US – The Duckhorn Portfolio, a prominent US wine group, has revised its annual sales forecast, citing subdued growth in the luxury wine market.
Despite outpacing total wine and luxury wine markets, the company acknowledges the challenges posed by the sluggish industry growth rate for luxury wine in recent weeks.
Deirdre Mahlan, interim president, CEO, and chair of Duckhorn, emphasized the company’s consistent performance, stating, “Duckhorn continues to outpace both total wine and luxury wine markets,” with consumers consistently choosing their products over competitors.
However, she pointed out the flat to 1 percent growth rate in the luxury wine sector over the past 12 weeks, a trend expected to persist.
Mahlan conveyed the updated guidance, stating, “We are updating our full-year fiscal 2024 guidance to reflect our second-quarter results and more caution with regard to the second half.”
The company now anticipates annual net sales between US$395 million and US$411 million, down from the previous forecast of US$420 million to US$427 million.
Additionally, Duckhorn adjusted its forecast for annual adjusted EBITDA, projecting it to range between US$145 million and US$150 million, compared to the earlier guidance of US$150 million to US$153 million.
Despite the adjustments, the company remains confident in its unique product offerings, including luxury wine brands like Duckhorn Vineyards, Decoy, and Goldeneye.
Mahlan highlighted a cautious market sentiment regarding growth from distributors and retailers who are actively managing inventory. This caution, reflected in inventory adjustments, impacted top-line results.
In the second quarter, ending on January 31, Duckhorn reported a net sales decline of 0.4 percent to US$103 million. However, adjusted EBITDA saw an increase of 10.1 percent to US$42.7 million.
The group’s strategic approach includes achieving growth in the second half through innovation and “by-the-glass programs” with distributors.
Mahlan detailed the initiatives planned for the second half, including product releases such as a lower-calorie, lower-alcohol Sauvignon Blanc and a specific Paso Robles Cabernet Sauvignon under the Decoy Limited brand. Improving the availability of core wines like Duckhorn Chardonnay and Decoy Limited Merlot is also part of their strategy.
The Duckhorn Portfolio, headquartered in Napa Valley, looks to navigate market challenges and achieve growth through a combination of strategic releases and partnerships.
Last year, Duckhorn Portfolio purchased North Coast Winery and Vineyards in California, a fully operational winery plus equipment, alongside over seven acres of Cabinet Sauvignon vineyards, in a deal worth approximately US$55m.
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