“When it comes to winery sales, the economy is kind of like a thermometer,” says Rob McMillan, founder and SVP of Silicon Valley Bank’s wine division. “When times are good, average companies can sell. When times aren’t good, nobody wants to buy those. So the things that are moving now are really good companies, and they seem to be selling to big companies.”
The past decade has been a busy one when it comes to winery sales and mergers on the U.S. West Coast, largely because times were good and many of the people who created the wine boom of the past few decades had reached retirement age. Some of their heirs went looking for new partners to help them grow. Others went looking to cash out.
But times are decidedly mixed for the U.S. wine industry right now, with bottle sales down by volume and flat by value. And while the overall economy has avoided recession, things are still settling after the disruptions caused by the pandemic and inflation. That’s slowed the pace of mergers. Higher interest rates have played a role too—it’s harder to get financing for big deals when borrowing costs have risen dramatically. The crises at Silicon Valley Bank (now part of First Citizens Bank) and First Republic (now part of Chase), two of the biggest lenders to the wine industry, only complicated things during the first half of the year.
All that aside, there have been major deals with implications for the industry as a whole. Here are some notable trends:[article-img-container][src=2023-12/ns_deals-rombauer-122923_1600.jpg] [credit= (Rombauer)] [alt= A Rombauer vineyard in Napa.][end: article-img-container]
White Wines Hold Promise; Pinot Noir Is Still Attractive
One of the most notable sales of the year came in August when E.&J. Gallo bought Rombauer Vineyards, including the Rombauer brand, three winery facilities, two tasting rooms and more than 700 acres of sustainably-farmed vineyards in Carneros, Napa Valley, Sonoma Valley and the Sierra Foothills.
Gallo gained a top name in Napa Chardonnay that also makes outstanding premium Sauvignon Blanc, at a time when white wine sales—particularly Sauvignon Blanc—are ticking upward. Gallo followed the deal with the purchase of the much smaller Massican, another Napa winery known for white wines.
And in November, the Duckhorn Portfolio bought Sonoma-Cutrer from Brown Forman for $400 million. Sonoma-Cutrer is known for Chardonnay ranging from $20 to $50 per bottle.[article-img-container][src=2023-12/ns_deals-daou-122923_1600.jpg] [credit= (Chaz Roberts)] [alt= Georges and Daniel Daou in a vineyard.][end: article-img-container]
California’s Central Coast Offers Value
Napa and Sonoma offer prestige and luxury, but California’s Central Coast offers plenty of value right now, particularly because costs are lower but the wines sell at a premium price of $10 or higher. In June, Gallo bought Hahn Family Wines, which produces multiple brands. According to Impact Databank, the entry-level Hahn Founders line, priced between $10 to $15 per bottle, has an annual production of 300,000 cases.
Treasury Wine Estates has been struggling with its Americas division for more than a decade because it was largely built around value-priced wines. In November, the Aussie wine giant bought Paso Robles company DAOU Vineyards from founders Georges and Daniel Daou for $900 million, with an additional $100 million if Daou reaches certain goals. According to Impact Databank, Daou has been among the fastest-growing wine brands in the U.S. market lately, almost entirely with wines priced over $20 per bottle.[article-img-container][src=2023-12/ns_deals-roy-122923_1600.jpg]
Source : https://www.winespectator.com/articles/the-year-in-winery-deals