Despite the recent rally in stocks, with the S&P 500 up 11% and the Russell 2000 rising 7%, wine stocks continue to lag. While there are still just a handful of pure-play publicly traded wine names available, the ranks have doubled over the past 18 months with three initial public offerings, including The Duckhorn Portfolio (NAPA) (March 2021 IPO), Vintage Wine Estates (VWE) (June 2021 IPO) and tiny Fresh Vine Wine (VINE) (December 2021 IPO). I'll give a rundown on those companies today and hit those that are not recent IPOs in my next column.
The Duckhorn Portfolio (down 19% year to date) debuted at $15 a share and sells Duckhorn Vineyard, Decoy and Goldeneye wines. It is focused on the "desirable luxury" segment, defined as wines sold at above $15 a bottle. Duckhorn controls 843 vineyard acres comprising 22 vineyards and owns about 778 of those acres.
Duckhorn ended its latest quarter with about $9 million in cash and $231 million in debt, putting its enterprise value at $2.4 billion. NAPA shares endured a 9% hit on July 7 following the announcement that stockholder Mallard Holdco was selling 5 million shares in a secondary offering. Duckhorn currently trades at 26x next year's consensus earnings estimates. In terms of wine plays, with the exception of ADR Treasury Wine Estates Limited (TSRYY) , NAPA is the biggest pure wine play available. It also gets quite a bit of scrutiny, with eight analysts covering the stock.
Vintage Wine Estates (down nearly 49% year to date) went public via a merger with special purpose acquisition company Bespoke. It produces more than 50 brands with prices ranging between $10 and $150, but focuses on the market for wines in the range of $10 to $20 per bottle. Vintage Wine's brands include Layer Cake, Cameron Hughes, Clos Pegase, B.R. Cohn, Firesteed, Bar Dog, Kunde and Cherry Pie.
Vintage Wine owns or controls 900 acres, including 10 owned wineries and two leased wineries. The company has been active in the acquisitions arena, with 20 in the past 10 years and 10 in the past five, through the end of fiscal 2021. Vintage Wine ended its latest quarter with $69 million in cash and $340 million in debt, putting its current EV at about $661 million; the debt is a concern, for me anyway. VWE trades at about 13.5x next year's consensus estimates, with four analysts covering.
Fresh Vine Wine (down 35.5% year to date) specializes in low-carb and low-calorie wines, in the range of $15 to $22 a bottle (the "affordable luxury" segment). Fresh Vine does not own any vineyard acres. VINE ended its latest quarter with $5 million in cash and no debt, putting its current EV at $36 million. The company, which generated just $1.7 million in revenue In 2021 and $3,1 million on a trailing 12-month basis, is not yet profitable. Consider Fresh Wine to be a development-stage company as far as wine companies go; it is also not currently followed by any analysts.
Despite potential headwinds for the wine industry, including the current generation's absolute fascination with local brewpubs, I find the business interesting at the very least. I've owned shares of four wine names over the years, including one pink-sheet name I still hold that is too small to mention. It's the same story, though, in terms of value investing. If you can purchase something for 50 cents on the dollar, it does not matter how compromised an industry may appear. I'm not sure any of the above stocks are at that point at this writing, but I will continue to follow their stories.
(Please note that due to factors including low market capitalization and/or insufficient public float, we consider VINE to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)