SND: Private Equity Firm Butterfly Buys Duckhorn Wine Company For $1.95 Billion
Five years after going public, Duckhorn will be leaving the stock exchange. Executives at the Duckhorn Portfolio announced this morning that Los Angeles-based private equity firm Butterfly has agreed to buy the Napa-based wine powerhouse for $1.95 billion. According to Impact Databank, a sibling publication of Wine Spectator, Duckhorn is the 20th-largest wine marketer in the U.S. by volume, producing 2.6 million cases last year.
Following the acquisition announcement, Duckhorn revealed that sales for its fiscal year through July grew 0.7 percent to $406 million. Stripping out the benefit of its acquisition of Sonoma-Cutrer late last year, net sales declined by $18.4 million, or 4.6 percent, versus the prior year.
Publicly listed Duckhorn (stock symbol NAPA) will become a private company after the closing of the transaction, expected this winter. The deal was unanimously approved by the Duckhorn board. It includes a customary 45-day “go-shop” period until Nov. 20, during which Duckhorn may solicit, consider and negotiate alternative acquisition proposals from third parties.
From Merlot Producer to a Luxury Powerhouse
Duckhorn is among the leaders in the U.S. wine segment’s luxury tier, focusing on brands priced $20 a bottle and higher. In 2023, the company’s top-seller, Decoy by Duckhorn, grew an estimated 2 percent to 1.45 million cases in the U.S., according to Impact Databank, up from 1.1 million cases three years earlier, while flagship label Duckhorn Vineyards rose an estimated 3.5 percent to 305,000 cases and Decoy jumped 35 percent to 166,000 cases. Other brands in the portfolio include Kosta Browne, Goldeneye, Paraduxx, Calera, Migration, Postmark, Canvasback, Greenwing, and its latest acquisition, Sonoma-Cutrer.
Margaret and Dan Duckhorn started their business in 1976, producing their first wines in 1978. The company managed to build a successful business model championing Merlot. They added other wines as they gradually expanded, with Paraduxx, a brand focused on blends; Goldeneye and Migration for Pinot Noir and Chardonnay; Decoy for value; and Canvasback, an expansion into Washington.
The deal will be the third time a private equity firm takes the reins at Duckhorn. GI Partners invested in 2007, buying out some of Duckhorn’s original investors, who wanted to cash out. The company’s value was reportedly $200 million at that time. TSG Consumer Partners, a San Francisco-based private equity-investment group, purchased control in 2016, reportedly for $600 million. Then in 2021, the company filed an IPO, offering 20 million shares of common stock at an initial asking price of $15 a share. The goal with each ownership change appears to be getting new investment to keep growing its portfolio, assets and sales and marketing operations.
New Private Equity Ownership
Founded in 2016, Butterfly specializes in “seed-to-fork” investments with a portfolio that includes Milk Specialties, Chosen Foods, MaryRuth Organics, Orgain, Bolthouse Fresh Foods and QDOBA, among others.
“As a leading pure-play luxury wine producer, Duckhorn has, in our view, the best portfolio and strongest fundamentals in the industry,” said Vishal Patel, partner at Butterfly. “We believe the company’s curated suite of luxury wine brands, structurally advantaged business model and world-class team have laid the foundation for a powerful, scalable platform, which will continue to drive growth both organically and through strategic acquisitions.”
“Based on our long history of success and innovation, and our position as one of America’s most successful luxury wine companies, Butterfly believes strongly in The Duckhorn Portfolio and is fully invested in helping us achieve our next phase of growth,” said Duckhorn chairperson and CEO Deirdre Mahlan. “Just as important, Butterfly brings a proven track record of strengthening its portfolio companies while helping them advance their long-term strategic objectives.”
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