It is a Chapter 11 restructuring. The company will still survive. Not saying they arenāt going through tough times just pointing out that is more about debt restructuring than going out of business, at least at this point.
Owen Roe and Tamarack in WA are excellent. BR Cohn Olive Hill was always a great Cabernet, as was Girard Cab and PS, Kunde Zin(s), Cherry Pie Pinot(s), Clos Pegase Cab, Chard and SB, and Laetitia Pinot and Sparklers.
I like Qupe a lot as a QPR. In the distant past Iāve had excellent B.R. Cohn wines, but havenāt really thought about it in years. I would think about buying Cohn if I ever ran into their wines. Perhaps thatās why they need to reorganize. Their marketing may be questionable.
Correct itās Ch. 11 but they are hurting - and unless they sell off more assets like they just did Cosentino, they are toast without weeks or months.
What hurt them was a number of factors. Certainly, the downturn in the wine market generally. The de-SPAC going public (full disclosure: I was counsel to the underwriter on that transaction) and the financial transactions surrounding that. The founder retiring without having the right management team in place to continue the legacy. The challenge of being a public company in an industry that doesnāt really suit itself well to quarterly expectations. Going on a massive buying spree of brands, including a cider business, and the IP of two cannabis drinks businesses.
I think the portfolio is really redundant too, plus they also bought a lot of brands that were on their last leg (Cosentino being the most notable) and those are really hard to turn around.
I also donāt see that ācarrot on a stickā brand that they can dangle out there so that they have some leverage for placements with a hot, allocated item. These brands are largely lower price point, and itās hard to compete with Gallo at the level.
Willing to bet that a lot of these ābrandsā (redundant ones that Ian mentioned) were vastly overvalued when Vintage bought them and have not brought any positive return. Like so many of the brewery purchases and over-expansions, somebody wins when you sell at the top of the market, but somebody else is left holding the empty bag
Not sure they were āover valuedā to the extent you may think as it seems that Vintage was purchasing these brands far from peak value. I think in most or all cases, owners wanted or needed to get out . . .
I see this kind of thing in my industry (software) as well. There are two types of acquisitions:
Strategic
Tactical
The strategic transactions are done to create an overall portfolio that will strengthen the brand and the mission of the acquirer as a whole. The tactical transactions are usually done just to buy revenue in order to build a top-line in order to drive more investment.
Based on the list of brands VWE bought, they were just buying revenue in order to drive share price, but didnāt pay attention to what it takes to actually run those businesses profitably. Marc might be able to opine on that given he was an attorney on the IPO, but thatās my read from the cheap seats.
Lots of portfolios donāt have a limited allocation carrot. Not sure what vineyard ownership is for VWE, but I see a portfolio of wine that has a lot of purchased fruit, and that can impart a ton of risk, particularly in high cost of fruit regions like Napa, as prices rose over past years before the pivot last year.
Instead of the carrot, what is missing is the anchor brand(s) that get distribution in national retail coast to coast from Kroger, Safeway, HEB, SEG, Publix, Walmart, Target, etcā¦that are the foundational building block for the super and ultra premium wines.
Very insightful, and something I think you are very much onto.
Kris, I absolutely agree with your first point. Too much risk in a heavy pipeline of juice.
Getting into those chains takes a lot. Gallo, KJ, Treasury and the other big guys take up way too much shelf space. I just donāt think they could compete. Where I think they lost out with other retailers was not having that ace up their sleeve with an allocated item. Itās a compounded issue for sure, but they are just lost in a sea of labels.