Cleavage Creek sold for China exports

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NAPA COUNTY -- A Hong Kong-based group has purchased the Cleavage Creek wine brand as well as its shuttered 6,700-case-a-year winery and vines in Pope Valley east of Napa with plans to export that brand and other forthcoming California labels to China.

[caption id="attachment_78017" align="alignright" width="400"] Production of the Cleavage Creek brand for China markets is set to come back to this Pope Valley facility in 2014. (image credit: Heritage Sotheby's International Realty)[/caption]

FCC North American Investment, LLC, purchased the brand, its 16,000-gallon-a-year winery with 19 acres of mostly cabernet sauvignon vines and permits to plant 16 more on the 95-acre ranch at 6307 Pope Valley Rd. on July 26 for $4.95 million, according to public records.

The late July off-market deal came through active courting of out-of-the-country buyers, according to the buyer's agent, Scott Bergman of Bergman Euro-National. Out of a number of inquiries from China-based investment groups seeking California wine brands and properties, this group was the best-prepared, despite not having been in the alcoholic-beverage business, he said.

"They had established a relationship with a large distributor before they had a wine label," Mr. Bergman said.

The buyers declined to comment on the sale, according to a Hong Kong-based representative.

The deal didn't include the Budget Brown brand. Yet the Cleavage Creek name had more appeal among the buyer's connections with Macau casinos, a target market, he said. Whether it would be a benefit brand again is unclear, he added.

The group is seeking U.S. and California approval of a new label, Calla Lily Estate & Vineyard, also for export to China. FCC North American Investment is seeking a second winery to purchase, potentially in Russian River Valley with a supply of pinot noir grapes from that winegrowing region.

"The Chinese market is realizing that (cabernet sauvignon) isn't the endall," Mr. Bergman said. "They are realizing that Russian River pinot noir is highly appealing to the new Chinese market."

To help evaluate the potential of the investment group's plans for a California brand and the Pope Valley Winery, Bergman Euro-National brought in Cary Gott, who started what's now Gott's Roadside restaurants and whose Vineyard & Winery Estates for the last 14 years has helped launch wine brands such as Joel Gott and Rams Gate. He's also consulting on a $50 million to $75 million winery in China.

"They do not want an over-the-top wine and not a high alcohol level," Mr. Gott said about Hong Kong group's plans for their brands. "We make big wines in Napa Valley, though many are toning down wines here."

California wine has become highly sought-after in China, exemplified in a Beijing wine show promoter recently contacting him for leads on California producers to present their wines there. He said he's worried that the Chinese wine market may develop local production too quickly.

Mr. Gott said he found that the Pope Valley winery was pretty much ready to get back into production. Yet for this year, the new owner is buying 25 tons of grapes from property's vines under an agreement with the seller. The first vintage, likely for sale in two or three years, will be made at The Ranch custom winery in Rutherford then shift back to Pope Valley in 2014, Mr. Gott said.

The Cleavage brand garnered national attention a decade ago when Sonoma County residents Jeffrey and Barbara Conners released it with provocative label portrait photos. They made contributions of 10 percent of sales to breast cancer research, in honor of one of her relatives who survived the disease.

The most recent owner of the brand was Robert "Budge" Brown, and he came to market with it in late 2007, two years after his wife, Arlene, died of breast cancer. Mr. Brown perished in plane crash at age 78, and the winery closed shortly thereafter in July 2011. Sales raised more than $90,000 for the Brown Foundation to fund research.

The seller, an entity led by Mr. Brown's children, declined to comment on the sale, according to the seller's real estate agents, Steve and Marla Ericson of Heritage Sotheby's International Realty in St. Helena.

CORRECTION, Aug. 12, 2013: Jeffrey and Barbara Conners started the Cleavage Creek brand in 2003 and were making 10 percent donations to breast cancer research. Budge Brown acquired the brand and came to market with it in late 2007.

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