Wine business appetite for acquisition tops pre-pandemic pace

“We think it’s going to be a very good year in 2022,” Zepponi said. “What 2021 didn’t have is the return of international travel. And for the North Coast that’s important for French and other buyers in taking look at North Coast opportunities, but they were not able to travel here until November.”

Taste for luxury chardonnay

The Treasury Wine Estates deal for Frank Family Vineyards, set to close next month, comes as the publicly traded Australia-based company said it has completed a selloff of lower-priced U.S. brands as part of a focus on higher-priced brands, a trend commonly called premiumization. Those divestments netted Treasury AU$300 million ($218 million), the company said.

The Frank Family Vineyards transaction would include the Calistoga winery and tasting room at 1091 Larkmead Lane, some of the vineyards (others would be leased) and the inventory. Annual production is about 160,000 cases, according to Treasury. Winemaker and General Manager Todd Graff would continue to oversee operations.

Proprietors Rich and Leslie Frank would remain involved with the brand and would retain ownership of Winston Hill Vineyard in Rutherford and Lewis Vineyard on the Napa County side of the Carneros winegrowing region. Treasury would get the Benjamin Vineyard and Rutherford and the S&J Vineyard in eastern Napa County.

Ben Dollard, president of Treasury’s Napa-based Americas business, called the deal “another important step towards our ambition of becoming the premium wine market leader in the Americas.”

Frank Family Vineyards fills a “key portfolio gap for luxury chardonnay,” the company noted. Treasury said it will use its national distribution network and California assets, including grape sourcing, to help grow the brand.

The acquisition would place Treasury as a No. 3 player in U.S. premium chardonnay and No. 2 for such wine retailing for over $25, the company said.

The deal price is figured to equate to 13.2 times earnings before interest, tax, depreciation, amortization and stock compensation, Treasury said. The company said it plans to pay for it with $240 million in debt plus cash, including proceeds from recent divestments.

Frank Family Vineyards last fiscal year had net sales revenue of $54 million and pro forma earnings of $21 million. Rich Frank started the wine company in 1992.

Treasury Wine Estates brands include Penfolds, Beaulieu Vineyard (BV), Beringer, Stags’ Leap, 19 Crimes and Sterling Vineyards.

Excited by cider

Vintage Wine Estates’s deal for The California Cider Company, the Sebastopol-based maker of the Ace brand, closed Tuesday. It added about 1 million 9-liter cases (90,000 barrels) to annual production for the Santa Rosa-based wine company. Vintage already was the 15th largest U.S. wine producer, at over 2 million cases a year previously.

The deal, set to close Tuesday Nov. 16, would add about 1 million 9-liter cases (90,000 barrels) to annual production for the Santa Rosa-based wine company. Vintage already was the 15th largest U.S. wine producer, at over 2 million cases a year previously.

California Cider, founded in 1993, has been a pioneer among family-owned hard cider producers in the U.S. Annual sales are about $20 million, and compound annual growth rate has been in the mid-teens for the past five years, according to Vintage.

Cidery founder and President Jeffrey House and sons Jason House, vice president of production and operations, and Simon House, vice president of sales and marketing, are said to be remaining involved with the company. Other terms of the deal weren’t disclosed.

“This strategic acquisition adds an innovative product line to our RTD (ready-to-drink) category and brings us access to a significant new sales channel for distribution, through which we expect we can push many of our brands,” Vintage Wine CEO Pat Roney said in the announcement. “ACE is an excellent complement to our wine portfolio and its products are distributed through the beer channel which provides a new growth opportunity for all of our RTD products. Importantly, this provides another platform from which we can expand by executing our strategy of consolidating highly fragmented offerings where we can leverage our production and marketing expertise to gain market share, capture more customers and increase volume.”

This acquisition follows several Vintage Wine has made in recent months following its becoming a public company early this year. Before California Cider, the company made a larger move into the membership club market with the acquisition of Vinesse in October, The Sommelier Company in June and Kunde Family Winery in April.

Vintage Wine reported fiscal first-quarter earnings were $2.8 million on $55.7 million in net revenue, down from $3.2 million in net income a year before and $53.8 million in quarterly revenue.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.

Source: Wine business appetite for acquisition tops pre-pandemic pace

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