Issue link: http://winesandvines.uberflip.com/i/867389
September 2017 WINES&VINES 67 You know how good your Zinfandel is... Promote your wines to leading Zinfandel enthusiasts and extend your winery's relationship in the market. JoinUs! We are champions of Zinfandel— America's Heritage Wine Become part of our proud legacy zinfandel.org • 530-274-4900 Zinfandel Advocates & Producers is a 501(c)(3) non-profit organization. ZAP is dedicated to advancing public knowledge of and appreciation for American Zinfandel and its unique place in our culture and history. Vineyard Tools Battery Powered Pruning Shears • 1.25-inch and 1.5-inch cutting capacity models • 15,000 pruning cuts per battery charge • Includes lithium battery, harness, holster and carrying case www.zenportindustries.com | 503-524-7289 Gra ing Tools w zenportindustri Tying Tools & Supplies Harvest Shears ineyard T ols Pruning | Gra ing | Tying | Harvest REAL ESTATE INTERVIEW to service the grape needs of win- eries. Grape prices are increasing in super- and ultra-premium AVAs, and buyers are looking to protect their long-term supplies for grow- ing brands. Wineries are faced with either buying and owning vineyards or securing supply with long-term contracts. Most winer- ies decide on a combination of both strategies. This is increasing pressure on land available for vineyards in certain AVAs. As for wineries, many wine companies are looking to acquire wineries to expand their portfolios and compete more effectively in the market. In order to broaden their offerings to the market and to improve their leverage with both wholesalers and retailers, many wine companies are now looking to make acquisitions that comple- ment their current offerings. A shortage of winery produc- tion capacity in California's North Coast has resulted in some sizable transactions, such as the Jackson Family 2012 acquisition of So- noma County's Carneros Hills (formerly Buena Vista Winery) as well as Gallo's acquisition of both Napa County's The Ranch Winery in 2016 and Sonoma County's Asti Winery in 2015. A smaller exam- ple is the Huneeus Vintners' acqui- sition of Sonoma County's VML Winery in 2016. We see that public wine com- panies often prefer to buy brands only and to remain "asset light," keeping their assets off their bal- ance sheet to improve ratios. Re- c e n t e x a m p l e s w o u l d b e Constellation's 2016 acquisition of The Prisoner and Treasury's 2016 acquisition of the Diageo wine business, where they inher- ited a lease with a REIT (real estate investment trust) on most of the assets. There are few distressed sales now. Since the Great Recession, the real market has returned, with values firm and increasing for most assets. For U.S. buyers, ac- quisitions improve their market leverage and are an opportunity for portfolio expansion into new categories. For international buy- ers, acquisitions improve their ac- cess to U.S. distribution and their asset diversification. All buyer groups are active now. Q Who are the buyers? Nicholson: IWA represents sellers. However, in order to man- age the sale process in a confiden- tial manner for our clients and make highly targeted approaches to select buyers on behalf of our clients, IWA is continuously in di- rect contact with all the different buyers to know what they want to acquire (and what they don't want to acquire) and why. Owners of prominent wine companies and estates in the U.S. constitute one group of buyers. Multi-national companies like Constellation and Treasury are also buying. There are also financial buyers and equity funds. For example, Farmland is a real estate invest- ment trust that acquired Olsen Agriculture in Oregon. Other re- cent transactions involving this type of buyer include TSG's acqui- sition of Duckhorn and GI Part- ners' purchase of Far Niente. Luxury goods companies are also buying. Chanel, for example, bought St. Supéry. Finally, there are the owners of prominent overseas wine estates like Henriot in the Beaux Freres deal. IWA also sold two prominent Oregon vineyards to Louis Jadot, the Burgundy producer. A resident of the Santa Cruz Mountains, Laurie Daniel has been a journalist for more than 35 years. She has been writ- ing about wine for publications for more than 21 years and has been a Wines & Vines contributor since 2006. We see that public wine companies often prefer to buy brands only and to remain 'asset light,' keeping their assets off their balance sheet to improve ratios.