Vintage Wine Estates SPAC offers discounts and VIP treatment from Investing.com

By Christiana Sciaudone

Investing.com – SPACs have gotten a lot of flack lately, but last but not least, this one offers a discount on wine.

Vintage Wine Estates, also known as VWE, is about to complete a reverse merger with a special purpose vehicle. Tailored capital acquisition Corp (NASDAQ 🙂 in a nearly $ 700 million deal. And for those willing to bet on the business, it offers a pass for shareholders who receive discounts on purchases, as well as VIP treatment at its 14 wineries. Not a bad deal for the oenophiles among us.

The 20-year-old US winemaker is an aggressive acquirer who has closed more than 20 deals in the past decade and plans to spend approximately $ 350 million of his new funds on both new acquisitions and innovation. VWE, which sells more than 50 brands, mostly in the premium segment above $ 10, has been profitable every year since its inception.

“We’re very different from many SPACS,” said Paul Walsh, Bespoke Executive Chairman and former Diageo (LON 🙂 Managing Director. Walsh, who spoke on a conference call with Pat Roney, VWE CEO last week, will become the non-executive chairman of the combined company. “You have a real management team today with a real track record of selling real products for real money. We’re making real money now. You don’t have to speculate what the multiples will be in 2025, you can take a look at it today.”

This year’s number – more than 300 – has already exceeded the previous year’s figure of 248, according to SPAC Research, which is tracking the market. The surge has caught the attention of regulators.

“Concerns include risks from fees, conflicts and sponsorship compensation, from celebrity sponsorship and the potential for retail involvement caused by unfounded hype, as well as the sheer amount of capital pouring into the SPACs publicizing each one in pursuit of a private goal, “wrote John Coates, acting director of corporate finance with the Securities and Exchange Commission, in an April 8 statement.

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

That doesn’t appear to be the case with VWE, which, while having big plans, has seen average sales growth of more than 20% per year since 2010, the company said in a statement.

Strong results have continued throughout the pandemic the company attributes to its tripartite approach. 33% of the business comes from B2B deals with companies like Costco (NASDAQ 🙂 and Amazon (NASDAQ :), 38% from traditional wholesale and 29% from direct customers, the company said in a presentation, citing data as of June 30 .

“We are very well diversified which has allowed us to grow through the pandemic,” said Walsh. Direct-to-consumer in particular was and should continue to be very successful.

According to Walsh, around 100 companies were bespoke and the Layer Cake brand maker was in the most attractive segment with 99% of its wines above $ 10. The Premium and Fine Wine segments recorded the greatest long-term growth at around 6% per year, according to VWE.

In addition, per capita consumption of wine in the US is 15.2 gallons per person versus 25 to over 50 gallons per person in France, Italy and the UK, which leaves plenty of room for growth. And then in the US there is a highly fragmented market of small wineries ready to sell.

The company will focus on acquisition opportunities within a two-hour flight from its headquarters in Santa Rosa, California, including Oregon and Washington, and will continue to focus on the $ 10+ category. There are more than 10,000 wineries in the US, with around 4,000 independent – and around 50% of them have stated they could sell, the company said.

“There are a lot of wineries, but many are very, very small,” said Walsh. “In a world where wholesalers and retailers are consolidating, these small businesses will find it quite difficult. We provide a safe home for their valuable assets.”

While the market seems to be overcrowded with wine brands, Walsh points out that VWE is one of the largest wine companies in the US, with only a 1.5% stake.

“We always have a very solid pipeline to make 2-3 acquisitions a year,” said CEO Roney.

VWE will also branch out, likely into cider as well as low-alcohol and non-alcoholic wines. A cannabis-infused drink is waiting in the wings for federal legalization.

“We think we are on our way to the races,” said Walsh.

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