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Azur.I: Azur Intelligence

 

At Azur Associates, one of our key goals is to provide our clients with the up-to-date, insightful information and analyses they need to make the best decisions for their business.  We have two seasoned team members dedicated solely to this task.  While, of course, we can’t release full studies that are confidential to our clients, we enjoy sharing some highlights as well as perspectives on more public situations in the industry.  This is Azur.I: Azur Intelligence.

 
 
 
 

Wine M&A | A Two Decade Lookback (2000-2022)

We are planning to share our thoughts about 2023 and looking forward in our next update.  Before that, we are taking a lookback at milestone transactions over the last two decades.  The attached summary assembled by Azur Associates includes certain marquee transactions over that timeframe.  Key themes over each timeframe follows:

2000-2009

The first half of the “00’s” was dominated by several billion dollar++ transactions initiated by large strategics, primarily Constellation Brands and Fosters Brewing (which eventually became Treasury Wine Estates).  Between 2000-2005 there was great optimism about the growth of the total wine category which was attractive for these larger publicly traded strategic buyers.  From a transaction dollar standpoint, there was likely more investment in the wine category during this period than for the combined 17 years through 2022 that followed.

Later in the 00’s, the emergence of Private Equity (PE) investment was fairly new to the wine industry which was highlighted by GI Partner’s investment in Duckhorn Vineyard in 2007.  This visible and successful investment brought a number of other PE investors to the category looking to deploy and diversify some of their “dry powder.”

2010-2020

The early part of the 2010-2020 decade was dominated by a “Portfolio Premium Mix” theme.  For some of the larger players, it meant building a stronger footprint in the luxury wine market >$25 as demonstrated by E&J Gallo’s purchase of J Vineyards and Constellation’s acquisition of The Prisoner Wine Company.    

The last half of the 2010-2020 decade started with the sale of Duckhorn Vineyards once again from one Private Equity group to another.  The dominate theme for the last of this period was transactions around iconic estates including the sale of Schrader, a controlling stake in Colgin, Heitz Cellars, Merry Edwards and Diamond Creek. 

2021-2022

2021 all by itself was one of the most active years in Wine M&A over the last two decades.  The activity was dominated by transformational deals with larger strategic organizations.  In some cases, this involved the exit of lower end brands by Constellation and Treasury, two organizations making large acquisitions of some of these same brands in the early 2000’s.   

In 2021, some major strategic wine companies either sold a majority ownership stake or had an outright exit, including Francis Coppola Family, Ste Michelle Wine Estates and WX Brands. 

As we will share in our next update, one theme we believe that will continue regardless of the economic climate will be interest in iconic estates, in particular in the Napa Valley.  The 2022 sales of Shafer Vineyards and Joseph Phelps Vineyards at premium valuations demonstrates the durable value of estates with strong cash flow, great vineyards & locations and well maintained assets.

Patrick DeLong