Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Wine giant Ste. Michelle sold for $ 1.2 billion

Wine giant Ste. Michelle sold for $ 1.2 billion

Ste. Michelle Wine Estates, the cornerstone of Washington’s wine industry, has been sold for about $ 1.2 billion. $ To a private equity firm of its parent company, the tobacco firm Altria.

Woodinville-based Ste. Michelle describes herself as the country’s third-largest wine company, cultivating nearly 30,000 acres throughout Washington, Oregon and California and selling wines under brands including Chateau Ste. Michelle, 14 Hands, Columbia Crest, Erath, Intrinsic and Patz & Hall.

However, its growth has stalled in the highly competitive wine industry. Ste. Michelle’s sales fell from $ 691 million in 2018 to $ 689 million in 2019, with operating income turning from a profit of $ 50 million to a loss of $ 3 million. Then, during pandemic shutdowns in 2020, Ste. Michelle̵

7;s sales fell to $ 614 million, and it reported a steep operating loss of $ 360 million.

Altria, which owns major cigarette brands like Marlboro, said it will use the proceeds from the sale to repurchase shares. CEO Billy Gifford said throwing the wine business is part of the plan to focus on “moving adult smokers away from cigarettes by taking steps to transfer millions to potentially less harmful choices” as non-combustible nicotine products.

The sale is expected to close in the second half of 2021, provided that Sycamore Partners obtains the necessary financing and antitrust approval.

Sycamore, based in New York, invests in a variety of consumer and retail brands, ranging from Hot Topic and Staples to Ann Taylor and Coldwater Creek.

In a statement, Ste. Michelle President and CEO David Dearie said the winery’s management team “believes we are well positioned to help drive the next phase of growth.”

“Ste. Michelle is committed to leading the growth of the Washington wine category through investment in brand-building and by continuing to produce award-winning, wonderful drinking wines. We are fortunate to have famous properties and brands in Oregon, Napa and Sonoma in addition to our diverse portfolio in Washington, ”he said.

In recent archives from the Securities and Exchange Commission, Altria noted the “negative effects” on its wine business early in the COVID-19 pandemic. With sharply reduced wine sales in restaurants, bars and hotels and on cruise ships, Ste. Michelle made a write-off of $ 392 million related to inventory and “estimated losses on future non-cancellable obligation to purchase grapes” in the first quarter of 2020.

For 2020, Ste. Michelle’s total wine shipment volume was approx. 7.3 million cases, a decrease of 12% from 2019.

This story will be updated.

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