Wine Industry Advisor speaks to Rob McMillan, EVP of Silicon Valley Bank, about The Wonderful Company’s newest Napa label.
The Wonderful Company is involved with almost every kind of agriculture and beverage business in California.The $5 billion privately held, Los Angeles-based firm is the brainchild of husband and wife Stewart and Lynda Resnick. Wonderful includes brands like Fiji Water, Pom Wonderful juice and a dozen other companies in the pistachio, almond, citrus and—wine businesses.
Under their Fiji brand, Wonderful acquired JUSTIN Cellars in 2010, Landmark Vineyards in 2011 and launched JNSQ in 2019. Just this past August, 2021 Wonderful also acquired Lewis Cellars, a boutique, Napa-based wine estate founded by former race car driver Randy Lewis and his wife, Debbie. The winery, which produces just 10,000 cases annually, has consistently ranked high in industry wine scores and prides itself in sourcing fruit from lauded Napa vineyards.
Lewis Cellars will fall under the JUSTIN operating organization of Wonderful.
Asked how the sales and management structure works within their wine brands, Clarence Chia, SVP of marketing, e-commerce and direct-to-consumer for JUSTIN Vineyards & Winery responded, “Our wine portfolio previously consisted of JUSTIN, Landmark and JNSQ. Each a unique brand, with its own source and style, as well as separate vineyard operations and winemakers, but with shared marketing and sales teams.” Lewis Cellars will be no different.
Industry analyst Rob McMillan, executive vice president and founder of Silicon Valley Bank, says he knew that the Resnicks had been looking for a brand to acquire in the Napa Valley. “They have been kicking the tires for a while, searching for the right fit,” said McMillan. “It’s an engaged portion of their strategy and look for them [Wonderful Company] to expand in other wine regions.”
It has been a trend recently for wineries to acquire other production capability while eliminating overhead to streamline processes, yet offer a larger range of brands to consumers under one banner. “You can’t just keep expanding with high-end products. It takes strategic acquisition and timing of those transactions lining up.”
McMillan also points out that there have been more winery acquisitions recently than in the last twenty years. “Two things have been encouraging transactions,” he says. “First, the Fed has been taking interest rates to almost nothing which makes debt attractive. And, a lot of family wineries have been doing this … if there is not a succession strategy of leaving the business to your kids, a sale would be the normal party process.”
In this case, Randy Lewis is “not ready to hang up his spurs” so he and stepson, Dennis Bell, will continue producing wines for Lewis Cellars, but the “not easy” burden of sales and marketing will be with JUSTIN. To JUSTIN’s advantage, the brand now has another premium wine label to offer their robust customer-base.
McMillan says that given the current DTC environment, it’s more important than ever to retain a loyal base of wine club memberships. The typical enrollment is only about 30 months. “Mailing lists are a crucial asset in this transaction and Lewis has some high-priced wines and customers who support that price point,” he says. “Now JUSTIN has acquired those and offers something that extends the customer opportunity.”