Duckhorn Wallet Represents An Outright Luxury Wine Opportunity As Pop Stock

Through Jarrett Banks and John jannarone

California wine producer Duckhorn Portfolio Inc. (ticker: NAPA), backed by private equity sponsor TSG, saw its market capitalization exceed $ 2 billion on the first day its shares were traded on the New Stock Exchange. York. The shares opened at $ 18.60, a pop from the IPO price of $ 15.

The company, founded in 1976, is the largest supplier of pure luxury wine and the 11th largest supplier of wine by overall sales value in the United States. Duckhorn is based in St. Helena, in the center of the Napa Valley wine region.

“We are working hard to perfect the blend of business and art in winemaking,” said President, CEO and Chairman of the Board Alex Ryan. IPO Edge in an interview on Thursday. “We remain focused on luxury and are interested in many companies to join our family of brands. “

President, CEO and Chairman of the Board Alex Ryan

The company has such a long history of growth, with sales up 500% since 2010. By 2021, revenues are expected to increase 13% from the previous year to $ 307 million, according to Renaissance Capital.

Duckhorn sells its wines in all 50 states and over 50 countries at $ 20 to $ 200 a bottle under a portfolio of brands including Duckhorn Vineyards, Decoy, Goldeneye, Paraduxx, Calera, Migration, Canvasback, Greenwing, Postmark and in 2018 acquired the American Pinot Noir Kosta Browne winery. It now includes 600 acres of vineyards in California and Washington, four winemaking facilities and three visitor centers.

Mr Ryan said he was proud of the way the company handled the twin challenges of the California wildfires and the Covid pandemic.

“We are well diversified in the way we manage our supply chain,” he said. “We have the flexibility you need when you need to react to changing farming conditions. “

A major selling point: luxury wines have strong margins and Duckhorn’s financial data confirms this. The company has Ebitda margins of almost 40 percent, considerably higher than a spirits company such as Diageo.

“When you come to our sites, you come out as an evangelist,” Ryan said. “We delight our old customers and add new ones at a price that makes them feel special. “

Duckhorn sets itself apart from other companies such as Altria Group, Inc. and Constellation Brands, Inc., which own some wine assets, but not enough to have a significant impact on overall financial performance.

An important part of Duckhorn’s growth story will likely be mergers and acquisitions. The wine industry is extremely fragmented and there may be opportunities to take advantage of Duckhorn’s distribution platform when it acquires other wineries.

“There is an impressive amount of great producers out there,” Ryan said. “There are a lot of exciting regions that we are not yet in.”

Mr. Ryan has spent his entire career with Duckhorn and will remain at the helm as the company begins its life in public markets.


Jarrett Banks, Editor-in-Chief

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