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2021-09-16 11:34:24

Wine is gaining popularity

We begin coverage of Vintage Wine Estates. We believe that, driven by strong M&A activities, double-digit revenue growth and market share growth will continue in the medium term, allowing the company to invest the generated cash flows in business development. VWE expects to increase its Adjusted EBITDA margin by more than 1,000 basis points to 25.9% between 2020-2023. The increase in gross profitability from capital expenditures will be supported by mergers and acquisitions that increase margins, as the last deal had an adjusted EBITDA margin of 60%.





We like the company’s operating profile and believe Vintage Wine Estates will continue to benefit from the growing popularity of certain wine categories. We believe that wine consumption may continue to increase in gross alcohol consumption as more women begin to prefer wine, narrowing the gap compared to men. Moreover, the demand for wine above $ 10 is starting to be in high demand, which correlates well with the VWE portfolio, where 80% of sales are from $ 10 to $ 20 per bottle.

Vintage Wine Estates (NASDAQ: VWE) was established in 2000 with the acquisition of the Girard winery in Napa Valley and has grown into a diversified wine company which generates revenue from wholesale, B2B and DTC segments and ships ~2 mm 9L EQ cases annually. WE has grown both organically and inorganically having completed ~20 acquisitions over the last decade across various channels. VWE is diversified across price points, with 99% of volumes (ex. B2B) priced over $10 per bottle and 80% of total volumes sold within the $10-$20 per bottle price range

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