Buyer of Napa Valley’s iconic Heitz Wine Cellars ‘a breath of fresh air’ to industry

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One of the top names in Napa Valley luxury-tier wine has changed hands to an East Coast man with major investments in farming and keeping structures comfortable to live in.

In a transaction that has been hinted at for months and announced Wednesday, Gaylon M. Lawrence Jr. acquired Heitz Wine Cellars for an undisclosed amount. Located off Silverado Trail south of St. Helena, Heitz was started by Joe and Alice in 1961 and run by the second generation — Kathleen Heitz Myers as CEO and David Heitz as winemaker — since the 1990s.

With the deal, coming on as CEO is Robert Boyd, who was promoted at the beginning of this year to president of Joseph Phelps Vineyards, after seven years as chief financial officer. Taking on full oversight of Heitz production is managing winemaker Brittany Sherwood, who joined the winery as an enologist in mid-2013, according to a winery spokeswoman.

Since the 1970s, Heitz has been making 35,000–40,000 cases of wines annually, she said. Suggested retail prices these days that range from $23 a bottle for Napa Valley sauvignon blanc to $54 for Napa Valley cabernet sauvignon to $250 for Napa Valley's first vineyard-designate wine, Martha's Vineyard cabernet sauvignon, originally released in 1966.

Lawrence, a 53-year-old billionaire, may be a new player in the wine business, but he and his late father, Gaylon Sr., have built over 75 years an agribusiness that owns and manages farmland in Illinois, Missouri, Arkansas, Mississippi and Florida. That includes row-crop acreage in the Heartland and what the announcement calls one of the Sunshine State’s largest citrus grove management operations.

The Lawrence Group in Nashville is the holding company for family ventures. Those include seven community banks with 31 offices in Arkansas, Missouri and Tennessee, and a stake in one of the largest privately owned heating, ventilation and air-conditioning (HVAC) distributorships, headquartered in California. Gaylon Sr. died in 2012.

“The entry of Gaylon Lawrence and his organization is a breath of fresh air for the wine industry,” said Mario Zepponi, an attorney whose Santa Rosa-based Zepponi & Company has handled a number of major wine business mergers and acquisitions on the West Coast.

While he knows both parties, his firm wasn’t involved in this deal.

“It's a really good shot of enthusiasm and confidence in Napa Valley. … You’re talking about a very successful and well-capitalized organization that is outside the industry — though it is in agriculture — and saying, ‘We like Napa and want to make Napa a core part of our business.’

“It's not like Gaylon bought a 5,000-case winery with 20 acres of vineyards. Heitz has significant vineyard assets behind it and a legacy.”

That includes ranking No. 13 on the W&S Restaurant Top 50 list of best-selling wines at fine-dining establishments, published in the April issue of Wines & Vines. The list is based on a poll of sommeliers. Heitz ranked No. 9 for cabernet sauvignon, with its Napa Valley and Napa Valley Trailside vineyard-designate selling at average prices of $143 and $188 a bottle, respectively.

Among by-the-glass wines in the ranking, Heitz’s Napa Valley cab, chardonnay and sauvignon blanc tied for No. 21 with Provence rosé. Those Heitz wines are pouring for an average of $25, $30 and $18 a glass, respectively.

“And I don't think he is done,” Zepponi said of Lawrence’s wine business plans. “What you're going to see here is someone committed to Napa Valley and that he will want to build on the acquisition of Heitz, not necessarily with additional brands — although, who knows.”

The deal also brings a new face to the world of wine industry mergers and acquisitions, such has been dominated over the past few years consolidation of brands into larger wine companies, Zepponi said. Domestic wine companies continue to be interested in North Coast brands and assets, but more foreign buyers are emerging, he said.

Many already have winery investments outside the U.S. and import brands into the country, but consolidation among beverage-alcohol wholesalers has made the path to market more challenging. Purchases of Fetzer in Mendocino County by Vina Concha y Toro and of Kenwood by Pernod Ricard are examples of such strategic deals to gain access to U.S. markets.

“They cannot ignore the U.S. market,” Zepponi said.

The United States is the world’s largest consumer of wine, and consumption is increasing on a total and per-capita basis, according to the Wine Institute. By comparison, consumption rates have been flat to down in several of the top wine markets globally.

In the Heitz acquisition, the winery’s advisers were Houlihan Lokey Capital, Inc., on finance and Arnold & Porter, LLP, and Napa-based Dickenson Peatman & Fogarty, P.C., in law. Lawrence’s team included Sebastian Lane as adviser and for legal counsel Santa Rosa-based Carle, Mackie, Power & Ross, LLP, and St. Helena-based Reidy Law Group.

This story was updated April 19 with the list of advisers to the Heitz buyers and sellers.

Read about other North Coast wine mergers and acquisitions:

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