Will we see Dole plc build some greenhouse? (APPH)
Total Produce (TOT-LON) will combine with Dole Food Company and list in the U.S. The combined company will become the largest global player in fresh produce diversified by product and region, as seen in the charts below. Total Produce is Europe’s largest fresh produce company. Total Produce purchased a 45% stake in Dole Holdings in 2018. The combined 2020 revenue would be about $9.7B and adj. EBITDA would be roughly $379M. The Board of Total Produce believes the company will have long-term organic growth potential of 2-3% and 5-7% EBITDA growth annually.
Total Produce shareholders will receive 82.5%, and C&C shareholders will receive 17.5% of shares in the combined company, Dole plc. The completion of an IPO, a listing on a major U.S. stock exchange, and a market capitalization of $1.2B are conditions for completing the merger. The implied valuation of the merger condition is 7.6x pre-synergies and 6.9x post-synergies. Dole plc intends to raise $500-700M in the IPO, bringing Total Produce shareholders down to 55% ownership of Dole plc and C&C shareholders to 10%. Management expects synergies of $30-40M. The transaction is expected to close in late Q2 or early Q3.
There has been a lot of interest in fruit and vegetable companies recently with the share public offerings and share price appreciation in companies like AppHarvest (APPH), Mission Produce (AVO), Vital Farms (VITL), and numerous private equity investments. Dole plc seeks to close the multiple gaps with peer companies. Dole plc can probably explain why most of its products are not grown in greenhouses, but it will expand its avocado offering. (Could Dole plc be interested in SunOpta’s fruit-based business in the future when it deleverages to 3x?)
Wine DTC sales during the pandemic (BSPE)
COVID-19 and the shift to at-home dining and drinking occasions boosted DTC sales of wine. Direct-to-consumer wine shipping had the largest year of volume growth at 27% in 2020. Last year also saw the largest decrease in a decade in the average price of a bottle, with a 9.5% decrease to $36.83. Shipments of wine bottles below $30 rose 41.6%, while wines priced above $100 fell 2.0%. DTC shipments accelerated during periods when on-premise restrictions were greatest, as seen in the following chart. The largest and smallest wineries saw the largest volume gains, with the largest growing 54.7% and the smallest growing 64.9%. Bottles under $15 represented about 25% of wine volume in 2020. Bottles less than $20 represented about 35%.
Constellation Brands has recently sold its portfolio of wine brands below $11. Vintage Wine Estates is focused on wines priced between $10-20 a bottle. While DTC sales benefited from the on-premise restrictions, the channel had grown at a 24% CAGR for Vintage Wine Estates in the three years preceding the pandemic. DTC represents 29% of Vintage Wine Estates revenues. Vintage Wine Estates expects its SPAC merger with BSPE to close in April/May.
Florida’s return to on-premise (BUD)
Florida has removed on-premise restrictions longer than the majority of states. (Restaurants in 24% of states are completely open while bars are open in 22% of states. 54% of states are open for bars indoors with capacity measures, while 68% of states are open with restaurants' capacity measures.) Nielsen surveyed legal age residents of Florida from Feb. 5-8th about their on-premise visits. 57% of respondents reported visiting casual dining chains since restrictions were lifted in late September. 50% visited independent restaurants, 28% visited neighborhood bars, 27% visited fine dining restaurants, 24% visited polished casual restaurants, and 16% visited hotel bars and restaurants. The first venue visited after reopening for 30% of respondents was a casual dining chain, followed by 22% visiting independent restaurants. 8% said the first venue visited was a neighborhood bar, and another 8% said it was a sports bar. Beer was the drink of choice for half of the respondents who visited a bar.
