Duckhorn Portfolio ‘continues to outpace’ wine industry slowdowns: CEO
The Duckhorn Portfolio President, CEO, and Chairman Alex Ryan joins Yahoo Finance Live to speak about the state of the wine industry and the company's latest financial results.
Video Transcript
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SEANA SMITH: If you're a fan of, or invest in wine, you might have something to cheer about. The Duckhorn Portfolio, home to a number of luxury brands, beating the street's estimates of both the top and bottom lines in its most recent quarter. Drilling down into those numbers, we saw about a 4% growth in sales of $108 million from just a year ago. That's sending shares higher today, closing up just around 5%.
For more on this, we want to bring in Alex Ryan, the Duckhorn Portfolio President and CEO and Chairman. Alex, it's great to have you. You have the wine there right in front of you. We're a bit jealous on set that we don't have any right here, but first, just your reaction, your take to the numbers that you saw, because it looks like your business has been holding up pretty well.
ALEX RYAN: We have been holding up great. The consumer, the luxury wine consumer is very resilient. We've been doing a lot of work. The depletions, the pull-off from the shelves has been excellent. Our wines are well-known around the United States and the world. The brands are really solid. And we've been executing on our core business of just selling fine wine to luxury consumers, and it's showing up in the numbers. So we're really excited.
DAVE BRIGGS: Yeah, give us a sense of your consumer. Are they high income, are they spending less, are they trading down? Any changes in that regard as we approach what some feel are recessionary environment?
ALEX RYAN: That's a good question. We do have more affluent consumers, as you would expect. We're solely, we focus solely in the luxury wine space. That's about $15 and up per bottle. We spend $20 to $200 per bottle, and that's really the active part of the luxury market. And we're not seeing any trade down now.
Obviously, we're watching it very carefully, we're watching the news clips. But right now, I think our customers want to share wines and explore what their friends during the holidays, coming off the pandemic, looking for a reason to celebrate and enjoy their life. So right now we're not seeing any trade down. We're watching for it, and we still think that end of the category is going to remain strong.
PRAS SUBRAMANIAN: Hey, Alex, Pras here. You mentioned that luxury consumer. Are they able to sort of weather the pricing pressure, that kind of storm better than non-luxury consumers?
ALEX RYAN: What we're seeing, and we think that that's an accurate depiction, that they like the experience enough that they're able to kind of choose where they want to put their money, and they're able to kind of withstand the pricing increases that they've seen in wine over the last several months.
SEANA SMITH: Alex, what about the prices that you have raised so far? I know you have been raising prices over the last couple of months. Is that enough do you think to get you through the next several months? Or are you potentially going to raise prices even more?
ALEX RYAN: As a luxury product, we raise prices on a regular basis, a consistent basis over time. We did take some prices, as you noted, the end of the summer, early fall. And those prices have moved through the system, both our distributors and our trade partners. And ultimately, our great customers have been able to absorb those and weather them, and they've clearly offset some of the inflationary pressures that we've had. So we feel that we're in a really good shape and I think it was reflective in the numbers.
DAVE BRIGGS: What of your products are showing the most growth? Where is the industry going, and how do you plan to innovate moving forward?
ALEX RYAN: Great question. The industry is moderating somewhat, as again, all the analysts were keen to point that out yesterday on earnings day. We continue to outpace the market. We continue to outpace the industry slowdown, if you will. And the reason for that is, we've been doing it for 45 years. We're very, very focused on luxury only.
And that customer is still active in the wine market. They still want what they want within fine wine, and we're able to deliver that throughout the United States with our great trade relations and great customer relations. So I think we're in a pretty good shape to weather the current storm. And let's face it, fine wines have been consumed since the days of the Romans. So the industry is not going anywhere.
PRAS SUBRAMANIAN: Hey, Alex, I'm actually a big fan of sparkling wine, Proseccos, that sort of thing. You guys have a new cuvee brut product I believe. Is that consumer, is that trending higher these days?
ALEX RYAN: Sparkling wine's exciting right now. Funny you should bring that up. This is one of our new products, Brut Cuvee from the Decoy Portfolio. We're seeing a lot of interest in sparkling right now across the globe. And we've been able to meet that demand with a lot of new sparkling products. This is the latest one.
And in a festive magnum size, so you and more of your friends can enjoy at the same time. So I think that your interest in Prosecco is reflective of a lot of the luxury consumers' interest in, greater interest in sparkling. It's not just for New Year's Eve anymore.
SEANA SMITH: That is one big bottle you got next to you, Alex. Alex, great to have you on Yahoo Finance. Thanks so much for joining us. CEO--
ALEX RYAN: Here's to you guys.
--President and Chairman of the Duckhorn Portfolio.
DAVE BRIGGS: Cheers. Bring that here next time, man.
SEANA SMITH: Cheers, yeah, you got to send some to us.
ALEX RYAN: Happy holidays.
SEANA SMITH: You can't be hogging it all, Alex. All right, Alex, thanks.
