Vintage Wine Estates to go public in $690M SPAC

Vintage Wine Estates President Terry Wheatley joined Yahoo Finance Live to discuss their decision to go public in a $690M SPAC and what this means for the company.

Video Transcript

SEANA SMITH: So let's turn to a topic that I think makes perfect sense for a Friday afternoon, and that's investing in wine and coupling that with this SPAC raise that we've been talking about so much here at Yahoo Finance. Vintage Wine Estates, it's going public via a merger with Bespoke Capital Acquisition Corp.

So we want to bring in Terry Wheatley. She's the president of Vintage Wine Estates. And Terry, it's great to speak with you. A fun fact that we learned is that you're actually the first woman in history to take a major multi-hundred million dollar US wine producer public. So congratulations on that because that is quite an accomplishment. But let's just first talk about how you're doing this. And that, of course, is via a SPAC. And we've seen more and more of these over the last several months. Why did this make sense for your business?

TERRY WHEATLEY: Yeah, you know, it really does make sense for us now. We were looking at going a traditional route, going in IPO. We were preparing last summer, leading into the fall, and then we met Bespoke Capital. And when you think about that, that executive chairman is Paul Walsh, ex-CEO of Diageo, so tremendous experience in our space. And then the general partners of Bespoke both have great experience in merchant banking, private equity, but also were investors in [INAUDIBLE], one of the largest capsule and closure companies.

So when we talked to them, it just really clicked with our CEO and founder. And from then on, we've just been going down the process of going to a SPAC. So really made a lot of difference for us because it was the people that mattered and then the business proposition that mattered for us.

ADAM SHAPIRO: So, you know, Terry, that I'm not just an anchor on TV. I'm actually a customer. And although my [INAUDIBLE]

TERRY WHEATLEY: Oh my god.

ADAM SHAPIRO: --I would say "chardonny"-- it's chardonnay. I've been schooled. [INAUDIBLE] one of the wines in the portfolio. And the reason I bring that up is a lot of people may be unaware that they know your portfolio of wines. So I want to talk to you about how do you grow this, because we know that a lot of us in the last year have been drinking more adult beverage, especially wine. I blame my COVID-11-- it's not COVID-19-- weight gain on that. But how do you grow this business after the pandemic?

TERRY WHEATLEY: You know, you grow it through what we've done historically, which is really what I like to call our three-legged stool. So our business model is different than any other wine business out there. So I've been in the business-- wine business over 30 years. Our CEO, founder has been in the business over 30 years. So we know how other companies work. And generally speaking, less than 10% of their business is done in the direct-to-consumer.

What we have done, we have a-- what I call a three-legged stool. So we have a direct-to-consumer business, which is about 30%. We have a wholesale business, about 41% of the business. And then we have a B2B. And that three-legged stool really gives us the opportunity to capitalize-- not only did we grow during the pandemic. Many other wine companies really struggled during the wine business-- or during the pandemic.

So that's what we see great opportunities for acquisition, great opportunities to just continue our organic growth. So we've had great organic growth through our history. You know, I'm proud to say that we have-- you know, we've done over 20% adjusted EBITDA growth for the last 10 years, which I understand is a little hard to do. So we plan to continue with that, our business plan, and then acquire on top of that by, you know, the capital of that we'll be getting from the public markets.

And combined, we really think we're going to have a growth engine to continue to really grow in this premium segment. So you talked about being a Cameron Hughes fan. I mean, that fits right in that sweet spot. That $10 to $20 price point, that's where we're going to be focusing on. And that's where we see great opportunities for acquisition to fit inside this really great three-legged stool business model.

SEANA SMITH: Hey Terry, and talking about that and the fact that you saw such a huge jump in demand over the last 12 months, because have you had any trouble meeting that demand? When we talk about-- we've talked to a number of not necessarily wine distributors or wine companies, but when we talk to other companies that have had trouble producing, the production problems just because of some of the regulations that come with COVID, did you run into that at all? And I guess, how have you navigated any of the challenges of the past 12 months while trying to meet that jump in demand?

TERRY WHEATLEY: Well, you know, some of our challenges, of course, were our tasting rooms were shut down, which is a tragedy for us. I think we had a little bit of an issue with some of the glass suppliers, but the great part is, we were-- you know, some folks had problems bringing in glass from China. We source domestically so that wasn't really an issue. Truly, you know, our issues were with the tasting rooms.

But because, in our direct-to-consumer model, we don't just have tasting rooms and wine clubs, we have the Cameron Hughes brand, which is digitally native. We have e-commerce, where we have 850,000 subscribers in that. We have a telesales group. And then, we have QVC business. So, you know, you pull this all together, and that's where we were able to really grow during the pandemic, where some of our other friends and neighbors were really struggling during that time.

SEANA SMITH: Terry, great to speak with you. Terry Wheatley, president of Vintage Wine Estates, we wish you all the best.