Focus on quality pays off for Andrew Peller

Article Excerpt

ANDREW PELLER LTD. (Toronto symbols ADW.A $17 and ADW.B $17; Income Portfolio, Consumer sector; Shares outstanding: 44.2 million; Market cap: $751.4 million; Price-to-sales ratio: 2.0; Dividend yield: 1.2%; www.andrewpeller.com) began operating in 1961, and is now Canada’s second-largest producer of wines, after Arterra Wines (formerly the Canadian division of Constellation Brands.) Its vineyards in Ontario’s Niagara Peninsula, and British Columbia’s Okanagan and Similkameen Valleys, account of 14% of Canada’s wine market. In October 2017, Peller acquired three wineries in B.C.: Black Hills Estate, Gray Monk Estate, and Tinhorn Creek. It paid $94.8 million. That price consisted of $77.6 million in cash, plus $17.2 million worth of class A common shares. The new wineries will add between $30 million and $35 million to Peller’s annual sales over the next five years. As well, they expand Peller’s portfolio of premium brands, which generate higher profits per litre than regular wines. As a result of those new operations, overall sales for the fiscal 2019 first quarter, ended June 30, 2018, rose…

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