Butterfly Private Equity Acquires Duckhorn Wine Company for $1.95 Billion Chris Lehoux, October 7, 2024 Five years after its initial public offering, the renowned Napa wine producer has new ownership. In a recent announcement, the executives of Duckhorn Portfolio revealed that the Los Angeles-based private equity firm Butterfly has agreed to acquire Duckhorn for $1.95 billion. As reported by Impact Databank, a publication related to Wine Spectator, Duckhorn ranks as the 20th-largest wine marketer in the United States by volume, having produced 2.6 million cases in the previous year. In the wake of the acquisition news, Duckhorn disclosed that its sales for the fiscal year ending in July increased by 0.7 percent, totaling $406 million. However, excluding the impact of its acquisition of Sonoma-Cutrer from the previous year, net sales saw a decline of $18.4 million, reflecting a 4.6 percent drop compared to the previous year. Once the deal closes, which is anticipated to occur this winter, publicly traded Duckhorn (stock symbol NAPA) will transition to a private entity. The board of Duckhorn has unanimously approved the transaction, which includes a standard 45-day “go-shop” period lasting until November 20, during which the company may seek and evaluate alternative acquisition offers from other parties. Duckhorn stands out as a key player in the luxury segment of the U.S. wine market, primarily targeting brands priced at $20 per bottle and above. In 2023, the brand’s leading wine, Decoy by Duckhorn, saw a modest growth of about 2 percent, reaching 1.45 million cases sold in the U.S., as reported by Impact Databank. This marks an increase from 1.1 million cases just three years prior. Meanwhile, the flagship Duckhorn Vineyards experienced a rise of approximately 3.5 percent, totaling 305,000 cases, while Decoy surged by an impressive 35 percent to reach 166,000 cases. The portfolio also features other noteworthy brands such as Kosta Browne, Goldeneye, Paraduxx, Calera, Migration, Postmark, Canvasback, Greenwing, and the recently acquired Sonoma-Cutrer. Margaret and Dan Duckhorn laid the foundation of their business in 1976, with their first wines hitting the market in 1978. The company successfully established a business model centered around Merlot, gradually expanding its offerings to include Paraduxx, which focuses on blends; Goldeneye and Migration, specializing in Pinot Noir and Chardonnay; Decoy, aimed at providing value; and Canvasback, marking their entrance into Washington. This acquisition represents the third instance of private equity involvement in the management of Duckhorn. In 2007, GI Partners invested, buying out initial investors who sought to sell their shares, valuing the company at approximately $200 million at the time. Then in 2016, TSG Consumer Partners, a private equity firm based in San Francisco, acquired control for about $600 million. Most recently, in 2021, Duckhorn went public, offering 20 million shares of common stock with an initial price of $15 per share. Each shift in ownership seems focused on attracting new investments to fuel further growth in its portfolio, assets, and marketing efforts. Founded in 2016, Butterfly specializes in investments that follow a “seed-to-fork” philosophy, boasting a portfolio that includes companies like Milk Specialties, Chosen Foods, MaryRuth Organics, Orgain, Bolthouse Fresh Foods, and QDOBA, among others. “Duckhorn stands out as a premier luxury wine producer with an exceptional portfolio and solid fundamentals in the sector,” stated Vishal Patel, a partner at Butterfly. “We are confident that the company’s carefully selected luxury wine brands, its strategically advantageous business model, and its top-notch team have established a strong groundwork for a dynamic and scalable platform that will continue to foster growth, both organically and through strategic acquisitions.” “With our long-standing history of success and innovation, coupled with our status as one of America’s leading luxury wine companies, Butterfly is firmly committed to The Duckhorn Portfolio and dedicated to assisting us in realizing our next growth phase,” commented Deirdre Mahlan, chairperson and CEO of Duckhorn. “Equally important, Butterfly has a demonstrated history of enhancing its portfolio companies while aiding them in reaching their long-term strategic goals.” For further wine industry updates, check out Shanken News Daily. About the Author: Chris Lehoux Meet Chris Lehoux, an experienced wine connoisseur and dedicated blogger with a deep passion for all things wine-related. With years of expertise in the industry, Chris shares insightful wine reviews, valuable wine tasting tips, expert pairing advice, and captivating tales of vineyard visits. Join Chris on a journey through the world of wine, where every sip is an adventure waiting to be savored! Wine