Institute of Management, Nirma University

MBA (FT) 2018-20

Case Study of Entrepreneurs

Individual Assignment on
“Sula Wines”

Submitted to: Prof. Shahir Bhatt

Submitted by:
Yash S Shah (181267)

Date of Submission: 14th November, 2019

Contents
Introduction and Background ............................................................................................................... 3
Analysis of findings ............................................................................................................................... 3
Driving global demand for Indian wine: ................................................................................................ 4
Challenges for Sula Vineyard ................................................................................................................ 5
SWOT analysis of Sula Vineyards: ......................................................................................................... 6
Recommendation and conclusion ......................................................................................................... 8

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Introduction and Background
The case introduces us to the Sula vineyard, an Indian brewery that began operations in early
1998 and was maintained and executed by young entrepreneur Rajeev Samant. Here, the case
tells us about their operational story, which gives us an idea of the strategic goals, financial and
financial issues that companies face in their operations. Since Sula is a domestically produced
product, entrepreneurs come from Mumbai, India.

When talking about the young entrepreneur Mr. Rajeev, he holds a bachelor's degree from
Stanford University, has worked in management engineering, and has some experience at
Oracle. Then he explored the outside world, where he decided to quit his job and start a business
with novel ideas. He came to his own country, India, as a young entrepreneur. After some
exploration, he discovered that Nasik was the ideal place to grow grapes, so he decided to start
a new wine company, where he talked to another friend, and they both agreed to start Sula
Vineyards, this is the source of stories and history. Start as a vineyard in Sula.

The Sula vineyard has now not only gained market status, but is now considered to be the best
wine industry in India, and has successfully won several awards for its continuous
improvement in wine quality, which will say Sula the vineyard is the best place to go wine.
Rajeev also created income, and he has been a role model for many young entrepreneurs who
want to learn from him. Sula Vineyards created jobs for the Nasiks and others. Now, Sula has
become the world's largest wine farm and the first wine industry in India, with more popularity
and market than ever before.

Analysis of findings

When they made the decision to open a business in India, they faced many difficulties in
financing and debt. Since Mr. Samant borrowed money from family and friends to start a
winery business, the bank was not ready to provide them with funds, which they had never
heard before in the market. Due to his father's dedication to the bank, his father also worked in
the bank, so they provided some loans to the brewery. Therefore, marketing is also a challenge
for Indians because they have never heard of this name and are not familiar with the wine brand
(Sulawines).

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After all these obstacles, Sula took over the place, they slowly succeeded in their field, and
even attracted more farmers, but they could not make a quality winery.

When they started operations, they were mainly concentrated in four cities, where customers
were one of the most tourist-friendly places and some expensive hotels. Now, they focus on
the upper middle class who can afford wine and some state capitals.

Therefore, according to Mr. Samant, “There is currently 1% of people drinking wine, but in
the next 10 years, the population will grow steadily to 10%, which will become a huge market
for Sula vineyards.” So Sula slowly occupied the market and began to earn income in the
second year. They earned $12 million in 2008 and made a profit of $1 million.

As a market, I am very vulnerable in India. Most people think that wine is not good, even wine
is made of luxurious materials, so the challenge for Sula vineyards is to understand these
customers. And let the market mature. Therefore, for Sula, wine education and rewarding
customers are the current obstacles. They even face huge national tariffs on wine, so India's
wine free trade zone will create market growth, but until today, they still face difficulties in
collecting tariffs.

Driving global demand for Indian wine:

• The Indian government has demonstrated “India's Victory” on a global scale, providing
opportunities for global operations in the US, France, Italy, Germany and Singapore.

• APEDA's rural wine promotion strategy includes relaxing trade barriers and raising awareness
of Indian wines, stimulating Rajeev to expand its business

• Maharashtra regulations promote the development of wine as a food processing industry,

deducting consumption tax from wine.

All of the above factors directly affect the success of the Sula industry. Six months of sales are
slow. The original brewery had an annual capacity of 150.000 litres. In 2006, it reached 1.6
million litres per year. His decision to design wines to meet global tastes and quality standards
has made him successful. He established a wine committee to encourage the Indian wine
industry.

