Duckhorn CEO Robert Hanson On Optimizing Portfolio Investment
Last night, SND reported that The Duckhorn Portfolio will reallocate investment away from lower priority brands and tasting rooms in order to focus in on its core four labels of Duckhorn Vineyards, Kosta Browne, Decoy, and Sonoma-Cutrer, along with Goldeneye, Calera, and Greenwing, which combine for 96% of its net sales. The California wine group’s Canvasback, Migration, Paraduxx, and Postmark labels will be deemphasized and its Migration (Napa, CA), Canvasback (Walla Walla, WA), and Sonoma-Cutrer (Windsor, CA) tasting rooms will be closed.
Acquired by Los Angeles-based private equity firm Butterfly last year for just under $2 billion, The Duckhorn Portfolio has volume of approximately 2.7 million cases, according to Impact Databank, with 2024 sales of $475 million. SND executive editor Daniel Marsteller spoke with Duckhorn CEO Robert Hanson to hear more about the company’s plans for the future.
SND: What is the rationale behind Duckhorn’s plans to focus in on key brands and consolidate its tasting room footprint?
Hanson: Over the last 24 months, we have represented about 37% 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, Duckhorn, Decoy, Kosta Browne, and Sonoma-Cutrer, and the additional brands that we’re choosing to focus on, Greenwing, Goldeneye, and Calera.
We looked at the growth and profit contribution of the other four brands. We have strong inventory positions on those wines, and they’re great wines. 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. 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. And so 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.
SND: Given the tasting room closures, what’s your take on the broader hospitality aspect in California wine country?
Hanson: We’re excited about our Duckhorn Vineyards tasting room. We are going to continue to operate the Paraduxx tasting room, which we’ve just remodeled. It will become a portfolio tasting room. We see the potential in leveraging our full fine and luxury wine portfolio on that campus because it’s large enough and it has the ability to accommodate discreet tasting experiences for our club members and visitors. And it’s in one of the most premier locations in Napa Valley on the Silverado Trail. So we’re very bullish on Duckhorn Vineyards and the future Duckhorn portfolio tasting site.
In fact, we’re going to be making a pretty significant upgrade to the Duckhorn Vineyards tasting room, the original hospitality site that Dan and Margaret Duckhorn opened on Lodi Lane in St. Helena. Next year’s our 50th anniversary, and as part of that we’re going to be closing that tasting room next spring and doing a year-long renovation to reopen it in Spring 2027.
So we’re committed to the omnichannel hospitality experience. It is true that traffic has been down in Napa and Sonoma County, but we’re concentrating our focus on the brands that have the greatest draw, the greatest potential to continue to drive profitable revenue growth. We also have tasting rooms for Goldeneye up in Mendocino County and Calera down in the Central Coast and remain committed to them.
SND: How do these moves position the company for the future?
Hanson: We’re concentrating on the 96% of our revenue and 97% of our profitability that we see the greatest growth potential in. We had contemplated these moves as a part of the acquisition thesis, and when we got into the company and understood the growth trajectory and profitability algorithm for these four brands, 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. 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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Tagged : Butterfly, Calera, Canvasback, duckhorn, Goldeneye, Kosta Browne, Migration, Paraduxx, Sonoma-Cutrer
