SONOMA – Walt Klenz and Pete Scott, former top executives with the Beringer wine group, have teamed up with private-equity funder Bill Price, whose firm was the previous owner of the group, to assemble a portfolio of “boutique” California brands.
The three formed The Vincraft Group to invest in high-end, smaller-volume wine businesses in Napa and Sonoma counties and the Central Coast, according to Mr. Scott, 56, the day-to-day operator of the company.
Backed by a commitment for an undisclosed amount of capital from TPG, the former Texas Pacific Group that Mr. Price co-founded, Vincraft is looking to leverage that money with bank debt to invest in three to six operations in the next few years.
“There has been a lot of talk in the last couple of years about the potential for ownership changes at the luxury end of the business with life events and generational changes to prompt owners to seek a full or partial exit of the business,” he said. “In our time in the business we’ve managed these kinds of assets at Beringer and elsewhere, so we can understand what these owners are trying to accomplish and what they’ve accomplished.”
Ownership of 51 percent of California’s 2,400 wineries is set to pass from one generation to the next, transition into professional management or be sold, according to an early 2008 survey by Napa-based management consultancy Scion Advisors and Silicon Valley Bank’s Premium Wine Division.
Vincraft is one of a handful of active investors or investment groups seeking North Coast vintners or growers, but it awaits its first investment. The firm is talking to a number of prospects, but it is looking for established brands with demonstrated sales performance. Economic shocks to certain restaurant, club and tasting room sales have made assessment and valuation of wines retailing for $50 to $100 a bottle challenging, according to Mr. Scott and Mr. Klenz.
Investments may take the form of minority investments, such as Mr. Price’s stake in Kistler Vineyards, or they could involve a majority stake with the owner remaining in an active winemaking or marketing role, depending on the fit, according to Mr. Scott.
In his early 50s, Mr. Price is chairman of Vincraft, and Mr. Klenz, 63, is a member of the board of directors. The three of them came together in mid-1997 when Mr. Klenz, then president of Beringer Wine Estates, hired Mr. Scott away from his role as chief financial officer for the Jackson winemaking family since 1990.
Texas Pacific Group and Silverado Partners had acquired the Beringer group from Nestle in January 1996 for a then-record $350 million and proceeded to acquire Chateau St. Jean, Stag’s Leap Winery and what is now called Souverain. Australia-based Foster’s Group purchased the Beringer group for $1.2 billion in August 2000.
Mr. Scott moved to a top finance post at Foster’s, returning to the U.S. in late 2007 after leaving the company.
Mr. Klenz remained at the helm of the Foster’s wine unit until he retired in 2005 after three decades in the wine business, mostly with Beringer. Since then he has been advising companies, mainly via seats on the boards of directors of Columbia Sportswear, a wine distributor, a wine importer in Asia and now-liquidated Vintage Wine Trust.