India’s biggest wine producer seeks millions on stock market


A visitor touches a barrel of wine during a visit to the Sula Vineyards winery in Nashik, India, on October 19, 2022 (AFP/Indranil MUKHERJEE)

India’s largest wine producer, Sula Vineyards, is taking to the stock market, betting on diversifying the tastes of a burgeoning urban middle class in a country that has long favored spirits.

“It’s wine time,” insists Rajeev Samant, founder and CEO of Sula Vineyards.

When this Stanford University graduate returned from California, he first tried growing roses and mangoes on his family’s land near Nashik, an ancient holy city about 100 miles from the financial center of Mumbai. .

“Where Sula is today, there were only grasslands. There were leopards and snakes. There was no electricity, no telephone line”, like a century ago, says Mr. Samant to AFP.

“I saw a certain beauty here, something about this place that really captivated me,” he says.

Rajeev Samant, founder and CEO of Sula Vineyards, pours wine at the Sula Vineyards winery in Nashik, India on October 19, 2022

Rajeev Samant, founder and CEO of Sula Vineyards, pours wine at the Sula Vineyards winery in Nashik, India, on October 19, 2022 (AFP/Indranil MUKHERJEE)

Marked by his visits to California’s Napa Valley wine region, Mr. Samant decided to “produce a decent, drinkable wine right here in India.”

India is one of the largest grape producers in the world and Nashik one of its key regions, but at the time the production consisted only of table grapes for consumption and raisins, rather than of wine grapes.

Wine accounts for less than one percent of India’s huge alcoholic drinks market, with spirits enjoying favor in the country of 1.4 billion people.

Named in honor of his mother Sulabha, the first vines of the vineyard were planted in 1996, then a vast hotel complex was erected in the hope of making Nashik the Indian capital of wine.

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In Bombay, businessman Parimal Nayak stayed in the vineyard with his family to celebrate his 44th birthday. “The Sula wines have improved a lot (…) and the atmosphere is pleasant”, according to him.

Visitors smell wine during a tour and tasting at Sula Vineyards in Nashik, India on October 19, 2022.

Visitors smell wine during a tour and tasting at Sula Vineyards in Nashik, India, on October 19, 2022 (AFP/Indranil MUKHERJEE)

Wine consumption in India, negligible in 1995, has increased as working women have taken to drinking it, but volumes were still only 20 million liters last year, according to the International Organization of Vine and wine (OIV).

Sula’s revenues have experienced an average annual growth of more than 13% over the past ten years. They amounted to 4.5 billion rupees (53 million euros) with a net profit of 521 million rupees (6 million euros) in the last financial year.

Next Wednesday, Sula Vineyards will open the subscription of its IPO, aiming to sell around a third of shares in the company which could bring in up to 9.6 billion rupees (110 million euros) and would value it at around 333 million. euros.

Karan Vasani, chief winemaker of Sula Vineyards, checks a batch of wine at the cellar of Sula Vineyards in Nashik, India, October 19, 2022

Karan Vasani, chief winemaker of Sula Vineyards, checks a batch of wine at the Sula Vineyards cellar in Nashik, India, on October 19, 2022 (AFP/Indranil MUKHERJEE)

Mr. Samant, 55, plans to sell about 5% of his 27% stake.

But several recent IPOs have failed – such as online payment company Paytm which has lost three-quarters of its value since going public a year ago – being overvalued by analysts.

Former wine pioneer Indage Vintners delisted in 2011 amid debt and cash flow problems.

– “The last glass of wine” –

In its IPO prospectus, Sula warned of the risk of “adverse weather conditions” affecting grape quality.

A worker prunes vines at Sula Vineyards in Nashik, India on October 20, 2022.

A worker prunes vines at Sula Vineyards in Nashik, India, on October 20, 2022 (AFP/Indranil MUKHERJEE)

Farmers in Nashik were already reporting floods and droughts nearly a decade ago, recalls Prutha Vaze, climate program manager at the Bombay-based World Resources Institute India.

Higher average temperatures accelerate the ripening of the grapes, accompanied by a drop in acidity, an increase in sugars and consequently the alcohol level in the wine.

These changes affect the delicate balance of flavors. If producers do not adapt to the changing climate, “it could be that one day (…) we drink the very last glass of wine”, warns Ms Vaze.

According to Ajit Balgi, founder of Bombay-based wine and spirits consultancy The Happy High, India’s most expensive wines have achieved world-class quality, even though they have “an Indian flair”.

“They don’t taste like Australian or French wine,” he says, “India is too close to the equator, so the grapes we choose are the ripest.”

Visitors take photos during a tour and wine tasting at Sula Vineyards in Nashik, India on October 19, 2022

Visitors take photos during a tour and wine tasting at Sula Vineyards in Nashik, India, on October 19, 2022 (AFP/Indranil MUKHERJEE)

New drinkers tend to prefer “more jammy” wines, he explains, “their first wine experience is sangria.”

But Sula could above all suffer from growing competition from foreign wines, which currently represent 17% of the Indian market.

A recent trade agreement with its biggest supplier, Australia, will reduce import duties on certain wines, which are currently at 150%.

But, according to Mr. Balgi, the biggest obstacle to the expansion of Indian wine remains its cost.

“The price of a basic Indian wine is comparable to that of a bottle of basic rum or whiskey”, he recalls, “wine consumption in India is low because the population does not have it. the means”.

© 2022 AFP

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