Butterfly Acquires Duckhorn Wine for $1.95 Billion

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Duckhorn Portfolio transitions to private ownership with Butterfly's $1.95 billion acquisition, aiming for growth in the luxury wine market.

The Evolution of Duckhorn: From Public to Private

Duckhorn Portfolio, a prominent name in the wine industry, is making headlines. After five years on the stock exchange, the company will transition to private ownership. This shift comes as Los Angeles-based private equity firm Butterfly agrees to acquire Duckhorn for a staggering $1.95 billion. This acquisition marks a significant milestone for Duckhorn, which ranks as the 20th-largest wine marketer in the U.S. by volume, producing 2.6 million cases last year.

Interestingly, Duckhorn’s sales figures reveal a mixed performance. For the fiscal year ending in July, sales grew by 0.7 percent, reaching $406 million. However, when excluding the impact of its recent acquisition of Sonoma-Cutrer, net sales actually declined by 4.6 percent. This indicates that while the company is still a major player, it faces challenges in maintaining growth in a competitive market.

The transition to private ownership is expected to close this winter. The Duckhorn board unanimously approved the deal, which includes a 45-day “go-shop” period. During this time, Duckhorn can explore other acquisition offers. This strategic move could provide the company with the flexibility it needs to navigate future challenges.

Duckhorn’s Journey: A Legacy of Luxury Wines

Duckhorn’s story began in 1976 when Margaret and Dan Duckhorn founded the company. Initially focused on producing Merlot, they quickly established a reputation for quality. Over the years, Duckhorn expanded its portfolio to include various brands, each catering to different segments of the market.

Today, Duckhorn is recognized as a leader in the luxury wine segment. The company focuses on wines priced at $20 and above. In 2023, its flagship label, Duckhorn Vineyards, saw a 3.5 percent increase in sales, reaching 305,000 cases. Meanwhile, Decoy by Duckhorn, the company’s top-seller, grew by 2 percent to 1.45 million cases. This growth reflects Duckhorn’s ability to adapt and thrive in a competitive landscape.

The company’s diverse portfolio includes brands like Kosta Browne, Goldeneye, and Migration. Each brand has its unique identity, appealing to various consumer preferences. This strategic diversification has allowed Duckhorn to maintain its status as a luxury powerhouse in the wine industry.

The Future of Duckhorn: Strategic Growth Ahead

With Butterfly’s acquisition, Duckhorn is poised for a new chapter. Butterfly specializes in “seed-to-fork” investments, focusing on companies that align with its vision. This partnership could provide Duckhorn with the resources needed to enhance its growth strategy.

Vishal Patel, a partner at Butterfly, expressed confidence in Duckhorn’s potential. He highlighted the company’s strong fundamentals and curated portfolio of luxury wine brands. This partnership aims to drive organic growth and facilitate strategic acquisitions in the future.

Deirdre Mahlan, Duckhorn’s chairperson and CEO, echoed this sentiment. She emphasized Butterfly’s commitment to supporting Duckhorn’s long-term objectives. With a proven track record of strengthening portfolio companies, Butterfly could be the catalyst Duckhorn needs to achieve its ambitious goals.

In conclusion, Duckhorn’s transition from public to private ownership marks a significant milestone in its journey. With a rich legacy and a promising future, the company is well-positioned to continue its growth in the luxury wine market. As it embarks on this new chapter, the wine industry will be watching closely to see how Duckhorn evolves under Butterfly’s stewardship.

Photo by Nathana Rebouças on Unsplash

Source: WineSpectator – SND: Private Equity Firm Butterfly Buys Duckhorn Wine Company for $1.95 Billion