Return of tasting-room visitors buoys Vintage Wine Estates Q3 revenue
In another sign of continued recovery of California Wine Country tourism from the pandemic is a report from Vintage Wine Estates big gains in visitors to its tasting rooms such as B.R. Cohn in Sonoma Valley and Girard in Napa Valley.
The Santa Rosa-headquartered company (NYSE: VWE) said that visits were up 45% in its third fiscal quarter, ended March 31, from a year before, according to CEO Pat Roney.
“Recovering from COVID restrictions continues to drive on-site customer engagements, which also had a positive impact on club membership gains,” Roney said on a Monday conference call with analysts about the quarterly results. “Of note, our combined average order value is stable across all DTC channels. Volume for direct to consumer was up 67%, reflecting increased tasting room traffic on site purchases and wine club membership gains.”
That rebound in winery visits, following state and county public health restrictions starting in March 2020, was key to the one-third annual growth for direct-to-consumer sales and a driver for 11% organic growth (not acquisition-related), Roney said.
“We're having hospitality bookings up, having more people come back to the properties, and that's accelerated a lot of growth. And we're getting some new consumers out of that,” Roney said.
A big bump in DTC sales came when Vintage acquired wine club and direct-sales fulfillment house Vinesse last fall.
DTC sales, at $19.6 million, were the third-largest portion of the company’s quarterly revenue mix. Leading the way for revenue overall was business-to-business ventures such as private labels for retailers, which more than doubled over the year (up 205%) to $33.6 million, followed by wholesale sales of company brands at $24.5 million (up 16.4%).
Quarterly revenue was up 68% annually, to $78.9 million. Sales volume was up 22%, to 557,000 cases.
Big contributors to future wholesale and business-to-business will be the acquisitions in the first quarter of Sebastopol-based Ace Cider and Midwest-based Meier, where Ace is set to be produced for the East Coast.
Vintage Wine Estates increased its guidance for anticipated annual revenue this fiscal year to $290 million to $295 million, which would be roughly a one-third increase over fiscal 2021.
But on the cost front, the conflict in Ukraine has exacerbated inflation in the price of dry goods inputs seen late last year, Roney said on the conference call.
“Some of the largest suppliers of wine capsules — most people probably don't know — it's actually the Ukraine,” he said.
In the first quarter, the company said it would be increasing bottle prices because of rising bottle and other packaging costs. Roney on the third-quarter call estimated that the first round of price increases would work out to be a 3% annualized increase.
“And as we look forward, and now with the expectation there may be continued increases from our suppliers on dry goods, we haven't ruled out taking prices up again, sometime next fiscal year,” Roney said.
Jeff Quackenbush covers wine, construction and real estate. Before coming to the Business Journal in 1999, he wrote for Bay City News Service in San Francisco. Reach him at email@example.com or 707-521-4256.