NAPA - Merion Road Capital - Duckhorn Portfolio: The Only 'Real' Publicly Traded Wine Company
2024-02-07 08:05:00 ET
Summary
- Duckhorn Portfolio is a top 3 players in the U.S. luxury wine category.
- It’s been tough sledding for NAPA’s stock as it has fallen ~60% over the past few years.
- NAPA announced its largest acquisition to date - the pending acquisition of Sonoma-Cutrer.
- NAPA is trading at about 8x EBITDA and 12x free cashflow, a significant discount to spirit and beer peers.
The following segment was excerpted from this fund letter.
Duckhorn Portfolio ( NAPA )
I initiated a new position in Duckhorn Portfolio in December. NAPA is a top 3 players in the U.S. luxury wine category (as defined by bottles costing >$15), with the majority of sales coming from its Duckhorn brand and the more affordably priced Decoy label. Like their spirit and beer brethren, NAPA benefits from stable demand, established distribution, and brand equity. Unlike other alcohol categories, the wine industry is highly fragmented as small players with romantic ideations of owning their own vineyard abound. While this dynamic creates a fertile hunting ground for acquisitions, it also creates a greater level of competition that makes the business less reliable than say Jack Daniels....
Merion Road Capital - Duckhorn Portfolio: The Only 'Real' Publicly Traded Wine Company