Baron Ziegler was at a crossroads a few years ago.
His Healdsburg-based Banshee Wines had gained a significant following — largely among younger customers — with a premium pinot noir priced well below other competitors. And he had the hippest tasting room in the city, with a Generation X-inspired lounge complete with a record player for vinyl albums and worn leather sofas for guests to relax.
But Ziegler could not escape the economics of the wine business. He operates a “virtual winery,” purchasing his grapes on contract with Sonoma County growers and using custom crush facilities for his winemaking. In addition, wholesale consolidation makes it harder for smaller wineries, like his, to get noticed in the marketplace even though Banshee had 20 percent annual growth rates. It produced 50,000 cases in 2017.
He came to realize what many young wineries have discovered: they must get bigger to ensure their long-term survival
Ziegler faced two options: bump up the price of Banshee from $25 to $40 a bottle and reduce production, leveling off growth to make it more manageable, or, bring in a bigger winery to provide the resources that he and his partners were lacking.
Banshee had various suitors since releasing its first vintage with the 2008 harvest. But none really interested Ziegler until Hugh Reimers came along in January with his own mandate to grow Foley Family Wines of Santa Rosa, already the 20th largest wine company in the country.
The result: a quickly negotiated deal. Foley took a majority stake in Banshee and its sister company, Rickshaw, a wine company that sells other smaller California producers under its own label. The deal, however, allowed Ziegler to retain a greater voice in operations than normally seen in winery transactions. Ziegler and Foley dubbed it as a “partnership,” rather than an acquisition. Financial terms were not released when it was announced last month.
“We have seen a lot of brands get purchased and get ruined — maybe not ruined because they make more money. But the soul of the brand changes,” said Ziegler, a 39-year-old married father of three young children. “The idea is to not milk the brand for as much as it is.”
Foley’s founder and billionaire owner, Bill Foley, and Reimers, the company’s president, were on board as they realized Ziegler was integral to Banshee’s success. They believe he can help steer the winery as chief executive officer to even greater growth with Foley’s resources behind it.
“We think it’s important for Baron to be involved. He’s a big part of the brand,” said Reimers, who came to Foley last year after serving as a top executive at Jackson Family Wines in Santa Rosa. “That really sealed the deal. He could stay involved.”
The wine industry is notorious for larger vintners taking over smaller beloved producers and then churning out more growth, a life cycle that typically ends with the brand becoming a shell of its former shelf, said Rob McMillan, founder of Silicon Valley Bank’s wine division in St. Helena.
“There are plenty of ones that pretty much are driven into the ground,” McMillan said.
Local pinot noir producers have especially been in demand, riding the wave of popularity the varietal received after the 2004 movie “Sideways.” While at Jackson, Reimers was part of a team that bought Siduri Wines of Santa Rosa from Adam Lee in 2015 and then Healdsburg’s Copain Wines from Wells Guthrie a year later.
Read other coverage of North Coast wine business mergers and acquisitions: nbbj.news/wineMnA