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Private Investment Firm Purchases Control of Duckhorn Wine Company

TSG Consumer Partners buys out GI Partners as investment firms continue to see growth in the Napa-based wine company
Duckhorn's main winery and surrounding vineyard is part of a growing company with six brands and 600 acres of vines.
Photo by: Courtesy Duckhorn Vineyards
Duckhorn's main winery and surrounding vineyard is part of a growing company with six brands and 600 acres of vines.

Aaron Romano
Posted: August 30, 2016

TSG Consumer Partners, a San Francisco–based private equity-investment group, announced yesterday that it will acquire Duckhorn Wine Company, the Napa-based Merlot powerhouse, from the current majority investor, GI Partners. Neither party disclosed financial terms, but the transaction includes all the Duckhorn Wine Company brands—Duckhorn Vineyards, Goldeneye, Paraduxx, Migration, Decoy and Canvasback—as well as wineries and more than 600 acres of estate vineyards.

GI Partners invested in 2007, buying out some of Duckhorn's original investors, who wanted to cash out. Duckhorn president and CEO Alex Ryan said the firm's decision to hand control to TSG came down to "normal investment-cycle timing." GI had recently bought control of fellow Napa winery Far Niente.

"GI had a great run, and it was time for them to monetize their investment," said Ryan, noting that the transition will be seamless, with Duckhorn continuing to run as is, with all current employees.

Margaret and Dan Duckhorn, who will also remain involved, started their business in 1976, producing their first wines in 1978. The company managed to build a successful business model championing Merlot. They added other varietals as they gradually expanded, with Paraduxx, a brand focused on blends; Goldeneye and Migration for Pinot Noir and Chardonnay; Decoy for value; and Canvasback, an expansion into Washington.

Decoy sales continue to grow at a rapid pace, jumping by 22.3 percent to 406,000 cases in 2015, according to Impact Databank, a sister publication of Wine Spectator, and it's on pace to finish the current year as one of the U.S. market's top 50 wine brands by retail sales value. Duckhorn has also thrived, with its double-digit growth streak continuing in 2015 with an 18.8 percent rise to 121,000 cases.

TSG Consumer Partners is an investment firm with $5 billion of assets under management, focused on a variety of consumer goods, including brewer Pabst Blue Ribbon. This is the company's first investment in luxury wine brands. "Duckhorn Wine Company is one of the most respected wine portfolios in the world," TSG president Jamie O'Hara said in a statement. "We are thrilled by this incredible opportunity to partner with and invest in a company as dynamic and well-run as Duckhorn, a rarity in any industry. Our goal is to support the company's vision and to use our consumer expertise to bring the Duckhorn portfolio of wines to an even broader global audience."

Ryan explained that though this is TSG's first investment in wine, Duckhorn's team was comfortable putting the business in its hands because of a shared vision of how luxury products are sold. "TSG knew they were buying into a group that already knew the wine business," said Ryan. "I believe private-equity communities are seeing a lot of opportunity in the luxury wine category as it matures. The wine industry is built on long-term assets, which give a company a lot of comfort in investing in."

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