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Challenges for Sula Vineyard

For any company that grows, survives, and sustains, they must face difficulties in the product
lifecycle because Sula faces many difficulties in the product lifecycle, some of which are
strategic issues and some of which are financial issues.

• The initial cash flow of the Sula Vineyard is negative due to unfavourable cash flows.

• In India, Samant decided to continue to work in the wine industry, so India does not have a
wine industry, so he talked about the country's rigid bureaucracy.

• He was unable to obtain a two-year license due to government and state intervention issues.

• India has never been a wine lover, so the market is a downturn for the state of Sula, and it is
really hard to prove that it is a quality wine producer because it is more expensive than other
French wines.

• The bank can't believe that Sula will do more, and they don't have any ideas, so the bank is
not ready to lend.

• Indian wine brands are rarely heard, so for other countries and exports, it is difficult for Sula
to establish a market and it is difficult to seize market opportunities.

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SWOT analysis of Sula Vineyards:

Although wine is a relatively new beverage

consumed by India, consumption growth has
exploded in the past five years. By adopting a
globalization strategy, Rajeev faced many
challenges, but it also created new opportunities
for the establishment of Sula wines as world
famous wines. Rajeev has been at the forefront
of this sport, and Sula's brand portfolio has been
carefully designed to adapt to changing
domestic tastes and performances as well as the taste and performance of the world's more
developed wine markets.

Strength:

 Work with experienced management and consultant teams such as Kerry and his
company.
 The supply of locally supported raw materials and further good relations with farmers
and other foreign grape dealers helped him succeed.
 Proper Sula financial strategy to sustain growth in the industry.
 Successful industry marketing strategy
 Expanding market strategy to go global and become India's largest wine industry
 Product portfolio and brand, quality is the main force of the industry.

Weakness:

 There is not enough capital to sustain the growth strategy, so he borrowed from the
bank to maintain the strategy.
 Global growth requires a lot of investment because it will reduce the ratio of net assets
to total assets.
 Inventory management is one of the weaknesses of the industry.

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  The distribution strategy is weak. The average price of a box of wine is about $4.80 per
bottle, while the average price of a bottle in the retail industry is about $13 to $15.

Opportunity:

 The Indian wine market is a growing industry and therefore has great growth potential.
 Laws and regulations promote companies to the world. Therefore, Sula has the
opportunity to expand its branded wines globally.
 The climate suitable for growing grapes as it also creates opportunities to produce
another wine.
 People drink wine every day and their standard of living is improving. It will increase
the consumption of wine. This will give you more opportunities to adopt a growth
strategy.

Threat:

 The Sula wine industry may face the potential threat of other wine industries entering
the Indian wine market, as there are already another big competitors, such as the
constellation brand, Gallo, Diageo, Hilgram, Foster and so on.
 The change in weather affects the production of raw materials (the grapes used for
winemaking).
 Government regulations and policies on wine distribution channels and their policies.
 The imbalance between wine production and demand
 The impact of pests and diseases on vines

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Recommendation and conclusion

The Indian wine industry is evolving and it has made wine business easy due to the
liberalization of many laws and regulations. After the wine has completed the fermentation
process, it is transferred to oak barrels for aging. For white wines, this process can take up to a
year, while for premium red wines it can take two to three years. Therefore, depending on the
type of wine, it requires a variety of raw materials, namely the grape type. Sula grows grapes
on hundreds of acres of land, so it can control the quality of the grapes produced. It also signed
long-term contracts with local farmers and wine producers.

Sula Vineyards is a pioneer in creating wine brands and developing a sufficient number of
products to meet the growing domestic demand of Indian wines. Rajeev faced a huge challenge
in the early days of its operations, and the financial statement showed that the net profit after
tax was negative. He continues to improve partnerships with farmers and experts and develop
his own industry. He needs to analyse and predict the company's market value, product price
and revenue over the five-year forecast period. Using an assessment of the past trends in
demand and price of the company's brands, they need to make their own adjustments to the
benchmark data. The change in lifestyle and awareness of the middle class Indians has become
a key factor driving consumer power and market attractiveness. Rajeev needs to consider other
factors when analysing his business strategy. Some of these include frequent travel abroad, an
increase in the number of women in the workforce, an increase in income, and international
research on the health benefits of wine.

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