Rabobank Group is an international financial services provider based in the Netherlands that offers wholesale, retail and private banking, and it dabbles in leasing and real estate services too. The bank boasts 8.7 million clients around the world. One of Rabobank’s commitments, “feeding the world sustainably,” connects it deeply with agricultural industries. The bank issues quarterly reports on industries ranging from poultry to wine.
In its recent Q3 2018 report, Rabobank issued a forecast that dealt with consolidation in the production, wholesale and retail wine segments. The way the bank’s global beverage strategist, Stephen Rannekleiv put it, “ Changes in technology, business models and market structure are disrupting the global wine market and creating new sets of winners and losers among wholesalers, retailers and suppliers.”
Rabobank recognizes the power of direct-to-consumer sales (DTC) as a profound change in the way wine reaches the consumer. In addition, the bank singles out Liberation Distribution, (LibDib), an online distributor connecting wineries and/or importers with retailers, bars and restaurants, which was covered in this space at the end of 2017. Briefly, LibDib was founded in 2016 in San Jose, California and launched in March 2017. The company claims to change the industry by “leveling the playing field” for every producer and wholesaler/distributor involved in a beverage alcohol transaction within the three-tier system. The service is available only in California and New York, with pending applications in the West and the Midwest.
Notwithstanding DTC and LibDib, important to Rabobank’s assessment of the wine industry is the fact that private-equity players are investing. One of those equity players appeared in this space just a few weeks ago: the upcoming sale of the Spanish Cava producer Codorníu to the Carlyle Group. Carlyle also made a 100% acquisition of the 165 year-old Australian Accolade Wines. Other large investor groups, like Italy’s 21 Investimenti and the Scotland-based Aberdeen Standard Investments, are taking positions in wine.
Rabobank also focused on recent wine industry mergers and acquisitions like global Treasury Wine Estates establishing its own distribution system as well as the exclusive distribution control of Chile’s large wine company, Concha y Toro, with its investment in the Excelsior Wine Co. Excelsior is a massive import and marketing outfit that included another giant wine business, Banfi Vintners.
The Rabobank report claims the U.S. is the largest wine market in the world, the most profitable and the most attractive. The bank also claims a large volume market poses special difficulty for small wineries to penetrate, and that benefits institutional investors and mergers.
The report recognizes that Australia and New Zealand present the U.S. with reasonable competition, but in the first quarter of 2018 U.S. bulk wine volume exports jumped more than 60% over 2017’s first quarter. In the same period, Australian export volume was up about 51% and import volume from New Zealand to the U.S. was up by 55%. Overall, U.S. import volume declined by 1% but dollar value was up 14%.
According to the report, the number of deals involving wine distributors grows in an attempt to cover new areas, incorporate varying products, and achieve economies of scale, and while U.S. and German players have been particularly active, mergers and acquisitions in the wine world is a solidly global activity—one that appears to have legs.
By Thomas Pellechia
Experienced independent writer with a background in the wine industry.
I am an independent wine writer, but once was a writer and producer of audio visual presentations in New York City, and a home winemaker in my spare time. I followed the winemaking bug to the Finger Lakes region of New York where I made wine for a small winery. Over the past two decades, I have also worked as a wine distributor representative and part owner in a retail wine shop in Manhattan’s East Village. I have had hundreds of articles about wine (and food) published in trade magazines, two ongoing upstate NY newspaper columns, and authored five books with wine and/or food history as their subject.