Investment decisions

Italian Wine Brands acquires Enoitalia to become the national leader among private companies

Enoitalia is one of Italy’s leading wine producers with 111 million bottles sold in 2020. The vast majority of its sales come from abroad (80%). They are specialised in the production and distribution of prosecco, sparkling, semi-sparkling and still wines, both white and red. The United States, Canada and Europe are the main reference markets with a presence in both on and off-trade channels, while Asia, Australia, Russia and the Middle East are markets of interest where Enoitalia operates with a dedicated task force. 

Enoitalia has been growing for the last few years, reaching revenues of €200.8MM and €17.1MM EBITDA in 2020. Enoitalia net debt is €1.1MM. It was founded in 1986 by the Pizzolo family who is the main shareholder. 

Italian Wine Brands has paid €150.5MM to the Pizzolo family for Enoitalia, and the Pizzolo family will reinvest €45.5MM in 1.4MM IWB shares (at €32.5). Gruppo Pizzolo will hold a total of 15.91% of IWB’s share capital. There is a 36-month lock-up period for the newly issued IWB shares subscribed by Gruppo Pizzolo.

The integration between the two companies will create Italy’s leading private wine group in terms of size, with pro forma revenues of €405.1 MM and an EBITDA of € 42.7 MM (Dec-2020). It is noteworthy that Enoitalia has a presence in the Ho.Re.Ca sector (Hotels – Restaurants – Cafes) and it lost €20-25MM in 2020 due to Covid-19. Therefore, we expect Enoitalia numbers to recover from 2021 onwards. Moreover, the synergies between the two companies are huge. Enoitalia makes the bottling internally 100% of its production, while IWB bottles internally only 30%/35% of its bottles. It represents that Enoitalia can expand volumes by 30%/40% without additional CAPEX.

Apart from this, we believe that both companies are perfectly complementary as they are specialised in different products and geographies:

  • IWB is strong in Red Wines and less in Sparkling and White ones: Enoitalia is exactly the opposite 
  • Enoitalia has a presence in the USA (8.5% of sales) where they are not present and in the UK (34%) where they are strong in Prosecco and HoReCa. IWB operates in the UK (12%) but more with Red Wines and not with the HoReCa sector. 
  • IWB derives 24% of its sales from Switzerland where Enoitalia is not present 
  • In Germany, they work with two distinctive very large retailers (no overlapping)
  • Enoitalia operates in Eastern Europe and the Middle East where they do not operate 
  • Combined CAPEX is estimated a € 6/MM per year 

The consolidation of Enoitalia into the perimeter of IWB will ensure: 

  • Strengthening of the group’s presence on international markets, in particular in the UK, where Enoitalia achieved Euro 68.1 million in revenues in 2020 and in the US market, where Enoitalia achieved Euro 16.9 million in revenues in 2020.
  • Further diversification of the customer base, through the acquisition of primary international accounts operating in the large-scale retail trade.
  • Strengthening of the group’s wine-making capacity (especially for sparkling and semi-sparkling wines) and bottling.
  • Possibility of obtaining important revenue and cost synergies. 
Italian Wine Brands acquires Enoitalia.

Conclusion: We believe the deal is almost perfect from a geographical and products’ standpoint. It will also allow IWB to obtain considerable synergies, boost cross-selling and enter into the Ho.Re.Ca segment. We believe that the execution risks are limited given the commitment of the Pizzolo Family to reinvest about 30% of its proceeds in IWB. 

Sources: Italian Wine Brands, Enoitalia and Banca Akros

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