So this happened this weekend........
https://www.winemag.com/2021/07/12/...QvHSPcm0o7-c9kpM8tr_cBogoCLA8snUojhsO7i-xUGzw
https://www.winemag.com/2021/07/12/...QvHSPcm0o7-c9kpM8tr_cBogoCLA8snUojhsO7i-xUGzw
Sold! What The Ste. Michelle Sale Means for Washington’s Wine Industry
- Thread starter ibglowin
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Wow, I didn't realize how dominant they are/were in WA. That is a large percentage!
CSM wines were definitely my entryway into wine(s) from WA State a long time ago in a galaxy far far away......... Have not had a bottle in over a decade I admit. We toured the winery back in 2009 and had a great time. One fear is that the winery which sits on a whopping 87 acres which is now prime real estate in the Seattle suburbs will be sold off for multi use development.
jswordy
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Very interesting. There has been considerable discussion among investors about the future of West Coast wines, and sadly, it has been pretty much negative. The impacts of wildfires and climate change are seen as major problems for the industry's health over the next decade and beyond. I wonder what that had to do with the decision to sell, if anything. Personally, I think there is growth yet to come if any relief is seen in both of those conditions.
But that backdrop of general worry also doesn't bode well for a private equity investor to keep the brand group together.
The question of selling off premium brands is intriguing, offering both the opportunity that they could become independent again and the likelihood that they will instead be snapped up by Constellation, Duckhorn Portfolio or Vintage Wine Estates. I'm sure all three - plus private investors - would be interested. That interest probably will raise prices for the properties, making the sum worth greater than the whole.
But that backdrop of general worry also doesn't bode well for a private equity investor to keep the brand group together.
The question of selling off premium brands is intriguing, offering both the opportunity that they could become independent again and the likelihood that they will instead be snapped up by Constellation, Duckhorn Portfolio or Vintage Wine Estates. I'm sure all three - plus private investors - would be interested. That interest probably will raise prices for the properties, making the sum worth greater than the whole.
I just keep picturing Gordon Gecko in my head.........
jswordy
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Gecko didn't tell the whole story, though. All business exists on a sliding scale in the space between greed and fear. Business cycles are remarkably similar to the weather, and people's reactions to them are notably close to how they react to weather events.
In this case, Altria may have been fearful of its ability to profitably manage Ste. Michelle as a unit and unwilling to go through all it will take to slice it up. On the other hand, Sycamore Partners were perhaps greedy about the value they saw that they could unlock from a company whose parts, in their view, are worth more than the whole.
That's the perfect marriage for a deal. Now, we'll get to see who's right.
In this case, Altria may have been fearful of its ability to profitably manage Ste. Michelle as a unit and unwilling to go through all it will take to slice it up. On the other hand, Sycamore Partners were perhaps greedy about the value they saw that they could unlock from a company whose parts, in their view, are worth more than the whole.
That's the perfect marriage for a deal. Now, we'll get to see who's right.
Fascinating to me, as UST (US Tobacco - maker of Copenhagen and Skoal) was one of my first stock purchases around 1998, and Ste. Michelle was a huge part of that business which I also found attractive and I knew that their wines were very good quality for the price. The stock was a fascinating one as it paid a huge dividend at a time when everyone wanted growth and few seemed to care for a solid business which dominated its markets (smokeless tobacco and WA wines) with limited growth prospects. After it was acquired by big tobacco MO (then Philip Morris, now Altria) in 2008, I stopped paying attention to Ste. Michelle as it was an insignificant component of that huge behemoth. Frankly I forgot I "owned" such a big winery through my miniscule number of MO shares.
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