TWE on acquisition trail, snapping up Frank Family Vineyards for $315m to boost strength in premium sector

Australian wine giant Treasury Wine Estates has been on the acquisition trail, boosting its portfolio with the purchase of Frank Family Vineyards in Napa Valley, plus three small Bordeaux Chateau, helping ramp up its presences in the premium sector.  

TWE paid $315m for Frank Family Vineyards, and the French estates for an undisclosed sum, to join its 2019 acquisition of Chateau Cambon la Pelouse. However, the Frank family are retaining 158 acres – nearly a third, and will continue to supply grapes.

TWE, along with other Australian producers, has recently been hard hit by the swingeing Chinese tariffs imposed on Australian wine imports, which was formerly a huge export market. Nonentheless, its 2021 revenues of AU$2.684bn are still above those of the previous year, but down on the A/u$2,883bn of 2019.   The company’s best performance has been in the US, where division saw its net sales grow by by 11.3%, and EBIT by 66%, on total US sales of A$876m, roughly a third of total global sales (A$2.6bn).  

The American Treasury division has stated its aim of becoming the market leader for premium wines in the US, and with this in mind, disposed of four value end brands to the Wine Group for $100m earlier this year, including two Beringer brands – Beringer Private founder’s Estate and Berginger Main & Vine White Zin, both of which retail at $6.50 or less.  

Frank Family Vineyards, which was founded by former Walt Disney Studios president Frank Rich and his wife, has 480 acres of vineyards in Napa, Carneros and Rutherford, and a reputation for full bodied wines which are in particularly high demand in the US. Its annual production of 174,000 cases of wine retail for around $35 - £225 per bottle, bringing in revnues of $54m with margins of nearly 40%, over twice the 17.25 recorded by Treasury Americas.