IPO: Here are the things to know about Fresh Grapes’ market debut

There has been a spurt in the number of food and beverages companies going public lately, but many of them failed to perform as expected in the stock market. Fresh Grapes LLC is among the last few companies preparing to go public this year.

The company, which does business as Fresh Vine Wine, in an amended SEC filing said it is looking to raise around $21 million by offering 2.53 million shares. The offering is expected to be priced between $9 and $10. If everything goes as planned, the stock will start trading on the New York Stock Exchange under the symbol VINE. The book-runners are Oak Ridge Financial and Boustead Securities.

Specialty Wines

The Plymouth-headquartered company is an early-stage producer of specialty wines, with a focus on the crisp and low-carb verities. Founded in 2019, the company sells four varietals of wines and is all set to launch a limited version in 2022. Cabernet Sauvignon, Rose, Chardonnay, and Pinot Noir are some of the main offerings, which are sold through the direct-to-consumer, retail and wholesale channels.

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Currently, Fresh Grapes is led by chief executive officer Janelle Anderson. What differentiates the company from others is its luxury segment that is affordable to the majority of customers. This segment is expected to witness significant demand growth going forward.

Outlook

While the wine industry is forecast to grow at a compound annual rate of 4% over the next six years, Fresh Grapes will have to compete with industry leaders like Constellation Brands, Inc. (NYSE: STZ) to gain a foothold in the market. Compared to most rivals – which also include Jackson Family Wines and the Wine Group — the company is very small in size and valuation.  

As usual, the proceeds from the offering will primarily be used for general corporate purposes and repaying debt. The company’s financial performance has been impressive, with the top-line growing steadily from a low base. However, elevated operating costs continue to put pressure on the bottom line.

Growth Plan

As part of its growth strategy, the company intends to invest in direct-to-customer capabilities because the DTC channel has been generating large volumes of sales and high margins. Plans are also afoot to pursue alternative channels like e-commerce marketplaces, product aggregators, and virtual distributors.

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It is estimated that Americans spent around $53 billion on locally produced wine in 2020. Fresh Grapes reported total revenues of $217,074 for fiscal 2020. It incurred a net loss of $1.29 million or $1.30 per share, which is sharply wider than the previous year’s loss of $0.43 million or $0.48 per share.