Lot to unpack here. Really curious to see how this pans out.
Huge news - setting themselves up for a multi-billion dollar buy out?
I said that in another thread, but clearly, that seems to be where this is going.
Wow. And I didn’t realize Sonoma-Cutrer is that big - 543k cases!
I remember my friend
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.
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.
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.
If my math is correct, $1.6b valuation on Duckhorn based on the value of the stock included in the deal. Yikes!
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.
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….
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.
when Duckhorn was acquired all their prices shot up. I expect the same now. I pour the SC Chard BTG.
Poor man’s Rombauer
my customers love rombauer.
Oh, it goes by the glass here in socal like iced tea in the nicer establishments.
You must not patronize a lot of steakhouses. It’s more common than Artemis and Les Noisetiers in that milieu.
And every grocery store in California
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.