Treasury Wine Estates Invests in Californian Luxury Brand

Australian Treasury Wine Estates, which counts Penfolds among its brands, has purchased Daou Vineyards in California's Paso Robles for approximately $1bn.

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Vineyards in the Paso Robles region of California. (Photo: Chris Leschinsky)
Vineyards in the Paso Robles region of California. (Photo: Chris Leschinsky)

The makers behind Penfolds, Treasury Wine Estates (TWE), are acquiring the Californian winery Daou for $900m, with an additional $100m contingent on the brand's performance as part of an earn-out clause. Daou is recognized as the fastest-growing brand in the American luxury wine segment, making it an ideal investment for TWE to solidify its position in the higher price tier. According to media reports, Daou has generated 69% of its sales from bottles priced between $20 and $40, with 13% of sales in the ultra-premium range exceeding $100 per bottle. Currently, Daou's presence is primarily in the US market, but TWE has plans for international expansion of the brand.

The acquisition, which is still subject to antitrust review, is expected to be completed by the end of 2023 and includes the Daou brand name, a visitor centre, four luxury wineries and more than 160 hectares of vineyards in Paso Robles' Adelaida District. Daou's most sought-after wines are the Cabernet Sauvignons labeled Patrimony. Founders Georges and Daniel Daou will continue their involvement, with Daniel serving as Chief Winemaker.

With this acquisition, TWE's luxury division in the US will become robust enough to be spun off into a separate business group. Treasury Americas Luxury will then include Daou, Frank Family Vineyards, Stags Leap, Beringer, Etude, and Beaulieu Vineyards. MS

According to a September 20, report in the Australian Financial Review, Pernod Ricard “has mandated two investment banks to conduct a strategic review of its Australia and New Zealand business, which is expected to lead to a change of control before the end of the year.”

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