M&As in Washington's Wine Business

Interest in wineries is ripening fast.
Bill Virgin |   November 2011   |  FROM THE PRINT EDITION

You’d expect to see a lot of deals in two of the Puget Sound region’s most iconic industries—aerospace and technology—because there are so many companies within those sectors and prospects are considered good.

So it’s not surprising that a third well known, highly regarded Northwest industry—winemaking—is also getting attention from buyers.

Earlier this year, Exvere Inc. announced a deal in which Betz Family Winery of Woodinville was sold to Steve and Bridget Griessel. The reasons for the sale cited by company founder Bob Betz in a news release will sound familiar to entrepreneurs in all industries contemplating the future of their ventures: “At this stage I want to focus more time on what originally attracted me to the industry, the vineyards and the cellar, rather than on the daily management of the company,” Betz says, noting that the sale would allow him to spend more time on fruit and wine quality. “And we want to carve out a little more time for ourselves and our family.”

Exvere’s Michael Brustkern says the premium wine industry, having gone through the recession, a drop in sales and some questioning of its long-term future, appears to be back. “Winery deals that are going down are getting very strong valuations,” he says, adding that the Betz deal was “highly competitive,” with three qualified buyers vying to acquire the company.

In late 2009, Seattle’s Apex Family of Wines was sold to Precept Wine Brands. Scott Hardman of Alexander Hutton, which advised on that deal, says both buyers and sellers have motivation to consider deals.

“There are a lot of economies of scale,” he says. “You’ve got some fixed costs and variable costs like in any business, but if you could acquire one or two other wine brands or wine labels or even the estate wineries themselves and merge them together, there’s a lot of cost savings.” Depending on when grapes are harvested and wine is made, companies can also make more use of their production facilities. “You can see some pretty significant operating leverage.”

Brustkern expects to see more deals simply because the word is now out about the size and quality of Washington and Oregon wineries. “That quality is being noticed internationally,” he says. “It’s not ‘Which Washington?’ anymore. That’s lending itself to a lot of search work for internationally based wineries that are trying to find properties—wineries and/or vineyards—in Washington and Oregon.”

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