Zepponi & Company200 Fourth St., Ste. 300, Santa Rosa 95401, 707-542-7500, zepponi.com
Impact conference includes top economist, Napa wine industry leaders
Economist sees three paths for Napa economyBusiness Journal Q&As with conference panelists
Bart Araujo, proprietor, Araujo Estate Wines
Andy Beckstoffer, president, Beckstoffer Vineyards
Jayson Pahlmeyer, founder and proprietor, and Brian Hilliard, president, Pahlmeyer Wines
Mario Zepponi, partner, Zepponi & Company
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Real estate and corporate attorney Mario Zepponi started Zepponi & Company as a wine industry mergers and acquisitions consulting practice.
In the past several years, the firm has been behind the scenes on a number of major wine deals totaling nearly $1 billion in value.
Mr. Zepponi will be part of a panel discussion at the Impact Napa 2012 conference the morning of Aug. 30. He spoke with the Business Journal about the rapidly changing landscape for wine M & A.
What does the North Coast wine mergers-and-acquisitions landscape look like now vs. previous years?
Activity is steadily increasing from a low point in 2009. There will be continued activity on the M&A front. That's a good thing. Wineries are much more healthy. Transactions are happening more on freewill than on some sort of distressed component or pressure from capital sources.
Having said that, there is still not a lot of foolish money going into transactions. One good sign we have not had in the last four years was Constellation (Brands) was the first publicly traded U.S. wine company to have entered the market again. [See "Constellation to buy Mark West wine brand for $160 million," June 29.]
What are the active groups of buyers now?
Private strategic wine companies continue to be the most active. Then there are publicly traded wine companies, domestic and foreign. It's good Constellation got back into the water, and I hope others will too. Everyone comfort level has risen that things have worked their way out of the system. They will look at their portfolios and compensate for gaps in those portfolios.
What are the top considerations related to foreign investors?
Foreign buyers are not a passing fancy. There is continued interest in the U.S. market from foreign entities, not just Asian and European buyers.
Has there been slackening of M & A activity from Asia and Europe because of global economic problems?
Two thoughts on this have been there would be a trickling off of interest with things happening with the euro and investors wanting to get out of the euro. We are not seeing tons of deals, but there is a lot of interest. A lot goes into a foreign company making an investment in the U.S.
How is the forecasted wine industry supply changes affecting business decisions?
There are pretty much two camps. The majority people are saying there will be a shortage, lock up grape sourcing and bulk-wine sourcing, and it's a good time get fruit under contract.
Naysayers do not buy into it and say we're one good harvest away from everything being in balance again. Some wineries out there have done very well not getting into long-term contracts. They have their ears to ground. After a couple of short vintages, they're not ready to buy into hysteria. They're waiting for harvest to gauge wine supply.