Sula is the leading wine producer and retailer in India, with a 52.6% market share in the Indian wine industry.
Wine may not be as popular in India as it is in other countries as it accounts for only 1% of the $30 billion alcoholic beverage market. The per capita consumption of wine in India is just 40 ml per year. Despite this, winemakers are still hopeful for increased popularity in the future. Currently, hard spirits like whiskey are more popular in India, comprising 70% of liquor consumption.
Why Indians Prefer Hard Spirits Over Wine?
The arrival of the Portuguese and French in India during the 16th century introduced wine to the country. However, when the British arrived, they brought their preferred spirits, such as whiskey and gin. These alcoholic beverages became integrated into Indian culture. They have remained popular even after the British left, seemingly unable to shake off the influence of colonialism.
How Sula Positioned Itself in India?
In the 1990s, companies such as Grover Zampa and Sula Vineyards entered the market with the aim of altering India’s drinking habits. The wine industry in India currently holds a small share of the market at 1%. However, this is still an improvement from its previous status of 0% in the year 2000. Previously, all the wine consumed in India was imported. It was primarily consumed at 5-star hotels, accounting for 95% of wine consumption.
Today, 84% of the wine consumed in India is grown domestically, and only 25% is consumed at fancy hotels and restaurants. Many people now prefer to enjoy a bottle of wine at home with friends while watching a movie, rather than exclusively consuming it at high-end establishments. This change in behavior can be attributed, in part, to the high tariffs placed on imported wines, as well as the efforts of domestic winemakers.
In addition to changing consumer preferences, domestic winemakers like Sula have also contributed to the shift in India’s wine consumption habits. Sula has a strong social media presence. They have made wine trendy and fashionable, particularly among millennials who make up over 50% of Indian wine drinkers.
In order to tap into this market, Sula introduced a Wine Tasting Room and music festival called the Sula Fest. Along with this, they also offered wine tourism at their vineyard, which attracts over 350,000 visitors each year. The occupancy rates of these visits is higher than many hotels in India at 70%. These efforts have allowed Sula to dominate half of the market and become one of the top wineries in the world.
As a result of their innovative marketing strategies and high-quality products, Sula wines likely make up 20 ml of the 40 ml of wine consumed in India. The company has steadily risen to the top over the course of its 23-year existence.
Role of Government of India to Promote Wine in India
While the efforts of domestic winemakers have contributed to the growth of the wine industry in India, favorable government policies have also played a crucial role. In 2001, the state of Maharashtra recognized the agricultural nature of wine. As a result, it implemented policies that provided rebates on excise duty and sales tax for wine production.
Additionally, wineries were given access to bank-funded working capital. This allowed them to sustain their businesses during the time-intensive process of growing and aging grapes for wine production. These policy changes have been instrumental in supporting the growth of the wine industry in India.
In 2007, the state of Karnataka followed in the footsteps of Maharashtra by implementing policies that supported the wine industry. As a result, 97% of grapes grown for wine production are now grown in these two states, which also account for 57% of total wine consumption in India.
Maharashtra’s new Wine Policy aims to bring significant changes to the industry. They are looking to allow the sale of wine at supermarkets and grocery stores that are over 1000 sq ft. This policy is similar to those in the US and Europe, where wine is easily accessible at most supermarkets. By making wine more readily available, the policy aims to increase sales by 20%, according to industry experts.
The Current State of Sula
Sula is hoping that other states will adopt similar policies to increase wine sales. However, it is important to note that the company’s revenue growth has not been strong. They are currently conducting an offer for sale (OFS). In this process, existing investors are selling their stake for financial gain rather than investing the proceeds into growing the business. This is ideally not a good sign for the company.
While the Indian wine industry may experience a resurgence, it is uncertain if Sula will see the same level of success. Only time will tell.
