North Bay Business Journal

Monday, April 8, 2013, 6:30 am

April 18 Wine Industry Conference: M&A surges amid supply concerns


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    The record-sized winegrape harvest of 2012 hasn’t crushed demand building over the past year for wine producers to lock in fruit supplies and places to turn it into higher-end wines that have been enjoying a resurgence in sales.

    Joe Ciatti

    Joe Ciatti

    “Three or four years ago, it was almost impossible to sell vineyards, unless you were giving them away, and there was a lot of interest in negociant labels because there was a lot of bulk wine around,” said Joe Ciatti, partner of Santa Rosa-based wine transaction advisory Zepponi & Company.

    2013 Wine Conference Report

    Q&A: Giancarlo Bianchetti of Viña Concha y Toro
    Engineer of the Fetzer acquisition

    Mr. Bianchetti will be the keynote speaker at the April 18 Wine Industry Conference presented by the Business Journal. He spoke with the Journal about the company’s interest in Fetzer and his role in the deal. [read more]

    Vintners debate demand for price hikes

    Wine companies largely are caught between escalating costs of production and mixed perceptions of how much of the rising costs the market for finished wine will bear. Those are among the topics five of the Bay Area’s innovative wine entrepreneurs are set to tackle at the conference.

    Top wine M&A players see opportunities

    The year 2012 was a big one for wine-related property and brand transactions, and industry expectations are that 2013 deal-making also will be busy. At the conference, five of the most active players are set to be part of a panel discussion on what’s happening and the potential for more.

    At that time, the economic recession dramatically slowed sales of higher-end wine, leaving growers without buyers and buyers with too much wine in bottles, tanks and barrels. Negociants, or brand builders often without their own vines or wineries, came in to buy the excess at a bargain. That changed radically in late 2011 and 2012, as concern that sales were going to outstrip supply sent prices for available grapes and wine in bulk soaring.

    “There are still good negociant labels around, but the persons buying them want to make sure they have growers under contract,” Mr. Ciatti said. “You’re not going to get as much for that label if you do not have sourcing.”

    The interplay of the resurgent market for wine-related supply and production assets and the ability to pass on higher costs to consumers will be discussed by 10 major industry players on two panels at the Wine Industry Conference, presented by the Business Journal in Santa Rosa on April 18. In addition to the panelists interviewed in this report, the conference keynote will be Giancarlo Bianchetti, CEO of Fetzer Vineyards.

    Registration is available online at NorthBayBusinessJournal.com.

    Robert Nicholson

    Robert Nicholson

    After working with a number of owners of vineyards, wineries and other industry assets looking to sell, more opportunities have been emerging since early last year to purchase entire wine businesses — brands, buildings and vines, according to Robert Nicholson, principal of International Wine Associates, a Healdsburg-based firm specializing in mergers and acquisitions.

    The firm completed a half-dozen vineyard, winery and other deals last year, valued at $100 million-plus, and has completed two more so far this year — Silverado Hill Winery in Napa to Laird Family Estate and Pine Ridge Vineyards in Napa Valley to an investor. Deal volume this year is shaping up to be more than last year’s, according to Mr. Nicholson.

    “Valuations are firmer now for full-business deals,” Mr. Nicholson said. “Expectations before may not have been achievable. Asset transactions needed to get through the system, if you will, and now others see it is time to sell their businesses.”

    Major asset divestitures in the North Coast have come from CalPERS’s unwinding of its major wine industry investments through Premium Pacific Vineyards. Another source of vineyard and winery deals is Entertainment Properties Trust’s continued sale over the past few years of its VinREIT subsidiary holdings, some of which at steep discounts. A recent sale was of the Geyser Peak winery facility and surrounding vineyards to Francis Ford Coppola.

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