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Viansa investor seeks greater stake in its success
SONOMA VALLEY — Nearly five years after taking over cash-strapped Viansa Winery & Marketplace in Sonoma Valley, a New York-based hedge fund is considering a buyout offer from a former executive who quickly returned Viansa to profitably and has been running it since.
Lloyd Davis, former fund partner and chief credit officer turned president and part owner of the winery, recently submitted a bid of an undisclosed sum to acquire the share of Viansa held by Laurus Master Fund, Ltd.
“I love this property and want to own it,” Mr. Davis said of his decision this past August to made a bid for it. “Part of me hopes nobody offers more than I’m willing to pay.” If there is a higher offer, he wants to pursue another opportunity in the wine industry.
Because of Mr. Davis’ ties to Laurus and part ownership in Viansa (800-995-4740, viansa.com), Laurus brought in St. Helena-based investment bank Global Wine Partners to market Viansa and negotiate with interested suitors. There is no date for a call for purchase offers, but a potential sale likely will be considered early next year, Mr. Davis said.
“The fund and I don’t have to sell our positions,” he said. “There’s no big hurry. I just want to resolve this sooner or later.”
In December 2007, Laurus assumed ownership of Viansa via bankruptcy court on account of tens of millions of dollars in loans to 360 Global Wine Co. A month later, Mr. Davis, a wine aficionado for more than three decades, eagerly stepped in to run Viansa.
When Laurus finally took ownership, the winery and its Italian food–oriented visitors center still had serious financial problems. 360 Global had amassed more than $40 million in debt just from Laurus, its largest creditor, largely to finance the $31 million acquisition of Viansa from the Sebastiani family in 2005.
In March 2007, John Bryan of Los Angeles-based corporate turnaround firm The Watley Group was put in charge of Viansa to deal with plummeting sales, hundreds of creditors, unpaid bills, depleted inventories, missed wine shipments and spooked tourists. Laurus had valued Viansa at $10 million at that time. Sales had fallen to $4.3 million a year from $15 million five years earlier, and annual visitors scaled back to 50,000. Mr. Bryan managed about $6 million in further investment in the winery business in upkeep and boosting the number of visitors, wine club members and sales.
Mr. Davis took over winery management in January 2008 and by mid-year had cut operational expenses by up to 35 percent, stopping the flow of red onto the winery’s income statement.
“A lot of that was running Viansa like a business and looking at every expenditure to see if it was necessary,” Mr. Davis said.
Such analysis to trim cost while maintaining quality led to cutting the phone bill by a quarter by installing a new system, installing energy-efficient lighting and reminding staff to turn it off when unused, putting health and property-casualty coverage plans to bid, working with landscapers to focus on the essential upkeep for the extensive grounds and adjusting packaged-goods purchases so bulk purchases would be held and shipped incrementally.
Also part of the cutbacks were trimming jobs, which at the time of the ownership change were too many for the level of business, according to Mr. Davis.
Because of the deep cuts in expenses in 2008, when the global financial crisis hit the wine industry hard late that year and next, Viansa was able to keep from slipping back into the red.
One thing that didn’t change under Mr. Davis is the winery’s large selection of different wines, now numbering 28. The winery promises club members 24 bottles of wine plus food products such as marinades and sauces shipped four or six times a year, and they shouldn’t get the same bottle twice in a given year.
And there’s been a deliberate yet subtle shift in wine production cost emphasis to channel more resources into viticulture and winemaking. Rather than the higher-cost bottles and multipart labels, Viansa has moved toward lower-cost yet high-quality alternatives. That allowed more funds for to create a top “Signature Series” tier of wines made from grapes farmed at yields of just one to 1.5 tons per acre and in quantities of just 150 cases each and retailing for $40 to $70 a bottle. There’s also a reserve tier of wines from vines yielding 2.5 tons an acre. Both of those tiers go into new French oak barrels.
There’s also been an intentional effort to actually limit visitor traffic. Viansa used to be a magnet for large tourist busses, and Mr. Bryan even wooed back 300,000 visits by the end of 2007. But Mr. Davis limited allowed bus size to 12 to 18 passengers because of complaints about how crowded it was.
“We found that many of the people who came in the large busses did not buy a lot of wine or join the wine club,” he said. The dramatic slowdown in North Coast wine tourist traffic hit Viansa as it did many other wineries, and that has been rebounding.
But the goal of giving the staff more time with visitors to explain the wines and the facility is part of an overall visitor-experience strategy. And part of that strategy is having a full-time wedding coordinator to build on Viansa’s history as a picturesque hilltop nuptuals site. The winery just one its fourth consecutive Wedding Wire Bride’s Choice Award.
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