims to expand Fratelli's total addressable market and strengthen its presence in existing and emerging markets.
• Luxury Segment Focus: The company's luxury range, including J'NOON and Sette, contributed 6% to the topline in FY25, with plans to grow this segment further.

As Fratelli Vineyards implements these strategies, the company is positioning itself to capitalize on the growing wine market in India and expand its international presence, setting the stage for potential long-term growth and market leadership in the premium wine segment.