After Acquisition Announcement, Duckhorn Posts Sales Of $406 Million
October 7, 2024In case you missed this morning’s news alert, The Duckhorn Portfolio has agreed to be acquired by Los Angeles-based private equity firm Butterfly for $1.95 billion. According to Impact Databank, Duckhorn is the 20th-largest wine marketer in the U.S. by volume, up 5.5% to 2.6 million cases last year.
Publicly listed Duckhorn will become a private company after the closing of the transaction, expected this winter. The deal was unanimously approved by the Duckhorn board. It includes a customary 45-day “go-shop” period expiring November 20, through which Duckhorn may solicit, consider and negotiate alternative acquisition proposals from third parties.
Following the acquisition announcement, Duckhorn revealed that sales for its fiscal year through July grew 0.7% to $406 million. Stripping out the benefit of its acquisition of Sonoma-Cutrer late last year, net sales declined by $18.4 million, or 4.6%, versus the prior year. The company’s adjusted EBITDA rose 7.3% to $155 million for the 12-month period.
In Duckhorn’s fiscal fourth quarter, sales grew 7.3% to $107 million including Sonoma-Cutrer, but fell 13.9% excluding the contribution of that brand, with results also impacted by a shift in timing of the Kosta Browne Appellation Series release into Q3 in fiscal 2024 from Q4 in fiscal 2023.
In the full fiscal year, the wholesale channel accounted for just under 70% of Duckhorn’s sales, while its California direct distribution business took a 16% share and the DTC channel was at just under 14%. Increased volume boosted sales by 3% for the year, while price/mix had a -2.5% effect, with the company noting that “the introduction of Sonoma-Cutrer, which is substantially comprised of white varietals which traditionally sell at a lower price point than red varietals, also impacted the price/mix” in the fourth quarter.
“We meaningfully advanced our strategic agenda in fiscal 2024, delivering strong operating and financial performance against a dynamic backdrop, including the strategic acquisition of Sonoma-Cutrer,” said Deirdre Mahlan, Duckhorn chair and CEO. “We believe the successful integration of this marquee brand, coupled with the continuing execution against our strategic initiatives, positions the business for solid growth and profitability into fiscal 2025 and beyond.”
Duckhorn is among the leaders in the U.S. wine segment’s luxury tier, with its brands retailing from $20-$230 a bottle. In calendar 2023, the company’s top-seller Decoy by Duckhorn grew an estimated 3% to 1.47 million cases in the U.S., according to Impact Databank, up from 1.1 million cases three years earlier, while flagship label Duckhorn Vineyards rose an estimated 3.5% to 305,000 cases and Decoy Ltd jumped 35% to 166,000 cases. Other brands in the portfolio include Kosta Browne, Goldeneye, Paraduxx, Calera, Migration, Postmark, Canvasback, Greenwing, and latest acquisition Sonoma-Cutrer, which grew 7% to 580,000 cases.
The company’s wines have garnered critical acclaim. Duckhorn Merlot Napa Valley Three Palms Vineyard 2014 was named Wine Spectator’s Wine of the Year in 2017.
Earlier this year, Duckhorn announced expanded partnerships with Republic National Distributing Co. (RNDC) and Breakthru Beverage Group, after a detailed review of its distribution footprint. RNDC now distributes the Duckhorn range in 21 states, while Breakthru is its distributor in 11 markets.—Daniel Marsteller
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