Wine Quarterly Q2 2021: The Valuation Gap Between Winery Buyers and Sellers in the US Wine Market

While some large, high-profile purchase deals have been closed in the US wine market recently, there has also been a notable shortage of deals for smaller wineries, according to new report by agribusiness banking specialist Rabobank.

In its latest Wine Quarterly report, Rabobank says there appears to be a significant gap in valuation expectations between buyers and sellers for small US wineries.

“This gap will eventually work itself out, as these things do. But while some sellers may benefit from a measure of patience, the potential for ongoing challenges in the on-premise channel, coupled with the threat of a significant rise in capital gains tax, could see more value lost from waiting too long,” Stephen Rannekleiv, Global Strategist – Beverages at Rabobank said.

The report says the good news for small US wineries is that, as we move into the second half of 2021, the recovery of the US on-premise sales channel is in full swing.

“There is pent-up demand, consumers are anxious to begin going out and socialising again, and wholesalers indicate that they are seeing sales in many of the bars and restaurants that have completely reopened reaching levels at or above those seen in 2019,” Mr Rannekleiv said.

“However, some important challenges remain and will constrain growth. In addition to the loss of accounts due to permanent closures, many restaurants are paring down wine lists in order to better manage cash and improve operating efficiency. This is likely to favour larger, better-known brands and create more intense competition for placements among smaller wineries.”

Tech deals taking centre stage

The report says retailers and tech companies in the food and beverage space are looking to the alcohol category to buoy their e-commerce growth and investing big money to build out their online alcohol infrastructure.

“Despite massive growth in 2020, alcohol remains vastly underpenetrated and under-promoted across most major e-commerce channels,” Bourcard Nesin, Analyst – Beverages at Rabobank said.

“Alcohol is perhaps the last of the low-hanging fruit in the online food and beverage world, a bright spot in an otherwise challenging moment for e-commerce players,” he explains.

Investments into the alcohol category, the report says, all but guarantee the category will continue its strong momentum over the next two to three years as retailers and tech companies increasingly turn to alcohol brands for support, leadership, and guidance to help build dedicated e-commerce teams for the category.

Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has nearly 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of about 8.6 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 branches throughout New Zealand.

Media contacts:

David Johnston
Marketing & Media Relations Manager
Rabobank New Zealand
Phone: 04 819 2711 or 027 477 8153
Email: david.johnston@rabobank.com

Denise Shaw
Head of Media Relations
Rabobank Australia & New Zealand
Phone: +612 8115 2744 or +61 2 439 603 525
Email: denise.shaw@rabobank.com

Wine Quarterly Q2 2021: The Valuation Gap Between Winery Buyers and Sellers in the US Wine Market

Rabobank Wine Quarterly Q2 2021