Spend any time talking to beverage industry professionals and you’re bound to hear someone tout this time-honored adage: How do you make a small fortune in the wine industry? Start with a large one.
Like many old saws, this one has some truth to it. In the 1960s and ’70s, when some of whom we now recognize as top luminaries in the wine world (think Robert Mondavi, Joseph Phelps, Joe Heitz, et al.) were just getting started, and California wine was mostly plonk, land in Napa Valley could be scooped up for a few hundred dollars an acre. No one knew for sure if quality grapes could grow there, and it would take decades for the region to come into its own as a world-class wine venue.
Fast forward to present times. Those visionaries who established the California premium wine industry, like the ones mentioned above and several others like them, have passed on or retired, and they or their heirs have sold off these wine businesses and vineyards, often to large beverage conglomerates.
Who can blame them? Vineyard properties now fetch hundreds of millions of dollars in Napa Valley. This past summer, Joseph Phelps Vineyards sold to the French-based brand Moët Hennessy (Phelps died in 2015 and his children oversaw the sale). While the terms of the deal were not disclosed, the sale price likely hovered near the $200 million mark, given the high-end nature of the Phelps brand and the location of the vineyards.
A few weeks earlier, Silverado Vineyards, located in the Stags Leap District about 11 miles south of Phelps, sold to Foley Family Wines for $150 million. Four years ago, some 18 years after Napa wine pioneer Joe Heitz died, his family sold the business to Arkansas billionaire Gaylon Lawrence for an estimated $180 million.
The purchasing companies often keep key personnel — e.g., the winemaker — on board at least for some period of time after the sale. After all, those folks helped build the brand and the customer base that enticed the buyers to fork over countless millions to acquire the property.
The good news for consumers who enjoy those wines is that there likely will be no noticeable change in quality — at least in the short term. The bad news for people looking to enter the wine business is that they indeed will need a large fortune to get in the game.
Silverado Vineyards Sauvignon Blanc Yountville 2019
A refreshing combination of citrus and minerals highlight this wine from the Stags Leap District.
Heitz Cellars Cabernet Sauvignon Napa Valley 2017
Highlights an earthiness with hints of herbs and black cherry.
Joseph Phelps Cabernet Sauvignon 2018
A bold, full-bodied Cabernet with developed tannins and deep plum notes.
Robert D. Richards, CSW, is a Certified Specialist of Wine through the Society of Wine Educators and has passed the first-level certification of the prestigious Court of Master Sommeliers. He is the author of the book Wine Savvy: Exploring and Enjoying American Wine.