Winebits 706: Chateau Ste. Michelle sale, restaurant wine, Total Wine

This week’s wine news: Chateau Ste. Michelle is gobbled up by a private equity behemoth, plus restaurants re-jigger alcohol sales, and Total Wine revenue reaches $5 billion

• A new era: Private equity behemoth Sycamore Partners, whose holdings include Staple’s, Aeropostale, and Nine West, will buy Ste. Michelle Wine Estates for $1.2 billion. It’s almost impossible to overestimate the importance of this deal; when private equity discovers wine, the wine business has changed forever. Washington state’s Ste. Michell, the eighth-biggest producer in the country, makes more than 8 million cases a year. Its brands include 14 Hands; Chateau Ste. Michelle and its well-known supermarket riesling; and a variety of more expensive labels. This deal not only means dramatic changes at Ste. Michelle — look for the new owners to try to dump its supermarket brands and to cut costs with layoffs, canceling grape contracts, and other “rationalizations.” But it also means, given the way private equity works,  that almost every large U.S. wine producer, save for the top dozen or so, is now for sale — whether it wants to be or not. Does it also mean that wine wholesalers, other than the top half-dozen, are also potential equity acquisitions?

• Bring on outdoor dining: Nation’s Restaurant News reports that restaurants across the country are tinkering with their wine, beer, and spirits efforts in the wake of the pandemic. The goal is to figure out how to keep what worked during the past 18 months, dump what didn’t, and decide what comes next. In some states, that means an end to cocktails and wine to go; in others, that means adding retail sales in addition to traditional on-premise sales. One thing that isn’t changing: Contactless check-in, virtual menus, and mobile ordering. Interestingly, one chain executive said she will change expansion plans from the northeast to warmer states, where patio dining is possible most of the year.

• $5 billion for Total Wine: Total, the country’s only true national wine retailer, saw revenue jump to $5 billion from $3 billion just a couple a years ago. Chalk that up to expansion and increased business during the pandemic. The chain has 216 stores in 27 states, and expects to reach 230 by the end of the year. It’s particularly keen on Texas, where it has 36 stores, the most of any state. Its CEO told Shanken News Daily that the company is actively looking to open more stores in Texas.

Photo:Brock Wegner on Unsplash