In 2009, Kosta Browne sold for $40million. They owned no vineyards.
Yep I remember Kosta Browne, but Merus was before that. I guess Ravenswood was the first of this type of winery to sell? The thing about Merus that made it unique was it was very small.
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It was actually $1.36 billion including the assumed debt.
Many news organizations (including CNN in in the story Robert linked to), only mention the value of the equity in deal stories. But the cost to the acquirer includes the assumed debt. Ignoring the debt is like saying your buying a house for the value of the sellerâs equity without mentioning the outstanding mortgage.
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John as an investment banker I will say that the example you gave is not a good one. The value of the transaction would be equity + net debt (debt - cash). The house does not come with cash, the business probably does. And as I point out later there are lots of different types of debt. I quickly looked at the filed fairness opinions and this was definitely an odd transaction because Mondavi had a two class structure and Constellation went hostile on them. The press release is very sloppy. I am guessing Constellation wanted to make the purchase price look as high as possible to help ensure they got the shareholder vote. And I would have to really dig into what the debt was if it was non recourse debt or some other type of odd debt I might not count it in the transaction value.
Thanks it was a fun, quick read through the merger docs!
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I actually updated what i wrote in my original post because i mistakenly wrote 3 million cases but josh is actually 6 million cases and on track for another double digit growth year now in 2024. I do indeed believe that Josh is bigger than all of VWE brands combined.
Deutsch will find another partner but most likely they will need to spread it out amongst several places (I dont know any facilities that have 6 million cases of capacity). The wine sourcing is done by an actual Deutsch winemaker (employee of Deutsch) and he is very well connected. I could see them moving that 6 million cases to 4-5 different facilities or perhaps they buy the VWE rayâs station winery where it is currently being produced by VWE.
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I dont have much insight to their grower situation. I think they started pulling back already in last few years (I know they bottled a lot less wine year over year in last few yrs) of their main brands so I am thinking most growers are not blindsided. However, still not a good situation for anyone that was selling them fruit.
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I think already there are a lot of vineyards that have fruit to sell. But itâs staying rather close to the vest for the moment. I think if there are a lot of such situations and word gets out, it will actually cause more large wineries to drop contracts, as they will think âIf XYZâ is pulling back, maybe we should too.
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Covering M&A I came across cases where the headline purchase price was fudged in one direction or the other for appearancesâ sake â for the buyer or seller â and the real price was different.
As a person not in the business, Iâm finding this thread to be quite fascinating. As a devout berserker, Iâve never bought a single bottle of any of these wines, although Iâm sure there are a few gems in the mix. I did actually visit BR Cohn for a tasting years ago, and ended up buying only olive oil and vinegar.
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Has anybody mentioned Laetitia? This is where they were making Qupe. The property comes with a lot of vineyards and Laetitia itself has made some fine wines. It was orginally Deutzâs outpost. They made very good sparkling wines, as I recall.
I have no idea what it is worth but somebody with a sense of flare might do well buying it.
Re Josh: the last time I checked somebody told me the wine was made by a guy named Wayne Donaldson, who ran Chandon in Australia and then here. Great guy, very smart. âŚis he still there?? That facility is in the boonies so transportation costs might be a killer. Maybe Josh should buy the old Ravenswood property. Or move to Lodi.
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Yeah, The guys at Tamarack are about as nice as it gets. Itâs been a few years since I caught up with them but this is sad to see.
They have been ripping out some of the vineyards over the past year. The tasting room had been closed for an extended period of time and recently reopened on the weekends - after getting rid of most of their staff. I think that the land is probably more valuable for future housing than it is as a winery . . .
As far as Qupe goes, I have no idea what theyâve done with that brand. I have no idea where itâs being made, who is making, or if they are even moving forward with it. Such a shame - but Bob and Louisa have landed on their feet and seem content doing what theyâre doing - and making their wines at the ABC facility.
Cheers
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Always funny to me that when you are branding a product after all the mind hours and money thrown at it and you come up with the dumbest name ever âJoshâ.
Yet it doesnât matter, biggest shelfer brand out there right now it seems.
Well, it was named after the founderâs DadâŚ
âIt was launched in 2007 by American vintner Joseph Carr and named as a tribute to his father Joshâ
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Cosentino has been a struggling wine brand for some time. Vintage Wine Estates originally bought it out of bankruptcy back in 2011 and now it is in round two of the same situation. I cannot believe it got sold for only $10.5M. The location is unbeatable. The brand itself was not part of the deal.
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Would you want the brand? Itâs associated with 30 years of mediocrity in both quality and no brand recognition. Time to revamp.
The real question - would Mitch want it back? My guess is that Vintage will try to sell back brands to original owners if they can - not that any will want them back now . . . but you never know . . .
Meh, the winery is what you want. Itâs right next door to Mustardâs!
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Totally agree - location location location . . .
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It really is quite a mess and the human cost in the disruption of employee lives is substantial.
From the perspective of someone who does M&A in the Wine Industry [https://www.globalwinebank.com], there doesnât seem to be a clear path forward for VWE. Many of their brands/assets have been up for sale in recent months (I have no involvement) as they sought to stave off delisting/bankruptcy.
It is a challenging market for those trying to sell wine businesses now and all these brands coming to market at once after many of them have âalready been shoppedâ will depress what VWE can recoup from selling any individual asset.
There is always a robust market for prime brands and assets.
Weaker businesses are always challenging. Interest rates are another drag. I expect many VWE assets will be sold de-coupled (one party buys the production facility, the brand is sold separately or âwound downâ, and another party buys some or all of the vineyards).
Definitely a Buyerâs Market.
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