Dive Brief:
- The Duckhorn Portfolio, a leading luxury wine company, announced it reached an agreement with alcohol giant Brown-Forman to purchase chardonnay producer Sonoma-Cutrer for $400 million. Brown-Forman will receive 21.5% of Duckhorn’s stocks and $50 million in cash, its press release said.
- Sonoma-Cutrer, known for its Russian River Ranches chardonnays, operates six vineyards in Sonoma County, California, and had net sales of $84 million in the year ending July 31, according to Circana data listed in the press release. The deal is projected to close next year, Brown-Forman said.
- As premium chardonnay continues to grow in popularity, Duckhorn — which owns 10 wineries across the West Coast — said the purchase will boost its position in the chardonnay segment where it does not currently have a large presence.
Dive Insight:
The purchase marks a major consolidation in the luxury wine industry, as a leading brand is sold off by one business and embraced by another.
Brown-Forman believes its divestiture will allow Sonoma-Cutrer to thrive within an esteemed wine company, while it works to revamp its own portfolio to fit consumer needs, president and CEO Lawson Whiting said in a statement.
“We believe an equity stake in The Duckhorn Portfolio will be a valuable investment for Brown‑Forman, allowing us to maintain a presence in the wine category while focusing resources on building our premium and super-premium spirits brands,” Whiting said.
Similar to other alcohol giants like Diageo and Constellation Brands, Brown-Forman is working to diversify its offerings as consumer tastes expand beyond traditional wine products into more unique and premium beverages. Last year, the company announced the purchase of Diplomático Rum for an undisclosed amount.
Despite inflation and desire for new kinds of beverages, higher-end wine maintains prominence among the niche of consumers who are willing to pay more for it. The global luxury wine and spirits market is projected to reach $414 billion by 2031, growing at a compound annual growth rate of 6.2%, according to Allied Market Research. The chardonnay segment is poised to see 7% growth by 2033, worth $973 million, Future Market Insights reported.
Sonoma-Cutrer’s chardonnays cost $25 or more per bottle, with select four- and five-year aged offerings costing roughly $70.
