Napa wine M&A market remains 'robust' despite rising vineyard, grape prices

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Impact Napa Conference

Wednesday, Aug. 29, 7:30–11:30 a.m.

Napa Valley Marriott, 3425 Solano Ave., Napa CA 94558

Register by Aug. 27:

Read coverage about the conference.

Vineyard values and grape prices continue to hit new highs in Napa County, but the ongoing thirst for prime wines from the region continues to propel acquisitions of brands and properties that can put the Napa name on the bottle.

Some estate vineyards in the valley’s prime cabernet sauvignon regions of Rutherford and Oakville are pushing $500,000-an-acre sale prices, and the county district average price for that grape variety passed $7,000 a ton last year for the first time.

“Almost any Realtor or appraiser out there is saying it has gotta stop,” said Hal Forcey, who has done more than 600 winery appraisals in his four-decade career. “If you look at the best vineyards in France, we have a lot to go before we hit the $1 million-an-acre point.”

Among the Napa County wine mergers-and-acquisitions deals in the past two years that have caught the eye of industry veterans are the acquisition of Outpost Wines in the Howell Mountain appellation to a French insurance company; E. & J. Gallo Winery’s purchase of the prime 600-acre Stagecoach Vineyard; the bankruptcy sale of Sullivan Vineyards to the U.S. arm of a Mexican wine company; and the rumored $400 million sale of Heitz Cellar to an East Coast billionaire of the banking business.

The volume of Napa County wine-related mergers and acquisitions may have ebbed a little but continues to be “robust,” said Sean Maher, managing partner of Aspect Consumer Partners. He is set to be part of a M&A activity panel discussion at the Business Journal’s Impact Napa Conference on Aug. 29. Forcey is set to moderate the panel.

Part of the dip in activity may be related to county government’s slower approach since 2015 toward approving new or expanded vineyards and wineries, and that is leading to a runup in value for properties with approved projects, Maher said.

“If you need a variance, it’s a really good reason not to get your permit approved,” Maher said. “It very difficult to go in from scratch to get a winery permit in Napa County.”

Local governments can suggest applicants seek variances on projects that deviate from limits on, in the case of wineries, annual case production or numbers of visitors allowed under their general plans or zoning codes.

However, that practice can become a political lightning rod for concerns that too much is being allowed outside of community-planning processes that had a lot of public involvement before approval.

In Napa County, concerns over traffic congestion and pollution from visitor traffic to rural tasting rooms and events centers and about commercial activity some deem nonagricultural led to revisiting county policy on what’s allowed at a rural winery and asking voters to limit vineyard development in woodland areas.

Voters narrowly rejected Measure C in June, but because of the slim-margin decision, county officials have been seeking input on whether such protections are needed.

That’s why approved entitlements, and what’s allowed for production and projects under them, are important for winery and vineyard sellers to understand before seeking buyers, according to Richard Mendelson.

He’s a three-decade wine industry attorney, currently of counsel at Dickenson Peatman & Fogarty in Napa, as well as broker of Premium Wine Properties and an adviser with investment banking firm Houlihan Lokey in San Francisco. And he’ll be part of the M&A panel at Impact Napa.

Impact Napa Conference

Wednesday, Aug. 29, 7:30–11:30 a.m.

Napa Valley Marriott, 3425 Solano Ave., Napa CA 94558

Register by Aug. 27:

Read coverage about the conference.

“Let’s face it: These are issues potentially get the attention from the public sector, so it creates uncertainty,” Mendelson said. “It adds to the price for doing projects and where they can be done. People don’t have to invest in the Napa Valley.”


Uncertainties in real estate investment have led to various approaches to mitigating risk as the property transaction progresses, and some have been entertaining the approach in the wine business, Mendelson said. One method common in real estate development is the option, in which the buyer puts some skin in the game but can back out if certain milestones aren’t achieved, such as securing permits or approvals. Another of the multiple risk-mitigation methods is the holdback, which delays delivery of some part of the transaction price until stated goals are reached.

The key is full disclosure, to let the buyer know what’s actually for sale, Mendelson said.

“Surprises can kill deals,” he said.


While the activity in the U.S. wine M&A market continues at the pace for more than a decade of roughly a couple dozen deals annually, the size of the deals and the salience of them is higher than average right now, particularly with big companies and equity investors in the mix, according to Carol Collison, a partner with St. Helena-based deal and financial advisory Global Wine Partners. She is set to be on the Impact Napa M&A panel.

“But it’s not as big (of a market) as people think it is,” she said.

For deals on producers of over 100,000 cases annually or deal value over $20 million, the pool of potential buyers is about 20.

“If those 20 are busy with (another deal) and what your client has is not of interest to them, you’re done,” she said.

For producers of 5,000–100,000 or deals of $5 million–$20 million, the list of credibly interested is about 60.

“Theoretically, there could be more, but (such vintners) are less desirable because 5,000 or 20,000 cases do not move a company’s needle much,” Collison said.

You can reach Staff Writer Jeff Quackenbush covers wine, construction and real estate. Reach him at or 707-521-4256.

This story was updated with details on Hal Forcey's involvement with Impact Napa.

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