Fine French winemakers buy great vineyards from Americans ready to sell
One weekend afternoon, Etienne Bizot, the manager of Bollinger Champagne, was sipping wine on the terrace of the Ponzi vineyards in Oregon. He was on vacation, playing tourists in the Willamette Valley, in the heart of the state’s pinot noir territory. Comparing three different Ponzi pinots next to a plate of cheese, he looked at the vines. They looked splendid.
It was two years ago. This month, he bought Ponzi, the first acquisition outside France for his family holding company, Société Jacques Bollinger. Bizot is Chairman and Chief Executive Officer.
And the Ponzi family, one of Oregon’s founding pioneers 50 years ago, became the last American to sell a historic winery.
The high-profile deal is part of a new wave of European winemakers seeking a foothold in the United States, just as some of America’s oldest vineyards are ready to cash in.
“It’s about as warm a market as I can remember,” says Rob McMillan, executive vice president and founder of the wine division of Silicon Valley Bank. “I observed 9 to 12 European wineries looking for assets.” He expects more sales than usual over the next year.
A recent SVB survey found that nearly 50% of wineries in Napa and Sonoma plan to sell a possibility in 2021. For some areas, including the Sierra Foothills, a zinfandel haven east of Sacramento that was once the epicenter of the gold rush is 80%.
New owners, new rules – sort of
Yes, the latest European influx is bringing even more international flavor to America’s wine regions. Will this influence the style of the wines? Probably. After François Pinault, owner of Premier Cru Château Latour, bought the Araujo estate in Napa in 2013, the wines became more precise and more elegant.
But not everything will change. Bizot, for example, has no intention of creating an American sparkling wine that could be James Bond-worthy (Bollinger is 007’s favorite quaff). At least not yet. He seeks to strengthen the reputation of Ponzi pinots and chardonnays and to increase Bollinger’s brand awareness and sales in the United States.
“In general, French producers have been the main investors in the wine industry in the United States, followed by other countries,” says Mario Zepponi of mergers and acquisitions firm Zepponi & Co., who says that the Foreign winemakers are motivated by access to American consumers and the world’s largest wine market.
Not to mention that the prices of wine lands in Oregon and California are much lower than those of Champagne, Burgundy and Bordeaux.
The prices are correct
What drives sellers, says SVB’s McMillan, are “unprecedented market valuations.” Like Anna Maria and Luisa Ponzi, other wine families are rethinking their strategies for the future, taking into account the growing challenges, costs and risks of running an independent winery today.
The growing number of wineries makes competition in the market more fierce and it is now more difficult for small family estates to sell through wholesale channels. The number of these is declining due to consolidation, and the pandemic and devastating fires have not helped. And the younger generations don’t always want to follow their parents’ dreams.
In 2020, the family owners of Napa Flora Springs Estate, founded in the 1970s, sold their 280-acre vineyard and cellar (but not the brand name) to Chateau Smith Haut Lafitte in Bordeaux, which resumed its first American property. They call it Cathiard Family Estate.
A few months later, we learn that the pioneer of Cabernet Napa Diamond Creek Vineyards, founded by the late Al and Boots Brounstein in 1968, had been acquired by Frédéric Rouzaud, president of Maison Louis Roederer. Also owner of Château Pichon-Lalande in Bordeaux, he bought the star cellar of Sonoma Merry Edwards in 2019.
And in January 2021, the Dyson family, behind the cult pinot noir vineyard of Sonoma Williams Selyem, sold a stake to the French family Faiveley, a producer of stellar burgundies.
All of these American families were in the same frame of mind as the Ponzi Sisters, who ran their family business for 30 years. “We are tired and an opportunity has presented itself,” says Anna Maria. His sister, Luisa, who remains a winegrower and oversees the Bollinger vineyards, points out that they have kept 100 acres of vines and land. They will sell grapes to Ponzi, but the plan gives their children the option of starting a wine business under a different name.
Oregon has several Burgundy properties, from Domaine Drouhin to Resonance by Louis Jadot, among others. AltAlthough Bollinger is known for its Champagne, the family business also owns land in Burgundy. Oregon’s cool climate and its main grapes – Pinot Noir and Chardonnay – are therefore comfort factors for Bizot.
The châteaux of Bordeaux, meanwhile, are drawn to California Napa, as wines from both regions are based on Cabernet Sauvignon, Merlot, and Cabernet Franc. Seven Napa wineries now have Bordeaux owners.
“Yet the pandemic has hampered international mergers and acquisitions activity in the wine industry,” says Zepponi, who handled the Bollinger and Roederer agreements. Doing due diligence is difficult when you can’t travel.
How these transactions happen
The pandemic has caused complications. The Cathiards had purchased Flora Springs in January 2020 but had been unable to make it to their new property for 14 months. “I could easily write a book about all the disasters we have overcome, including the fires that had the good spirit to stop 12 km from our forest!” Co-owner Florence Cathiard wrote in an email. “After three months of filing official papers and fighting with the United States Embassy, we managed to obtain exceptional visas of national interest in order to be able to supervise the work in progress.”
French buyers clearly have patience. Faiveley has spent a decade hunting down a Pinot Noir property; Bollinger searched for four years. “We are a family and take our time,” says Bizot. They also know what they are looking for. Not motivated solely by financial measures, observes Zepponi, Europeans are “much more aggressive in their auction practices”.
The Cathiards were won over by Flora Springs’ similarities with Smith Haut Lafitte. The Napa property is in one large piece, primarily in Rutherford’s first appellation. It also has a strong history, water resources and abundant biodiversity.
For American buyers, says McMillan, there is also a lot of interest in finding new acquisitions. “Part of the incentive to buy is induced by the Fed,” he says. “Lower interest rates encourage cash-rich individuals and businesses to invest. You cannot get cash back. “
At present, the competition for the best properties is fierce. Duckhorn Portfolio and Vintage Wine Estates, which recently announced their IPO, are looking to buy, as are private equity funds. Nashville-based billionaire Gaylon Lawrence, who bought the historic Heitz Cellar in Napa in 2018, seized Burgess Cellars in September 2020 and took over iconic chardonnay maker Napa Stony Hill Vineyard at the end of December.
Many historic estates, like Ponzi, see the prestige of selling to a major French producer, and they want to sell to another family with a generational long-term vision. “With Bollinger, we have seen an alignment of values, respect for the vineyard and for quality,” explains Luisa Ponzi. “The sale is a validation of our parents’ goal to put Oregon on the world wine list.”
Expect more sales by the end of this year. Some of the Bordeaux chateaux that have said they would like a Napa estate include Cos d’Estournel, Montrose and Lafite Rothschild.
All of this doesn’t have to be a big blow to your dreams of becoming a Napa winemaker. Neither the French nor the big American buyers are looking for small properties like the family heirloom with 7 acres of vineyards on Howell Mountain, a survivor of last year’s devastating fires, now on the market for $ 8.5 million. And they probably won’t bid on Juslyn Vineyards, a high-scoring Cabernet producer with a 6-acre vineyard and large villa on Spring Mountain. Currently listed at $ 42 million, it is auctioned off May 20-25. It’s time to pull out the wallet.