In a sign of challenging times in the wine business, executives at one of California wine’s biggest success stories in recent decades, the Duckhorn Portfolio, are refocusing their attention on the seven top-selling brands in their company. That means four other brands could eventually disappear from the market. The company is also reducing the number of tasting rooms it operates.
The news came in a statement on May 6. The seven top-selling brands include its core four labels—Duckhorn Vineyards, Kosta Browne, Decoy and Sonoma-Cutrer—along with Goldeneye, Calera and Greenwing. Those seven brands account for 96 percent of the company’s net sales. Duckhorn is planning to reallocate resources away from the Canvasback, Migration, Paraduxx and Postmark labels.
Focusing on Top-Selling Wines
“The company is competing in the right segment of the market, $15 (per bottle) and above,” Duckhorn CEO Robert Hanson told Shanken News Daily (SND), a sister publication of Wine Spectator. “Over the last 24 months, we have represented about 37 percent of the total growth in the $15 and above price segment. And if you look at where that growth contribution is coming from, it’s coming from the core four brands.”
Hanson says the company will continue to sell existing inventory of Canvasback, Migration, Paraduxx and Postmark through the three-tier system, but will stop direct-to-consumer sales and stop producing new vintages of the wines for now.
“They’re great wines,” he told SND. “So we are going to use them more tactically as predominantly wholesale brands moving forward. We’ve got inventory to support sales for a couple of years, and we’ll run that inventory out. We don’t have plans to bottle in the future, but if a particular program from one of these wineries were to hit, we certainly would revisit that.”
Less Tourist Traffic Means Fewer Tasting Rooms
In addition to focusing resources on its core four brands, Duckhorn’s statement said the company will close tasting rooms that are not generating significant revenue or contributing to profitability, including the Napa tasting room for Migration, the Walla Walla, Wash., location for Canvasback and Sonoma-Cutrer’s tasting room in Windsor, Calif. But Hanson said the company remains bullish on its Duckhorn Vineyards tasting room and is committed to its other locations such as Goldeneye in Mendocino County and also Calera on the Central Coast.
“The decision to close the tasting rooms was difficult because they are part of the omnichannel strategy for these brands, but generally very small volume and loss generating,” he said. “In the case of Sonoma-Cutrer, for example, we’re choosing to focus on the much higher growth, much higher profit and much higher potential wholesale business. We’ll continue with our club business and we’ll continue obviously with the winery, which we just acquired and has performed great, but we didn’t want to continue with a hospitality business that was basically declining and loss generating.”
Acquired by Los Angeles-based private equity firm Butterfly last year for just under $2 billion, the Duckhorn Portfolio has annual production of approximately 2.7 million cases, according to Impact Databank, with 2024 sales of $475 million. Hanson says the changes reflect both what Butterfly’s team found as they got to know the company and the current state of the wine industry.
“We just made the tough choice to concentrate our resources in the seven brands that drive the majority of our revenue and profit and we think have the greatest growth potential,” he said. “So it’s difficult, it impacts the industry and employees, but it is a very rational business decision to concentrate on where the growth and profitability is going to come from in the future.”
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