By Barbara Barrielle
The wine world raised eyebrows when, on June 24, Francis Ford Coppola Winery announced its deal-in-progress to sell Sonoma County wine properties to Delicato Wines and take a seat on the company’s board.
Both are family-held wine businesses with significant presence in the market. Delicato is known for brands like the fast-growing Bota Box and grocery store names like Gnarly Vines, Noble Vines, Three Finger Jack and Z. Alexander Brown. In Sonoma County, Francis Ford Coppola Winery has its namesake winery in the Alexander Valley AVA as well as a second facility, Virginia Dare Winery, and the 100 acre Archimedes Vineyard in the esteemed Pine Mountain-Cloverdale Peak AVA.
Delicato produces 16 million cases, a number that has soared over the past two years due to the popularity of the aforementioned Bota Box. CEO Chris Indelicato runs the organization, which, although founded in Manteca, is now headquartered in Napa. Delicato is ranked 5th in wine market share while Coppola is ranked 17th, according to Wine Business Monthly.
Because the deal must be rubber stamped by the Federal Trade Commission, Delicato’s Director of Corporate Communications, Brent Dodd, said in an email “with the transaction under review by the FTC, I can not comment on the future business state. Once we have approval, we will share more.”
The Francis Ford Coppola Winery side was equally mum except for the reassurance. “It’s business as usual,” said company spokesperson Lois Najarian O’Neill when asked for further comment.
In addition to being a significant wine producer, the brick-and-mortar Francis Ford Coppola Winery is a major wine tourist attraction. Their busy tasting room includes a museum of Hollywood treasures from the famed Hollywood actor-director’s career as well as Italian restaurant, Rustic. And the fountains-turned-swimming pools are a popular destination for locals and tourists alike.
Francis & Eleanor Coppola and their family are personally keeping Inglenook & Domaine de Broglie in Oregon’s Dundee Hills area of the Willamette Valley AVA.
Francis Ford Coppola also has eco-resort properties in Belize, Argentina, Guatemala, and Italy. There is speculation from industry insiders, who wish to stay unnamed, that, at 82 years old, Coppola is considering slowing down and, with family members more in the film business than wine, there may not be a clear family succession plan.
In the official release, Coppola explained the surprise growth of his presence in the wine business: “What started as a dream to own a family cottage in Napa Valley turned into a million+ case business producing iconic award-winning wine.” The Coppola Diamond brand ranks third in the domestic super-premium wine category, according to the press release written by Delicato.
The deal means that the combined wine businesses will become the #5 supplier of all wines over $11 and the #5 suppliers of wines throughout all categories. Together, they will also make up the third largest exporter of California wines. Delicato purchased Napa’s Black Stallion in May of 2010, but the company has been considered slow to expand into the premium wine category while exploding in the box wine category, according to industry analysts.
“I don’t think this deal was really expected but, in my opinion, it makes sense.” said Jon Moramarco, managing partner of industry analyst business bw166, during an interview with Wine Industry Advisor. “It will help to ‘premiumize’ Delicato and give Coppola more presence in the market.” For the time being, Coppola will remain involved in the Francis Ford Coppola Winery and own shares in the Delicato Family Wines company. Francis Ford Coppola Winery CEO Corey Beck will join Delicato’s executive team as EVP, production and chief winemaker.
Many ideas for the future are being bandied about among industry insiders. Moramarco points out that Delicato has extensive production capacity and may move some of Coppola’s production to the Central Coast. Delicato will also have access to higher quality vineyards for the production of premium wines. And the combined marketing power will likely have a positive impact on both companies’ distribution channels and market penetration.
Our unnamed industry experts also speculate Coppola plans to take shares in Delicato as well as sit on the board of directors.
Moramarco pointed out that Delicato reserved some cash by offering a package of management roles and a stake in their corporation, which gives them “more fire power to become an even bigger player.” Basically, they have money to play with.“While they may not be shopping for other wineries, not spending all of their cash on Coppola gives Delicato flexibility in the future if something else comes along,” he said.
Moramarco does not predict Coppola selling his other wineries at this time. “I don’t see him exiting the original winery. He did a lot of work to reacquire Inglenook and he won’t want to lose it. He’s old but not that old. Francis still has a lot of life left.”