Bespoke Capital Acquisition Corp. (BSPE) added to the Long Bias list.
Vintage Wine Estates is primarily focused on wines priced between $10-$20 per bottle. The company has built a portfolio of over 50 wine and spirits brands on the West coast. The company has a long track record of organic growth and successfully integrating acquisitions and extracting synergies. The company will have a billion dollars of acquisition capital to deploy in a fragmented industry of over 8,700 wineries just in the U.S.
The SPAC is early in its merger process and still has not filed its S4. Reviewing the audited financial statements is a critical step to make it a Best Idea Long. Investors can trade the shares now and lack the same information we do. Notwithstanding that limitation, shares trading at the $10 level offers asymmetric returns as shareholders can redeem for $10.
Vintage Wine Estates has scale advantages in a fragmented industry; its business mix is concentrated in the faster-growing segments. Its product mix is in the faster-growing price points, and the management team has been executing on integrating acquisitions for several years. The merger with Bespoke Capital Acquisition Corp. brings a talented Chairman who will transform the wine industry as he helped transform the spirits industry at Diageo. The company’s growth formula combines 10% top-line growth, plus acquisitions and expanding margins. The current valuation does not reflect any part of the formula being successful.
We are presenting our SPAC Research Roundup on BSPE on Tuesday, March 2nd, at 2 PM EST.
Out of stocks opened the door for small brands (FREE)
The CPG in-stock rate at retailers has been only 1% off targeted levels for the past month. Still, non-edible in-stock rates continue to lag in categories including paper products, home care, and general merchandise, as seen in the following chart.
The out of stocks early in the pandemic have had a lasting impact on consumers. Two beneficiaries of the out of stocks during the pandemic have been small brands and private labels. Brands with sales less than $100M grew 18.3% in 2020. Private label sales grew 12%. Large brand sales increased 7.5% despite the growth of online shopping, which benefits better-known brands. The faster rate of growth for small brands has encouraged more SPAC mergers like Whole Earth Brands (FREE), Vital Farms (VITL), Laird Superfood (LSF), and UTZ Brands (UTZ). CPG demand remains up 10% in February.
SunOpta launches its own oat milk brand at retail (STKL)
SunOpta announced the launch of SOWN, one of the first organic oat coffee creamers on the market. SOWN is available at Sprouts Farmers Market and Whole Foods stores nationwide. SunOpta has limited branded plant-based milk retail offerings; instead, it supplies the foodservice channel, retailers with private labels, and co-manufactures. Selling directly to retailers will capture more value, but management is currently set-up to oversee manufacturing and operations, not marketing. The brand launch represents more of a modification to the current strategy than a transformation of the company.
