DEAR
SHAREHOLDERS
FY25 has been a challenging year for our industry and for us at Sula,
marked by a slowdown in urban consumption and multiple temporary regulatory and market
disruptions. But challenges are not new to us. We've weathered storms before and each
time, Sula has emerged stronger.
I remain confident that this time too, as in the past, we will bounce
back — stronger and more inspired in the coming years.
Spotlight on Financial Performance
After 3 years of strong growth, FY25 was more a year of demand reset
for the Indian wine industry. Growth of wine market in India took a temporary pause as
demand was impacted by the urban consumption slowdown; wine being a predominantly urban
drink, impact on wines was more stark versus other AlcoBev categories.
Adding to the urban consumption slowdown, the wine demand was also
impacted by the multiple temporary regulatory and other market disruptions including the
national elections, state elections in key markets including Maharashtra, our largest
state, among others.
But the good news is that these setbacks are now behind us as we look
forward to more normalized domestic macro environment going into FY26.
Despite challenging market conditions for the wine industry, Sula
reported its highest ever revenue from operations at INR 619.4 Cr in FY25. We continued to
consolidate our leadership position, being by far and ahead the largest wine brand in the
country.
Amid subdued sales growth and the high base of last year in terms of
operating margins, our EBITDA declined vis-a-vis FY24. Despite the decline, our operating
EBITDA margins were healthy at c.24%, which is best-in-class in the Indian AlcoBev
industry.
Our Balance Sheet too remains strong with Net Debt / EBITDA below 2x
and our ROCE stands at a healthy level of ~18%. Going forward, in the medium-term, we will
continue to maintain our Net Debt / EBITDA below our internal benchmark of 2x and strive
to improve our margins and return \ ratios in tandem with growth.
Spotlight on Own Brands
Despite FY25 being a tough year for the Indian wine market on account
of multiple challenges, our Own Brands clocked its highest ever sales. Own Brands revenue
in d FY25 was INR 546.2 Cr up 2.2% YoY vis-a-vis INR 534.2 Cr in FY24.
Premiumization continues to gain ground as our Elite & Premium
portfolio outperformed in FY25 clocking a growth of 4.8% YoY to reach sales of INR 420.9
Cr with its share in the overall pie improving further to 771%, up from 75.2% in FY24.
Driving this momentum were our key Elite brands, The Source n and RASA, both of
which delivered , robust double-digit growth.
Its really encouraging to see the wine culture evolving and spreading
across India outside our top two markets. Our domestic Own Brand sales excluding
Maharashtra and Karnataka grew by 8% YoY powered by a total of 11 states registering
healthy double-digit growth.
This fits in well with our endeavor of creating a truly pan-India
penetration.
Despite the challenging backdrop, we continued to be steadfast on our
path of innovation with the launch of Sula Merlot - a lush, velvety red bursting with rich
plum notes. One of the world's most loved varietals, Merlot marks our first addition to
the Sula Classics range in nearly a decade.
We also doubled down on getting closer to our end consumer base through
vibrant initiatives such as the SulaFest'25 which was attended by over 10,000 people, and
extensive on-ground tastings, where we conducted 2.5+ lakh tastings in FY25. Further we
carried out activations through impactful promotional schemes, gifts and combo packs
during the festive season.
In a marquee positive development, Sula has partnered with Indigo,
India's largest airline to offer Sula's premium canned wines to travelers on international
flights. In the SulaFest'25, too our premium wine cans saw very good offtake. So, we
believe that the Indigo partnership and music fests / concerts can be great platforms to
promote our wine cans.
In other good news, we successfully secured the listing of four new
Sula wines with CSD, following the culmination of a two-year long process. This takes
Sula's total listings in CSD to 9 wines now and positions us for a good year of growth in
the Defence segment.
Spotlight on Wine Tourism
Our Wine Tourism business continued to grow from strength to strength
in FY25 recording another year of solid double-digit growth. Over last 4 years
(FY21-FY25), our wine tourism business has grown rapidly at 35% CAGR.
In FY25, our wine tourism revenue grew by 10.2% YoY to INR 60.3 Cr
driven by a very successful SulaFest'25 coupled with the strong performance of our
resorts. Our resort occupancy improved by 400 bps from 74% in FY24 to 78% in FY25 on the
back of a strong festive and wedding season. We also recorded high single-digit growth in
revenue per guest (up 7% YoY) at our key wine tourism facilities.
We brought back the SulaFest for its 14th edition after a gap of 5
years. The response for SulaFest'25 was amazing and much higher than expected. The event
was attended by 10,000+ participants over two days and moreover for the first time,
SulaFest was a profitable initiative. Given its success, we have decided to make SulaFest
an annual event.
Going forward, we have a few exciting additions to our Wine Tourism
portfolio in FY26. First, we have the Dindori Tasting Room & Bottle Shop coming up
soon in Q1 FY26 (at ND Wines) - its located close to the Gujarat border and we see a
strong potential for footfalls here. Second, we are expanding our facility at Domaine Sula
by adding a new tasting room overlooking the vineyard and expanding the restaurant and
bottle shop. Thirdly, the most significant of our expansions is the new resort of 30 keys
we have coming up near the York winery in time for the festive season.
Sustainability is not just a goal — it's a way of life at Sula
At Sula, sustainability is not a value, it is a commitment that we have
been living every day since our inception. We are one of the most sustainable wine
businesses worldwide.
Our efforts can be seen across our facilities as we generate >4
million kWh of solar energy, conserve water through rainwater harvesting, reduce waste by
using recyclable packaging, and cut down emissions by moving towards electric
transportation.
In fact, 66% of our energy needs in FY25 up from 59% in FY24 were met
through our own solar PV installations. We also reduced our water consumption per case by
5% in FY25 through targeted initiatives.
We are committed to achieving 75% renewable energy usage in near future
and have already begun laying the groundwork to make this vision a reality.
The best is yet to pour!
Looking back to the year gone by, it was a very challenging year marked
by multiple macro headwinds, but in many ways, we have reached a trough in FY25, and the
worst is behind us.
So, looking ahead, we are optimistic of seeing better traction and
growth in FY26 with positive triggers and expansion plans in our Own Brands and Wine
Tourism businesses further supported by the normalization of the macro environment
expected soon. More importantly, with steps taken to optimize cost, we expect a stronger
rebound in operating profit.
In the more longer- term, we are excited with immense potential for
wine in India. So far, we have just scratched the surface; wine still accounts for <1%
of the Indian AlcoBev market. There is a very long runway ahead for Indian Wine, and we at
Sula are confident that we will continue to lead the way forward in future just like we
have in the past 25+ years.
Here's Raising a Toast to a Sunnier and Brighter FY26 & Beyond!
Best regards,
Rajeev Samant Founder and CEO