Sula Vineyards , India's leading wine producer, reported a flat revenue of INR 118.00 crores for Q1, after adjusting for a one-time WIPS gain of INR 10.40 crores from the previous year. The company's performance was impacted by continued softness in urban demand and temporary disruption in wine placement in Maharashtra during June following an excise duty hike announcement on spirits.

Elite and Premium Wines Show Resilience

Despite challenging market conditions, Sula's Elite and premium wines grew modestly by 1% year-on-year. These segments now constitute 75% of own brand revenue, up from 71% in Q1 last year. The Source brand, in particular, delivered strong double-digit growth and now contributes nearly 10% to own brand revenue.

Wine Tourism Business Thrives

Sula's wine tourism business grew over 20% in Q1, with resort occupancy rising to 82% from 70% in the previous year. The company is set to open a new 30-room resort, Haven by Sula, near York winery before the festive season. This expansion will increase Sula's room capacity by around 30% to 134 keys and include convention facilities.

Profitability Challenges and Outlook

Operating performance was affected by a 20% increase in cost of goods sold due to a change in wine sourcing model for the tourism business. However, the company expects operating margin improvement of a couple of hundred basis points in the second half of the financial year.

New Product Launches and Market Expansion

Sula launched a new wine, Muscat Blanc, priced at INR 875.00 per bottle in Maharashtra. The company also expanded its Canteen Stores Department (CST) portfolio to 9 labels, strengthening its presence in this channel.

Geographical Performance

Despite overall tepid urban demand, several key states, including West Bengal, Goa, Uttar Pradesh, and Rajasthan, posted healthy double-digit growth.

Financial Highlights

Management Commentary

Rajeev Samant, Founder and CEO of Sula Vineyards, commented on the quarter's performance: "Despite near-term headwinds, Sula gained market share in the last fiscal year, and we expect to have gained market share in Q1 this year as well, going by the early industry data that has come in for some of the key corporation markets."

Abhishek Kapoor, CFO, added: "We are taking decisive steps to improve profitability, grow wine tourism, and enhance shareholder value while staying true to our long-term vision of delivering sustainable and profitable growth."

Looking ahead, Sula Vineyards remains optimistic about the growth trajectory of wine tourism and expects to see positive impacts from recent initiatives to lower raw material costs and improve manufacturing efficiencies in the coming quarters.

Sula Vineyards , India's largest wine producer, has announced its financial results for the first quarter, showing growth across various metrics.

Revenue and Profitability

Sula Vineyards recorded revenue from operations of Rs 118.30 crores, marking a 7.9% year-on-year increase. The company's gross profit reached Rs 89.80 crores, up 14.6% year-on-year, while operating EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) stood at Rs 18.30 crores, representing a significant 46.1% increase.

Own Brands Performance

Own brands sales grew 10.8% to Rs 102.30 crores. The company continued its focus on premiumization, with the share of Elite & Premium categories improving to 74.7% from 71.0% in the previous year.

Wine Tourism Segment

The wine tourism segment achieved record quarterly revenue of Rs 13.70 crores, up 22.0% year-on-year. This growth was driven by over 100,000 visitor footfalls and an 82% average room occupancy.

Product Innovation and Expansion

Sula Vineyards launched India's first still Muscat wine with 7.5% ABV, demonstrating its commitment to innovation in the wine industry. The company also expanded its facilities with a new Dindori bottle shop and tasting room.

Market Position

Sula Vineyards maintained its market leadership position with over 50% share in domestic wines. The company operates across 23 states through approximately 25,000 points of sale, showcasing its extensive distribution network.

Challenges in Profitability

Despite the revenue growth, profit after tax (PAT) declined to Rs 1.90 crores from Rs 14.60 crores in the previous year, with the PAT margin dropping to 1.6%.

Looking Ahead

While the company faces challenges in terms of profitability, the strong performance in revenue growth, especially in the wine tourism segment, and the continued focus on premiumization suggest potential for future growth. Sula Vineyards' market leadership and ongoing expansion efforts position it well in the Indian wine market.