India-based wine maker Sula Vineyards is all set to launch its initial public offering (IPO) on 12 December. Aimed at raising INR9.6 billion ($116.7 million) to fund its domestic expansion, the IPO launch comes at a time when the Indian wine market is emerging from the COVID-19 lull and gearing up to accelerate at a compound annual growth rate (CAGR) of 12.2% during 2021–26*, says GlobalData, a leading data and analytics company.

Vishakha Rastogi, Consumer Analyst at GlobalData, comments: “The prolonged stay at home during the COVID-19 pandemic accelerated at-home consumption of wines. The pandemic also unlocked the direct-to-consumer and e-commerce distribution channels. Now, as most of the COVID-19 restrictions have been lifted, consumers are flocking back to hotels, restaurants, bars, pubs, and clubs, and tourism activity is also on the rise. The resumption of out-of-home dining, socializing, and celebratory occasions are boosting wine sales.”

Sula Vineyards has established itself as a market leader in the Indian wine market with its portfolio of popular brands, such as Sula, RASA, Dindori, and The Source, targeting consumers at every point of the price-demand curve in the price-sensitive market. With quality and pricing, local wineries, such as Sula Wines, have gained an edge over imported wines in the Indian market, where pricing makes or breaks a brand.

Rastogi continues: “While it has expanded its international presence in recent years, Sula Vineyards plans to use the IPO funds to expand in the beer- and whiskey-dominated domestic market. Moreover, wine distribution is limited to metropolitan and top-tier cities and only in large liquor stores and fine-dining restaurants and bars.

“Rural market penetration has been constrained by the premium image and poor consumer awareness of wines. In addition, wines attract high excise tax, as it is bracketed under the Indian Made Foreign Liquor (IMFL) category.”

Despite the challenges, wine has been gaining traction among young aspiring urban Indians, who are more drawn to Western culinary trends through overseas travels and popular media. Gifting wines and serving wine at parties is increasingly being viewed as a status symbol. Budding domestic viticulture and wine tourism businesses, and wine-tasting events are also disseminating awareness and incubating the nascent wine culture in India. This is in line with GlobalData’s Q4 2022 consumer survey results, wherein 30% of Indian respondents said their spending on wine was quite/very high over the last 3 months^**.

Rastogi concludes: “Armed with a cash reserve, and with the backing of multinational private equity investors and institutional investors, and a base in the fast-growing wine market, Sula Vineyards is expected to establish itself as one of the leading global winemakers.”

*GlobalData Consumer Intelligence Center – Market Analyzers, accessed in December 2022

**GlobalData Q4 2022 Consumer Survey – India, with 500 respondents, published in November 2022