Foley Scoops Up Sebastiani
Century-old Sonoma family winery is reportedly sold to aggressive Central Coast group
Sebastiani, which became one of Sonoma's most recognizable brands during the 1970s, making mostly jug wines under the guidance of Samuele's son August, has in recent years downsized to emphasize high-quality varietals, mostly grown in Sonoma County.
Following August's death in 1980, his widow Sylvia took the reins, appointing the couple's elder son Sam to run the winery. The matriarch fired Sam in 1986 in a disagreement over growth and direction, and replaced him with his younger brother Don. Under Don the winery reversed Sam's downsizing strategy and again built up volume and created new brands. The family eventually sold off its Turner Road Vintners in the Central Valley in 2000 to concentrate on high-end Sonoma-produced wines. In 2001, Don left to establish a company with his own sons Donny and August. Don Sebastiani & Sons is largely a negociant operation producing offbeat brands including Plungerhead, Hey Mambo, Screw Kappa Napa, and the hugely popular Smoking Loon and Pepperwood Grove.
Sam and his then-wife Vicki, meanwhile, founded Viansa Winery in Sonoma Valley, then sold it in 2005 to an investment group for a reported $31 million. Sylvia Sebastiani died in 2003.
"Since 2000, management has refocused the brand through an unwavering commitment to production of wines of quality and value," Mary Ann Cuneo stated. "We are confident that this transaction will strengthen Sebastiani's leading reputation…and continue the Sebastiani heritage of consistent quality and value."
Coincidentally, Don Sebastiani had spoken with Wines & Vines only a day before the news leaked. Although he did not talk of the sale, he mentioned that he had retained part-ownership of Sebastiani Vineyards since leaving the company, and described himself as a "passive investor" in the family winery, which he characterized as a medium sized "appellation winery." Looking back at business during the current year, he said, "I think they're somewhere around flat, maybe down, but profitable." He added that the current wine economy is unlike any he's seen. "I don't think it's been like this for 35 years."
According to Don Sebastiani, in 1966 his father made only about 15,000 cases of wine; by 1970, the total was up to 120,000. By 1973 it had soared to 300,000 cases per year; 500,000 the next year and by 1975 production had grown to more than 1 million cases annually, mostly in jug or magnum bottles. His current company produces in excess of 1 million cases per year of its various brands. Most are negociant wines, although "We did make about half a million cases last year from the ground up," he said. He foresees a day when his brands' $10 and under offerings will be exclusively sourced from negociants, "But it's likely that a greater percentage of our high-end products will be from the ground up, even if it's fewer cases."
High-level executives at Foley confirmed to Wines & Vines that a deal is on the table, but declined to comment further, saying an official announcement will be forthcoming within the next week. Given the recent history of high profile winery sales (read: Chateau Montelena), it's perhaps wisest not to count this a done deal until the actual keys change hands. In the interim, however, we can report with confidence that the Foley Group has acquired a new president. Tim Matz, previously with Brown-Forman, Beringer Blass and Kendall-Jackson, and most recently president of Lake County's Langtry Estate and Vineyards, joined Foley just last week.
Industry insider Deborah Steinthal, founding partn er of Scion Advisors in Napa, told Wines & Vines, "I'm hoping we see more of this," referring to Foley's wine industry credibility (he purchased his first Central Coast wine property in 1996 and later bought Lincourt there as well). "Often, outsiders--private equity companies from outside--have unrealistic expectations," she said.
Steinthal praised the Sebastiani family for its foresight in developing an exit strategy. Indeed, a paper she prepared with Rob McMillan of Sillicon Valley Bank and released last January, "Ownership Transitions in the Wine Industry: Obstacles and Strategies for Success," (read it here), deals with just such issues. The authors selected a list of about 100 family-owned or closely held West Coast wineries that had both strong market presence, business infrastructure, multiple sources of distribution and positive cash flow, and estimated that within 10 years, the majority would change hands. Selling to someone who knows the business is, she suggested, the soundest way to preserve a brand, if family succession is not practical.
"I hope it goes through," Steinthal said of the Sebastiani sale to Foley. "Our industry needs to see positive transitions. We have such little practice on this phase. We're so young as an industry. When a deal like like this doesn't go through, it is discouraging."