Winery buyers reveal expansion plans
Published: Thursday, April 28, 2011 at 5:38 p.m.
Last Modified: Thursday, April 28, 2011 at 5:38 p.m.
Five of the most likely buyers of California's premier wine brands gathered in Santa Rosa on Thursday to discuss the future of the industry.
They sat on a podium in a hotel ballroom like prize fighters before the championship fight, all five of them answering questions and explaining how they plan to conquer a slice of the wine industry.
Bill Foley, owner of Foley Family Wines and probably the most active buyer, explained he was looking for hard assets like wineries and vineyards — not just virtual brands — and his goal was to build a wine business that sold 2 million cases a year.
“I really have a long-term perspective. This is a legacy for my family,” said Foley, who in 2007 decided to invest heavily in the business and has grown his once meager winery holdings into a company that produces about 850,000 cases a year.
Foley said that because the wine industry was hit hard by the recession, he has been able to acquire a portfolio of wineries that he “could never have put together five or 10 years ago.”
He paid about $70 million last year for Chalk Hill Winery, bought Sebastiani Winery in 2008 and bid unsuccessfully this year for Fetzer Vineyards in Mendocino County, which sold to a Chilean producer for $238 million. He is still looking to acquire a flagship winery on Highway 29 or Silverado Trail in Napa County and is growing his brands in New Zealand and Australia.
He is trying to create a large enough portfolio of brands to give him clout with distributors, whose sales teams are often responsible for getting a producer's wine in the best retail outlets.
“To get the attention of the distributor network is so hard,” he said. “I think it might take a couple million cases to be really effective with them.”
Roughly 450 people gathered in the Hyatt Vineyard Creek Hotel for the North Bay Business Journal's annual Wine Industry Conference to listen to Foley and his fellow panelists speak about mergers and acquisitions.
Dan Leese, who co-founded the V2 Wine Group last year to market and produce wine, said his company is looking to acquire or partner with wineries to create a portfolio of wine brands that have a combined annual production of about 1 million cases.
“We need to be big enough to field a national organization,” Leese said.
Pete Scott, chief executive of The Vincraft Group, which acquired coveted pinot noir producer Kosta Browne in 2009 for an estimated $40 million, spoke on the panel even as the ink dried on his deal to buy the 25,000-case Gary Farrell Winery in Healdsburg.
“We are definitely focused on the top end of the market,” Scott said. “We will never be the size and case quantity that either Bill or Dan will be.”
The Vincraft Group is focused on small production brands that can be sold directly to consumers or restaurants, he said.
Stewart Resnick, whose $2 billion Roll Global company owns Fiji Water, the Pom Wonderful juice brand, and a lot of agriculture businesses, bought Justin Vineyards & Winery in Paso Robles in December.
“I'm the newest one here, I've only been in this business for four months now,” Resnick said. “(But) we've tended to dominate the agriculture businesses we've gotten into.”
His company already has a distribution network for Fiji Water and Pom Wonderful, and he will use that to expand the production and sales of Justin, which now is about 80,000 cases annually.
The Winery Exchange, which specializes in creating custom brands sold in specific retailers, is interested in acquiring brands that have few assets, or even none at all, said Byck, whose company bought Echelon Vineyards in Napa this year.
“I'm happy that everyone is looking for assets, because maybe then I get the scraps of the deals that these other guys don't want,” he said.
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