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TWE Details Its $315 Million Deal For Napa Valley’s Frank Family Vineyards

November 18, 2021

In case you missed yesterday’s news alert, Treasury Wine Estates has agreed to acquire Napa Valley’s Frank Family Vineyards for $315 million. Frank Family is known for luxury Chardonnay and also produces Cabernet Sauvignon, Pinot Noir and sparkling wine. The company had revenues of $54 million and EBITS of $21 million in its most recent fiscal year. Frank Family’s annual volume stands at 174,000 9-liter cases.

Discussing the deal on a conference call last night, Treasury CEO Tim Ford described it as “an important step towards our ambition of becoming the market leader in premium wines in the Americas. The acquisition is strategically compelling. It is clearly aligned to our Americas divisional strategy, being highly complementary to our existing portfolio and in particular fills a key portfolio gap for luxury Chardonnay.”

Treasury noted that the acquisition, coupled with other recent moves such as its licensing of 4.2 million cases of lower-priced wines to The Wine Group and sale of the former Provenance winery to Far Niente, furthers its premiumization push in the U.S. The company has now offloaded non-priority brands totaling more than 5 million cases, which had a combined net sales revenue per case of A$52 ($38), compared with Frank Family’s revenue per case of A$427 ($310). With the deal, Treasury said it will boost its share of the $20 and up wine market in the U.S. to 7% from 5.3%, with its share of luxury Chardonnay rising to 9.4%. TWE’s other luxury brands include Beaulieu Vineyard, Beringer, Stags’ Leap, Etude, and Penfolds.

The company added that Frank Family has a strong on-premise distribution footprint in California and a wide DTC reach through its tasting rooms, wine clubs and e-commerce, and makes TWE the No.-2 player in above-$25 Chardonnay in the U.S.

Noting the winery’s DTC prowess, Ford called DTC “a very important and highly profitable channel,” and said that TWE will continue to aggressively develop that part of the business. Frank Family’s California on-premise presence, meanwhile, opens up another “avenue for expansion across our entire TWE luxury portfolio in what is a priority state, and one in which we have an opportunity for growth.” Ford added that Treasury expects to “step-up” Frank Family’s volumes in the next few years, leveraging TWE’s existing California assets and sourcing, to fully take advantage of those opportunities. —Daniel Marsteller

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