26-year-old Stanford Alum winemaker braves India’s IPO market
As recession fears have seen new listings stall this year, one of the few companies currently looking to go public in Mumbai is testing investors’ appetite for India’s growing wine market.
Sula Vineyards Ltd., which filed an initial public offering last month, says it has more than 50% of India’s small but rapidly growing wine market.
The 26-year-old company has opened tasting rooms and held an annual music festival as part of its effort to make the drink popular in a young country with a growing middle class.
“When Sula entered the market, wine was seen as something aspirational – for people over 45,” said independent alcoholic beverage consultant Abhay Kewadkar. “They’ve smartly changed that perspective by targeting younger consumers.”
The winemaker is seeking to go public at a time when IPOs have dried up in India, as in much of the world, amid fears of a recession.
Young retail traders who have helped boost the local stock market over the past two years have been burned in recent months by plunges into high-flying tech unicorns such as Zomato Ltd. and Paytm’s parent company, One 97 Communications Ltd.
The S&P BSE IPO Index, a gauge that tracks the performance of Indian stocks for the first two years after listing, has fallen 24% so far in 2022 after nearly tripling in the previous three years.
Sula has not yet disclosed the value of the planned sale of about a third of its existing equity, including shares held by founder and chief executive Rajeev Samant. The company posted sales of $57 million for the year ended March 31, about a tenth of the revenue of Zomato and Paytm, although unlike the two tech companies, Sula is profitable.
In his draft prospectus, Sula claims that India is the world’s third-largest alcoholic beverage market, with $33 billion in 2020, but wine only accounts for 1%. The company believes this leaves plenty of room for growth, forecasting total Indian sales of 3.4 million cases of wine in 2025, up 70% from the 2021 level.
Samant, a 55-year-old Stanford graduate, has been working to stimulate demand by promoting wine tourism in Sula’s production base, Nashik, which is considered India’s version of Napa Valley. The company says social media has also helped raise the drink’s profile and claims that Sula is among the top 10 most followed wineries on Instagram globally.
Sula won’t make any money from the IPO itself, but hopes the listing will boost its visibility and brand image. It could also have a halo effect for the entire industry, with the company’s local competitors including Fratelli Wines and Grover Zampa Vineyards.
“This IPO will put the wine segment in the spotlight,” said Ronak Soni, analyst at Equirus Securities Pvt. “It’s a growing segment.”
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)