Sula Shares get boost as Wine tourists flock over Christmas
“It was a record-breaking weekend on all fronts. Revenue, visitor numbers and tastings set new records. This bodes incredibly well for the future of wine drinking in India,” said Rajeev Samant in a Statement, according to a report.
While one is not sure about the second part of his statement as the industry has, by and large neglected this critical part of the wine operation over the years, it bodes well for Sula and its shareholders as it adds value to the company and puts further pressure on the competitors.
Wine tourism is picking up among Indians amid a growing trend for immersion travel and better availability of foreign products. The information supplied to the stock exchange resulted in a jump of around 6% only due to this factor. Emotions in the stock market notwithstanding, this factor was widely acknowledged by the market pundits. A jump from Rs. 483 on Thursday morning to Rs. 511 in the evening of the same day, reflects an increase of Rs. 28 per share. With current Capitalization of over Rs. 4,200 Cr, it could be surmised that the increase in shareholders’ value has been about Rs. 240 crores!! This has been primarily due to wine tourism. Later on, the market reacted, going up and down, with the final closing price of Rs. 499 on Friday, 30 December.
There may be disagreements about the quantum of increase in Shareholders’ wealth due to wine tourism but today nobody can disagree that it is very significant. Despite several advisories to the industry by delWine, there was really not much attention paid to it over the year though Grover, York and Fratelli did make some investments.
Of late, Big Banyan Bangalore has also joined the bandwagon and Soma Vineyards has some concrete plans. Vallonne has excellent facilities too but with limited investments possible. Soma Vineyards has a rather nice location and the project is chugging along.
In a recent interview with a TV Channel, Rajeev Samant, Founder CEO of Sula Vineyard disclosed that 16-18% of company revenue came from wine tourism- including the room tariffs and wine sold to the tourists. He also added that 85% of the revenue is generated from the sale of wines. He also acknowledged the branding value of wine tourism, a factor not given as much importance as it deserves.
Every producer claims shortage of funds, overlooking the fact that wine tourism has to be a central part of wine sales. Sula had started with a small Tasting room and with no rooms available for stay, they engaged an adventure travel company that would rent out tents over the weekend so that people could come and enjoy the stay. SulaFest was also launched to increase wine tourism and sales. Sula had encouraged the now-owner of Soma Vineyard, Pradeep Pachpatil to construct a building to its excellent specifications and leased it out for several years till it could spend money of its own and constructed the Source complex.
Insofar as possible, Sula has started to report to the stock exchanges about wine tourism in its statements. In its “Sales Update Q2 & H1 FY24, it announced that its wine tourism business was up 26 per cent at Rs 12.1 crore, Sula Vineyards said According to the company, this was the “highest-ever Q2 net revenues overall as well as for the priority Own Brands and Wine Tourism businesses”, according to a report in PTI.
The industry is gearing up for more action in this area. This will not only give a boost to tourism but will also result in more wine consumption and addition of new wine drinkers. As Rajeev says, ‘We are perhaps the most visited winery in the world, though we have not approached Guinness World Records for this certification. We feel more people have tasted wine for the first time at Sula Vineyards than any other vineyard in the world.’
We have not yet met anybody who challenges the Statement-in India or overseas though some winery in China or the US could be a contender.