Kosta Browne winery sold to Duckhorn Wine Co. of Napa Valley
Sebastopol's Kosta Browne winery - which helped put luxury pinot noir from Sonoma County on the map for wine lovers across the world - has been sold from one private equity group to another private investment firm.
Duckhorn Wine Co. of St. Helena announced Tuesday that it has purchased Kosta Browne from controlling owner J.W. Childs Associates of Boston. The purchase price was undisclosed.
Duckhorn is owned by TSG Consumer Partners of San Francisco, which also has such companies as Pabst Blue Ribbon beer and a collection of Planet Fitness health clubs in its portfolio. In 2016, it bought the iconic Duckhorn and its other five wineries, including Goldeneye Winery in Mendocino County's Anderson Valley.
The sale includes the Kosta Browne winery located in The Barlow, all of the inventory, and 170 acres of vineyards owned or in long-term leases that include Cerise Vineyard in the Anderson Valley, portions of Keefer Ranch Vineyard in the Russian River Valley and Gap's Crown Vineyard on the Sonoma Coast. The Kosta Browne team will remain, including CEO Scott Becker and winemaker Nico Cueva.
“Fine wine lovers have an insatiable demand for luxury pinot noir, and Kosta Browne's wines are among America's most coveted,” said Alex Ryan, president and CEO of Duckhorn Wine Co., in a statement.
Last year, co-founders Dan Kosta and Michael Browne left the company they launched in 1997, when the pair pooled tips from their jobs at a Santa Rosa restaurant to build up what would become a cult pinot noir winery. Its prestige has grown even more in recent years.
The Kosta Browne lot typically receives the highest bid at the annual Sonoma County Barrel Auction.
The sale does not include CIRQ, a wine label owned by Browne.
Private equity companies typically have a period of five to 10 years before they sell off their investments in order for the partners to realize a return on profits.
For example, GI Partners of San Francisco had held Duckhorn for nine years before selling to TSG.
But in an interview, Ryan said the Kosta Browne acquisition “is a long-term play.”
Kosta Browne sells about 85 percent of its wines directly to consumers. It has a waiting list of 18 months for new customers who want to begin receiving shipments from the winery, which produces about 30,000 cases annually.
A few websites list Kosta Browne for retail, starting at $75 per bottle for its chardonnay and more for its coveted pinots.
“There is an insatiable appetite to continue to grow at the really high-end point,” Ryan said of the pinot noir marketplace.
Ryan said he doesn't plan major changes in the near term. “My first job is not to screw up Kosta Browne,” he said. “It's more of a partnership than an acquisition.”
But he noted there are some opportunities to expand on its acclaim, for example, finding greater placement in restaurants and fine-wine shops in the top international 25 cities for fine dining.
The winery has made a number of investments in recent years beyond buying land, such as installing concrete tanks for its small-lot wines, which provides a smoother texture.
It also opened up this summer an exclusive tasting room for its customers - which also now has a waiting list, Becker said.
Becker added that Kosta Browne needs to find ways to stay relevant to a new generation of wine drinkers, many of whom are influenced more by social media posts than an article in the Wine Spectator magazine.
Its vineyards will be a major focus, Becker said, from looking for more insight into how different microclimates affect the fruit to determining which rootstock is appropriate for its various holdings.
“We're only in the third inning of what's possible in California (for pinot noir),” he said.