By Elizabeth Hans McCrone
Wine industry financiers are predicting robust activity for winery and vineyard mergers and acquisitions throughout the remainder of 2014 and heading into the New Year.
According to industry experts, vineyard acquisition activity appears particularly lively, especially for companies seeking to extend their holdings beyond current appellations.
“The growth we’re seeing is internal, organic growth moving outside the appellation,” confirms Clay Popko, Vice President of Lending at American AgCredit. “We don’t see any weakness or driver that is going to slow down acquisition.”
Popko notes that large wineries seeking such expansion do face brand identity challenges as they move into new terrain.
“In Napa you’re defined by county,” Popko points out. “So how do you grow the brand and still maintain identity? Large wineries starting to explore other counties are doing so (with that in mind) very cautiously.”
The trend toward moving outside of traditionally held boundaries could be the result of wine-related companies realizing that in order to compete effectively in the marketplace, they need to maintain larger control over their resources.
“Wineries are recognizing that if they don’t own increasing shares of their own vineyards, they’ll lose out on supply,” explains Robert Nicholson, a Principal at International Wine Associates (IWA), one of the country’s leading wine industry mergers & acquisitions boutique advisories, with more than $1 billion in transaction value since 1990.
Nicholson concurs that there is a movement toward acquisition outside of appellation, noting that IWA has opened up satellite companies in Washington and Oregon because of the high level of activity there.
“Companies have discovered alternative locations for high quality Pinot Noir in Oregon and Cabernet Sauvignon in Washington for significantly lower vineyard prices,” Nicholson affirms.
Both Popko and Nicholson will be exploring these and other trends during an upcoming conference session at the North Coast Wine Industry Expo in December called “What to Expect on the 2015 Financial Front: Mergers and Acquisitions Forecast.”
They will be joined on the panel by Joe Ciatti, Principal at Zepponi & Company, who will speak from more than forty years of wine industry transaction experience in California, Oregon and Washington; and John Mackie, Managing Partner at Carle, Mackie, Power & Ross, LLP, who will provide a business law perspective from his Sonoma County firm’s background in finance and lending, business organization and mergers and acquisitions contract law.
The panel will be moderated by Brad Bollinger, the publisher of the North Bay Business Journal, a weekly publication covering all aspects of business in Sonoma, Napa and Marin counties.
For more information on the session and to register for the conference, go to www.wineindustryexpo.com.
