Vintage Wine Estates SPAC Comes With Discounts, VIP Treatment

By Christiana Sciaudone — SPACs have been getting a lot of flack lately, but, if nothing else, this one comes with a discount on wine. 

Vintage Wine Estates, also known as VWE, is poised to close a reverse merger with special purpose acquisition corp. Bespoke Capital Acquisition Corp (NASDAQ:) in an almost $700 million deal. And for those willing to bet on the business, it’s offering a passport for shareholders who will get discounts on purchases, as well as VIP treatment at its 14 estate wineries. Not a bad deal for the oenophiles among us.

The 20-year-old U.S. winemaker is an aggressive acquirer, having closed more than 20 deals in the past decade, with plans to spend some $350 million of its new funding on both new purchases and innovation. VWE, which sells more than 50 brands, largely in the above-$10 premium segment, has been profitable every year since its inception. 

“We are very different than many SPACS,” said Paul Walsh, executive chairman of Bespoke and a former Diageo (LON:) chief executive officer. Walsh, who spoke in a conference call alongside VWE CEO Pat Roney last week, will become non-executive chairman of the combined company. “You’ve got a real management team, with a real track record selling real products for real cash, today. We’re generating real cash now. You don’t have to speculate what the multiple is in 2025, you can look at it today.”

The number of SPACs bringing companies to the market this year — more than 300 — has already surpassed last year’s figure of 248, according to SPAC Research, which tracks the market. The surge has attracted the attention of regulators. 

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“Concerns include risks from fees, conflicts, and sponsor compensation, from celebrity sponsorship and the potential for retail participation drawn by baseless hype, and the sheer amount of capital pouring into the SPACs, each of which is designed to hunt for a private target to take public,” John Coates, acting director of corporation finance at the Securities and Exchange Commission, wrote in an April 8 statement.

Forward-looking information provided by SPAC targets “can also be untested, speculative, misleading or even fraudulent,” Coates said. 

That does not seem to be the case with VWE, which, while it has big plans, has seen average revenue exceeding 20% growth each year since 2010, the company said in a statement. 

Strong results have continued throughout the pandemic, which the company attributes to its three-pronged approach, with 33% of the business coming from B2B deals with the likes of Costco (NASDAQ:) and Amazon (NASDAQ:), 38% from traditional wholesale and 29% from direct-to-consumer, the company said in a presentation, citing data as of June 30.

“We’re very well diversified, which is what allowed us to grow through the pandemic,” Walsh said. Direct-to-consumer, in particular, has been highly successful and should continue to be.

Bespoke reviewed some 100 companies, and the maker of the Layer Cake brand operated in the most attractive segment, with 99% of their wines over $10, Walsh said. The premium and fine wine segments have demonstrated the greatest long-term growth at around 6% per year, VWE said. 

In addition, per capita consumption of wine in the U.S. is at 15.2 gallons per person versus 25 to over 50 gallons per person for France, Italy, and the U.K., leaving plenty of room for growth. And then there is a highly fragmented market of small wineries in the U.S. willing to sell.

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The company will focus on acquisition opportunities within a two-hour flight of headquarters in Santa Rosa, Calif., including Oregon and Washington, and with a continued focus on the $10-and-up category. There are more than 10,000 wineries in the U.S., of which about 4,000 are independent — and some 50% of those have indicated they might sell, the company said.

“There are a lot of wineries but a lot of them are very, very small,” Walsh said. “In a world where wholesalers are consolidating, retailers are consolidating, these small players are going to find it quite difficult. We offer a safe home for their treasured assets.” 

While the market might seem to be crowded with wine brands, Walsh points out that VWE is one of the largest wine companies in the U.S., and it only has a 1.5% share.

“For us to make 2-3 acquisitions per year, we’re always going to have a very solid pipeline,” CEO Roney said.  

VWE will also branch out, likely into hard cider, and low- and no-alcohol wines. A cannabis-infused beverage is waiting in the wings for federal legalization.

“We think we’re off to the races,” Walsh said.




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