Beer Loses Fizz as Spirits Gain Popularity: Top 10 Stocks to Buy

8. The Duckhorn Portfolio, Inc. (NYSE:NAPA)

Number of Hedge Fund Investors  in Q1 2024: 14

The Duckhorn Portfolio, Inc. (NYSE:NAPA) is a wine company headquartered in Saint Helena, California. It is one of the largest luxury wine brands in America, and sells Classic Chardonnay, Merlot,  and other wines. The Duckhorn Portfolio, Inc. (NYSE:NAPA) operates in a highly fragmented industry, which is proliferated by countless players. This means that the firm has to consistently be on its toes and invest heavily in marketing to ensure that not only does it gain market share but continues to hold it as well. Additionally, since The Duckhorn Portfolio, Inc. (NYSE:NAPA) only sells wine, and high end wine at that, the firm is more vulnerable to inflationary trends than other alcohol stocks. This makes it unsurprising that the stock is down 34% year to date, and The Duckhorn Portfolio, Inc. (NYSE:NAPA) is also investing in revamping its distribution network by focusing on wholesale distributors. While this can help it distribute significant product volumes, it also leaves open the chance of a significant channel glut in case of demand slowdown.

Merion Road Capital briefly commented on The Duckhorn Portfolio, Inc. (NYSE:NAPA) in its Q2 2024 investor letter where it shared:

“During the quarter I exited our position in Duckhorn (“NAPA”) at a loss. Fundamentals came in worse than I expected and I ultimately realized that because the upside was less than my prior expectations, it did not justify current uncertainty.”