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32 WINES&VINES September 2016 S P E C I A L R E P ORT WINE INDUSTRY FINANCE 2016 A Healthy Market Solidifies It's been a year of financial optimism and free-flowing capital By Ben Narasin S ince we started our annual Wine Industry Finance report in 2012, we have seen the classic pattern of cyclicality that re- mains the norm for all finance industries over time. That inaugural year was defined by the seasonal shift from financial summer to winter created by the post-crash realities of the Great Recession: scarce capital, an exceptionally tight lending environment, huge spreads between buyer and seller expectations on the mergers and acquisitions (M&A) front and the exit of fair- weather lenders and buyers that had become active and optimistic in the heady days that pre- ceded the crash. The following year (2013) brought a gradual warming among stalwart lenders and long-term players in the wine space, but there was still an overall conservatism with loans available only to the optimal credit customer. The year 2014 ushered in a financial spring and a broader openness to lending, while also increasing acquisition activity as a means to con- trol (and add to) grape supply or to further fill out a portfolio of brands. In our most recent report, 2015 brought about full summer, with banks competing aggressively on terms to lend to the best credits and opening their underwriting to cover a broader range of borrowers. So it is of little surprise that we enter the third quarter of 2016 looking back over a year of summer-like heat in the finance space. Rates remain low, competition for loans among banks remains high, and according to our finance ex- pert panel member Jason Hinde of Exchange Bank, "Debt is out there for nearly anyone look- ing for it right now." M&A consolidation across all categories— from the three-tier players to vineyard land—has continued in earnest this past year, according to our experts, with the big continuing to get bigger and the concentration of power increasing to- EDITOR'S NOTE: The news from lenders has never been more positive. As you will see in author Ben Narasin's introductory article and the multiple interviews that follow, financial institu- tions are eager to lend to the wine industry and have aided the ongoing consolidation of vineyards and wineries through merg- ers and acquisitions. Narasin and senior editor Andrew Adams created the Top 20 Finance Companies table on pages 38-39.