Rather big news....Duckhorn acquires Sonoma Cutrer, and seemingly partners with Brown Forman?

WINE TALK
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Lot to unpack here. Really curious to see how this pans out.

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Huge news - setting themselves up for a multi-billion dollar buy out?

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I said that in another thread, but clearly, that seems to be where this is going.

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Wow. And I didn’t realize Sonoma-Cutrer is that big - 543k cases!

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I remember my friend :stuck_out_tongue_closed_eyes:

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But the revenue number is small!

I bet there is a thought that the wines are under priced, so they can immediately raise the prices.

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That’s a good point. 6.5 million bottles generating $84 million of revenue. $13 per bottle gross assuming that’s all wholesale. I suppose that makes sense - it’s usually somewhere in the $20s in the grocery store.

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Yup, good math there.

The issue is I think that most of their revenue is one SKU. The high end wines are super tiny production comparatively speaking.

I remember their top wines used to age quite well. They were always very Burgundian too. The base wine never did anything for me.

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If my math is correct, $1.6b valuation on Duckhorn based on the value of the stock included in the deal. Yikes!

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And growing!

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Not just that, but presumably Duckhorn (and Gallo, and Constellation and Wine Group) all know they can move production in-house (in-factory?) and reduce costs significantly there.

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And with the deal they also acquired over 1100 acres of vines. That assures them a constant supply of not having to go to the bulk market….

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Interesting play by Brown Forman. Clearly they think there’s “synergy” in the combined entities. The equity play gives them a piece of the action when Gallo comes knocking for the whole enchilada.

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when Duckhorn was acquired all their prices shot up. I expect the same now. I pour the SC Chard BTG.

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Poor man’s Rombauer

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my customers love rombauer.

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Oh, it goes by the glass here in socal like iced tea in the nicer establishments.

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You must not patronize a lot of steakhouses. It’s more common than Artemis and Les Noisetiers in that milieu.

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And every grocery store in California

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When you consider the trends in red wine sales and white wine sales, this makes a lot of sense.

They make PInot Noir. They sell direct from their website. They sell cans of California Chardonnay. I assume these are a piddling part of their business. If they are actually getting $13 or close for the large majority of their wine, they have big market clout with retail in the low to mid-$20s. That means either their wholesalers and/or the retailers are working on thin margins.

I personally think the wines are pretty good, especially at the upper end, but I don’t wind up drinking them except btg in restaurants.

Dan Kravitz

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