When Vintage Wine Estates (VWE) went public on June 8th, via a merger with SPAC Bespoke, it marked the second wine IPO since March, when luxury wine name The Duckhorn Portfolio (NAPA) made its debut. Wine pure plays have been few and far between for many years, so this was big news for investors, but did not garner a great deal of coverage.
Years ago you could have owned shares of Robert Mondavi (as I did at one time) but it was acquired by Constellation Brands (STZ) in 2004. Later that same year, Chalone Wine Group was taken out by Diageo (DEO) after a bidding war with Domaine Barons de Rothschild. That left microcap names Scheid Vineyards (SVIN) , and Willamette Valley Vineyards (WVVI) as the only publicly traded U.S. wine pureplay if my memory serves me.
Then, in 2013, Crimson Wine Group (CWGL) was spun-off from Leucadia National (now Jeffries (JEF) ). CWGL has been a very disappointing buy and hold over the past eight years as it currently trades near its spin-off price. However, it made for a good trade in 2020 when shares dipped below $5. In fact, CWGL was "cheap" enough to be included in my 2020 Triple Net Active Versus Passive Portfolio, and later my 2021 Double Net Value Portfolio, and still trades at just 2.72x net current asset value and just over tangible book value (1.07x).
CWGL, which owns 757 vineyard acres is up 58% year-to-date. Always an asset play, the knock on CWGL has always been profitability, or lack thereof. It was cashflow positive in 2020, and currently trades at about 17x free cash flow.
Since going public in March at $15, and closing the first day of trading at $19, NAPA shares have been on the rise, closing Tuesday at $23.12. NAPA beat third quarter earnings estimates handily (17 cents vs. a seven cent estimate), and currently trades at 46x next year's consensus, which includes six analysts. NAPA owns and leases 843 vineyard acres.
VWE shares, however, which opened at $11.64 on the first day of trading (as VWE), and closed at $12.60, have since fallen 22%, closing Tuesday at $9.86. VWE currently trades at 20x next year's consensus estimates. VWE currently owns 945 vineyard acres and leases, or has under contract, an additional 1845.
It's certainly an interesting time for investors who now have more access to direct wine plays then anytime in recent memory. I'm not sure that access will continue however, given the historical precedent of industry consolidation via acquisition.
