Institutional investors are well-positioned to benefit this spring and beyond.
Direct-to-consumer value is increasing to reflect shifting volume. Winery direct-to-consumer shipments grew 7% to over $175 million while the average bottle price of shipments is up 16% compared to only a year ago.
Looking at the numbers, clear consolidation continues to drive wine industry deals. Specifically, transaction activity summited new heights in 2021 ($4.5 billion) and we certainly expect the market to remain hot as the impact of consolidation among retailers and wholesalers actively affects every element of the wine industry across California and beyond.
A leading authority on the state of the industry, particularly what's moving the M&A market, Jenny's trusted collaborator Mario Zepponi of Santa Rosa-based Zepponi & Co. notes, "...just eight transactions worth more than $10 million closed in 2020. The aggregate value of $539 million marked the lowest tally since 2017 and paled next to the record $2.4 billion logged in 2016."
However, once public health restrictions were lifted in 2021, this lull in deal-making changed. People started rekindling meaningful business relationships and with it, more capital appeared. In fact, "Constellation Brands’ $810 million sale of nearly 30 lower-priced brands to E. & J. Gallo Winery, first announced in 2019, was the first out of the gate, closing Jan. 5. Others, including public listings for Duckhorn Vineyards and Vintage Wine Estates (the latter through an acquisitions vehicle set up with private equity), followed."
"Wines Vines Analytics estimates the total value of winery transactions worth more than $10 million approached $4.5 billion on a total of 21 deals, making it the biggest year ever for winery M&As."
As consumer spending shows signs of returning to pre-pandemic norms, deals are only accelerating.
Smaller wineries are being purchased to meet niche needs in the portfolios of sunstainial domestic players and offer international buyers a foothold in the domestic distribution chain—and serious deals are still actively in the works. For example, Korean retail chain Shinsegae purchased Shafer Vineyards in Napa Valley for more than $250 million.
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Cheers to spring and your continued success!
