Image Source: Nashik City
A Challenging Quarter for India’s Wine Pioneer
Sula Vineyards, India’s largest wine producer, faced a turbulent start to FY26. The company reported a dramatic 87% plunge in consolidated net profit year-on-year for the April-June quarter, alongside a notable decline in core operating revenues. However, vibrant gains in its wine tourism segment offered a silver lining, as the company navigates a volatile regulatory and demand environment.
Key Takeaways
Revenue and Profit Picture
Sula Vineyards posted consolidated revenue from operations of 1.18 billion rupees (₹118.3 crore) in Q1 FY26, marking a 7.9% decline compared to ₹128.4 crore the previous year.
Net profit crashed to just 19.4 million rupees (₹1.94 crore), an 86.7% year-on-year plunge from ₹14.6 crore in Q1 FY25.
At the operating level, EBITDA fell sharply by 44.6% to ₹18.5 crore. The operating margin narrowed significantly, sliding from 27.8% in the previous year to just 16.9% this quarter.
The steep fall in profitability was attributed to persistent softness in urban demand, compounded by temporary trade disruptions in Maharashtra. Prior to a late-June excise duty hike, many traders stocked up heavily on spirits, squeezing out shelf space for Sula’s wines in the key market.
Segment Breakup: ‘Own Brands’ Under Pressure, Wine Tourism Booms
The flagship ‘Own Brands’ business, which forms the bulk of Sula’s top line, witnessed a double-digit setback. Revenue dropped 10.8% year-on-year, landing at ₹102.3 crore, as against ₹114.6 crore in the same quarter last year.
A key reason is the ongoing slowdown in urban consumption, as well as the ripple effect from Maharashtra’s spike in excise duties (which only impacted spirits, not wine). The resulting spirit stockpiling temporarily crowded out wine sales.
In contrast, wine tourism emerged as a powerful growth driver. Revenue from this segment leaped 21.8% to ₹13.7 crore, its best-ever performance for the June quarter. Higher visitor footfalls, record resort occupancy, and increased guest spending all contributed to this boom. Infrastructure improvements like the Samruddhi Highway, which cut travel time from Mumbai to Nashik by nearly an hour, also played a role.
Product and Brand Performance
Despite headwinds, the elite and premium wine categories (notably Sula’s ‘The Source’ and ‘RĀSĀ’ labels) delivered robust double-digit year-on-year growth in Q1.
The quarter also saw the launch of ‘Sula Muscat Blanc’, billed as India’s first low-alcohol still Muscat wine (7.5% ABV). The product debuted in Maharashtra, with plans for a phased rollout across Karnataka.
Management Commentary and Outlook
CEO Rajeev Samant acknowledged a tough start but reaffirmed Sula’s focus on driving healthy operating profit growth for the remainder of FY26, banking on a more favorable regulatory climate for wine as opposed to spirits.
The company points out that last year’s Q1 revenues were artificially boosted by a ₹10.4 crore one-time benefit from inventory accounting adjustments, so the underlying operational decline is less severe than headline numbers suggest.
Sula signaled optimism about the medium-term impact of the excise duty hike on spirits, which may nudge consumers and retailers further towards wine and benefit the industry structurally over time.
Stock Market Reaction
Following the announcement, Sula Vineyards’ shares slipped nearly 1% on August 6, 2025, closing at ₹278.20 on the NSE. The stock has faced broader pressure in 2025, with year-to-date returns down over 29%.
Summary
Sula Vineyards’ Q1 FY26 results reflect significant near-term pain from trade and regulatory headwinds—manifested in falling revenues and a steep profit decline. Yet, the strength of its wine tourism business and growth in premium labels offer resilience. With new product launches and a bet on India’s evolving regulatory landscape, the company remains committed to weathering short-term turbulence for long-term gains.
Source: CNBC-TV18, Business Standard, MoneyControl.
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