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08.17.2007  
 

Firestone's Perspective on the Deal

Family happy to sell Foley an engine for his small train of wineries

 
by Jim Gordon
 
 
Firestone's Perspective on the Deal
Adam Firestone
Photo: Robert Dafoe
Los Olivos, Calif. -- Adam Firestone today put into perspective the acquisition of his family wine business by the Foley Wine Group, announced yesterday. Firestone Vineyard in the Santa Ynez Valley of Santa Barbara County is the latest of several pioneering California wineries to transition in recent weeks, notably Duckhorn, Stags Leap and William Hill in Napa Valley, and Davis Bynum in Sonoma County.

Adam Firestone, president of the 150,000-case winery and a third-generation vintner, wouldn't reveal the price Foley is paying to acquire the Firestone Vineyard and Prosperity Wines brands, along with the Santa Ynez Valley winery and 480 acres of land, which counts 380 vineyard acres. But he did say it was a more realistic deal than some of the recent ones in Napa.

"I see those things going on up there and I shake my head," he told Wines & Vines. "I don't understand people paying the equivalent of the gross national product of Guatemala for the Duckhorn winery, which is basically a small business. It must make sense to somebody, though, because you see it happening."

Firestone's Perspective on the Deal
Adam and his father, Brooks Firestone, both emphasized that knowing the buyer, William P. Foley, for many years and having a business history with him, was what made this deal comfortable for them. Foley is proprietor of Foley Estates Vineyard & Winery and Lincourt Vineyards in Santa Barbara County, and is founder and chief executive officer of Fidelity National Financial Corporation, a publicly traded, Fortune 500 Company.

Foley created Lincourt Vineyards in the Santa Ynez Valley in 1996, and opened Foley Estates Winery in the nearby Santa Rita Hills in 2005. Foley acquired the J. Carey Cellars property from the Firestone family in 1997, which became Lincourt Vineyards.

Foley was not available for direct comment, but he stated in a media release that this was the first in a series of acquisitions, and that he is looking for other opportunities in Napa, Sonoma, Oregon and Washington. Foley Estates' estimated size is 10,000 cases and Lincourt is 12,000, according to the Wines & Vines Annual Directory.

Adam Firestone said Foley considers Firestone Vineyard as a solid engine to pull his growing train of wineries, and that Firestone's winery facility, its sizable estate vineyard, its expertise in the vineyard and personnel on the administration side all add power to that engine. "For instance, we have a great CFO, who is a CPA, fully qualified to handle finances for a good-sized wine company. But if you're a 10,000-case winery, you can't justify a person like that. So unless you're a CPA yourself, you can't do what needs to be done.

"Bill Foley could have built everything up himself," Firestone added, "but that takes years, and maybe he didn't want to wait for years. Having a base of operations from which he could take on some of these other brands makes it viable."

Firestone's Perspective on the Deal
Firestone describes the sale as a move made from strength, saying, "It was just a good combination of factors that came together. It's been great to do something that you love to do, and not go broke doing it." He said Sauvignon Blanc is the winery's biggest varietal, and his favorite. Bordeaux varietals and a Riesling made continuously since 1975 are also important in Firestone's portfolio.

Firestone Vineyard was founded by tire company heir Leonard Firestone and his son Brooks and Brooks' wife Kate in 1972, as the county's first estate winery, although Santa Barbara Winery in the seaside city dates from 1962. It did much to put the area on the winemaking map, and encourage winegrape growing in the South Central Coast.

Adam Firestone said Firestone Vineyard is financially successful today, but had some tough times in his first years as president, beginning in 1994. A presentation that he gave at the Central Coast Insights symposium in March, entitled "I Love Winemaking, But Can I Do It Profitably" was based on his experiences in those years, he said. "Most of my financial scar tissue was formed in the '90s. At the time, we had cuts and bruises, then we had bleeding, then we had deep arterial bloodflow, but now we're in good shape."

Firestone said he knows of no significant changes in staffing, operations or distribution. He is the only one to have lost his job at Firestone Vineyard. He will continue as co-proprietor of Firestone Walker Brewing Company.

The Firestone family retains ownership of Curtis Winery, Firestone Walker Brewing Company and the new family winery in Paso Robles, which has made red wines from 2005 and 2006, but has not released anything yet. The family is also retaining the Jarhead Red and Rock Hollow wine brands, and 400 acres of land in the Santa Ynez Valley, including Brooks and Kate Firestone's home and 215 acres in vines. Adam's brother Andrew will continue to manage the Paso Robles winery.
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