The deal includes six estate vineyards spanning a total of 454ha in the Russian River Valley and Sonoma Coast appellations.
Deirdre Mahlan, chair and CEO of The Duckhorn Portfolio, said: ‘Sonoma-Cutrer is an iconic, highly acclaimed winery brand with a long history of crafting exceptional wines in a timeless style and is a perfect addition to our thoughtfully curated portfolio of luxury wines.’
Dan and Margaret Duckhorn founded The Duckhorn Portfolio in St Helena, California, in 1976. It has spent the past 46 years establishing itself as one of the leading producers of Napa Valley wines. The group owns 10 wineries, seven tasting rooms and more than 440ha of vineyards spanning 32 estate properties in California and Washington State.
However, it lacks a meaningful presence in Chardonnay, which is the most popular white varietal in the US market, so this deal should plug a major gap in the portfolio.
Deirdre Mahlan, chair and CEO of The Duckhorn Portfolio. Credit: The Duckhorn Portfolio
‘Sonoma-Cutrer is among the fastest-growing major brands in the luxury Chardonnay category,’ said Mahlan, who is also the group’s interim president. ‘We see opportunity to further accelerate that growth and enhance operating margins of the combined business. This transaction expands our presence and visibility, diversifies our portfolio of luxury American winery brands and dramatically increases our position in the luxury Chardonnay category.’
The Duckhorn Portfolio went public on the New York Stock Exchange in March 2021, with NAPA as its ticket, after raising $300m in an IPO [Initial Public Offering]. Its wines are available throughout the United States and they are exported to more than 50 countries around the world.
In the 12 months to 31 July 2023, unaudited financial reports estimate that Sonoma-Cutrer had approximately $84m in net sales. The Duckhorn Portfolio believes that it can operate at similar margins to the other wineries within its group.
Credit: The Duckhorn Portfolio
Management also expects to achieve $5m in annual cost savings by merging its operations with those of Sonoma-Cutrer Vineyards. These savings will be realised in full during the 2025 fiscal year. Brown-Forman, which produces Jack Daniel’s, Woodford Reserve and many more famous spirits brands, will receive cash and stock as part of the $400m deal.
A Brown-Forman executive will also sit on The Duckhorn Portfolio’s board. ‘The Duckhorn Portfolio has some of the world’s most-respected luxury wine brands and Brown-Forman looks forward to participating in its future growth through a minority equity stake and board membership,’ said Lawson Whiting, president and CEO of Brown-Forman.
In May 2022, The Duckhorn Portfolio bolstered its presence on California’s Central Coast by purchasing 107 hectares of Cabernet Sauvignon vineyards in the Paso Robles AVA in the shape of Bottom Line Ranch in the San Miguel District.