The $900 Million Deal Positions TWE as a Leader in the High-End American Wine Market
PASO ROBLES – In a move that underscores the shifting sands of the global wine industry, Treasury Wine Estates (TWE), an Australian wine behemoth, has announced the acquisition of California’s Daou Vineyards. This strategic purchase, valued at $900 million—with the potential to reach $1 billion due to an earn-out clause—aims to bridge a crucial gap in TWE’s Americas luxury wine segment.
Subject to anti-trust approval in the US, the acquisition is set to be finalized by the year’s end. TWE will gain complete ownership of Daou Vineyards, which encompasses three wineries and 389 acres of prime vineyards in Paso Robles, in addition to a winery and 22 acres of vines in San Luis Obispo.
The Melbourne-based TWE is crafting plans to integrate Daou Vineyards into an independent Treasury Americas Luxury division, positioning the brand among illustrious names such as Stags Leap, Frank Family Vineyards, and Beringer. In contrast, its ‘premium’ division will include well-known labels like 19 Crimes and Sterling Vineyards.
Established in 2007 by brothers Georges and Daniel Daou, Daou Vineyards has become a significant player in the wine industry, employing a 250-strong workforce. The Daou brothers will continue to serve as brand ambassadors and partners, contributing their vision and expertise to TWE’s future endeavors.
The acquisition is a calculated investment by TWE, with funding coming from equity and a $311 million debt financing package, which includes issuing shares to the Daou family. TWE anticipates the deal will be earnings per share (EPS) accretive from FY2025.
TWE’s commitment to “luxury-led portfolio premiumisation” is evident in its enthusiasm for the transaction. The acquisition targets the $20-40 wine segment while reinforcing its stronghold above $40 per bottle, a strategic response to a market increasingly inclined towards luxury and premium wine selections.
Daou Vineyards’ diverse portfolio spans five pricing tiers, offering products that range from $20 to $500 per bottle. As per Circana’s data, Daou has been recognized as the most dynamically growing luxury wine brand in the US over the past year.
This deal is a significant pivot for TWE as it adapts to an industry landscape marred by rising costs and a downturn in demand for lower-priced wines. Previously, TWE noted a softening in the “entry-level premium” segment in the US market. Yet, CEO Tim Ford expressed that the demand in the A$30 (US$21) plus bracket remains robust.
Earlier this year, TWE announced its intention to divest certain assets amidst a tough market for entry-level wines, which led to the closure of the Karadoc winery in Victoria in July. TWE’s full-year results reflected these challenges, with a 2.2% decline in net sales revenue, attributed to volume decreases in both the Treasury Americas and Treasury Premium Brands portfolios.
In related news, TWE’s Sterling Vineyard in the US has recently reopened after a three-year renovation due to wildfire damage from the Glass fire, signaling a period of recovery and growth for the company.
The acquisition of Daou Vineyards is not just a transaction; it’s an investment in quality, legacy, and the future of luxury wine consumption. With this deal, TWE is poised to reshape the American luxury wine market and toast to a future where quality and prestige lead the way.
