The Duckhorn Portfolio plans to focus its investment on a clutch of wineries and close some of its tasting rooms in a bid to “profitably scale”.
The US luxury wine group said it will prioritise its spend on “four core wineries” – Duckhorn Vineyards, Kosta Browne, Decoy, and Sonoma-Cutrer, as well as the Goldeneye Calera, and Greenwing brands.
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Duckhorn’s CEO Robert Hanson said the move was part of the group’s regular evaluation of its portfolio “to ensure it is well-positioned to expand and profitably scale”.
The wineries account for 96% of the Californian company’s net sales and represent the “biggest growth opportunity” within its portfolio, it said.
The seven wine brands the company has chosen to prioritise operate within the $15-50 premium and luxury wine segments.
Over the last 24 months, Duckhorn said its portfolio accounted for 37% of growth in the premium and luxury price segment and “continues to gain market share”.
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By GlobalDataHanson added that the seven brands had “tremendous potential” to support Duckhorn’s ambition of becoming the “leader in American luxury wine”.
Consequently, Duckhorn will pull resources away from brands including Canvasback, Migration, Paraduxx, and Postmark.
These labels, which generated just 3.9% of Duckhorn’s total gross profit over the past nine months, “have been declining on a trailing 12-month basis,” the company said.
They will continue to be available in the wholesale market for the next few years.
The Californian group will also close tasting rooms that are not “generating significant revenue or contributing to profitability” by June.
Closures include Californian locations Migration in Napa and Sonoma-Cutrer in Windsor, plus Canvasback in Walla Walla, Washington.
Despite the closure of the Sonoma-Cutrer tasting room, its wholesale business, membership club, and winemaking operations will remain the “primary focus of this growth brand within the portfolio”, Duckhorn said.
The news follows recent management shifts in the business. Hanson, a former Constellation Brands executive, was appointed CEO in January, while Duckhorn appointed former WC Brands executive Jeff Ngo as its new chief growth officer last month.
