A large wine company goes public



SPAC, short for a special purpose acquiring company that is publicly traded and has no assets other than cash, is relatively new to both the market and the wine industry. Few large wine-growing entities, with the exception of large companies like Pernod Ricard and LVHM, have historically gone public in the wine sector.

The bulk of wineries are still family and private businesses, and many of them have the mystique of being small, closely operated and managed businesses. However, this standard is evolving and the use of front companies to acquire established multi-brand wine entities is growing.

Vintage Wine Estate‘s (VWE) upcoming public offering in mid-May with the acquisition of Toronto-based Bespoke Capitol is one example. It doesn’t hurt that former Diageo CEO Paul Walsh is running Bespoke. The deal is supposed to give VWE more leverage to buy brands. “The current investment landscape presented an opportunity to accelerate our growth and we believe others may follow suit. Duckhorn has just dropped off an S-1, announcing his intention to follow us by going public, ”said Terry Wheatley, VWE president based in Santa Rosa, California.

Why the wine industry avoids IPOs

The wine industry can require large injections of cash and earns most of its retail revenue during the holiday season. It also does not generate as constant income as many other sectors given its constantly changing agricultural rhythms.

“The wine industry is very capital intensive, largely due to the higher cost of real estate and fixed equipment. However, one of the more complicated factors is that the manufacturing process requires aging the wine stock for a minimum of six to twelve months for white wines and two to four years for red wines before the wines can. be shipped and sold to consumers, ”notes Mario Zepponi, wine merger and acquisition advisor at Zepponi & Company, based in Santa Rosa.

He adds that “Therefore, rapid changes in consumer demand and grape supply cycles can have significant economic impacts on an industry that is tied to longer term planning. It is during these downward cycles that publicly traded companies have less flexibility … [and it is difficult for them] to focus on the longer term during down cycles because of the enormous pressure they are under to meet the shorter term earnings expectations of their respective shareholders and Wall Street analysts, ”Zepponi notes.

Some of the advantages of an after-sales service

However, the type of public offering that WVE takes offers a number of advantages. “On the positive side, access to capital creates real benefits and there is some value in the transparency and financial discipline that are demanded of publicly traded companies,” Zepponi shares.

He goes on to note that “Margins are often less attractive than other categories, fluctuations in performance can have a significant impact on returns and it is generally more difficult to build strong brands. There is a reason why most of the major liquor companies [Diageo, Campari, Brown Forman, etc.] have generally ceded much of their exposure to wine companies, while companies like Constellation and Gallo, which started out as wine companies, have increased their exposure to other categories, like beer and spirits, ”continues Zepponi.

Many other wineries, such as Robert Mondavi, went public without much of the public even knowing about the transaction. WVE hopes to do the same. “We’re a real company with real people, real brands and real profits. We intend to continue to do business this way. The IPO capital gives us the fuel to drive organic growth, acquire new brands, expand direct-to-consumer sales at a high rate, build brands and accelerate innovation, ”concludes Wheatley.


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