Cosentino Closes Last Two Wineries
Sale of Napa icon may be imminent, founder starts new ventures
The highly desirable property on Highway 29 is now for sale. Winery co-founder Mitch Cosentino, who is no longer involved with the company, said a buyer may be announced shortly.
The building would be a valuable catch for a wine company seeking a high-visibility spot shortly after the divided highway ends in Napa Valley. There’s speculation that Bill Foley, who owns a number of wineries in Napa Valley including 1,000-case Merus, the 3,500-case Venge winery (Rossini Ranch on Crystal Springs Road) and 70% of Kuleto Estate (10,000 cases), might be interested. Foley has indicated he’d like a prime location there.
The other parts of the Cosentino Signature Wines PLC organization have also closed. According to the Stockton Record, Cosentino shut its tasting room off Woodbridge Road in Acampo (Lodi).
Cosentino previously defaulted on leases at the former Crystal Valley Cellars tasting room and vineyards in Lockeford. It had also once owned acreage and facilities in Pope Valley (CE2V) and Clements. The three properties had previously been sold to VinReit and leased back. They were shuttered and returned to VinReit in the winter of 2009.
According to records published by “Wine Industry Insight,” the corporation owed about $20 million to creditors, $12.5 million to Physicians Reciprocal Insurers, which held the first deed on the property in Yountville (the county assesses it at $7 million); $6 million to CSW Lender LP, and about a half-million each to California First Lending and Carpenter Ranches.
(On Monday, the North Bay Business Journal reported that LCPV VinREIT LLC, a venture of Missouri-based real estate investment trust Entertainment Properties Trust http://www.winesandvines.com/buyersGuide/listing/entertainment_properties_trust_20027.html, claimed Cosentino owes it $16.9 million.)
Cosentino Winery began when Mitch Cosentino started making wines in the corner of a Modesto, Calif., wine distribution warehouse in 1980. By 1981, he released his first vintage under the labels of The Cosentino Wine Co. and Crystal Valley Cellars. The wines were made from small lots of grapes bought from growers in Napa, Sonoma, Mendocino, Lake and Sacramento counties.
Mitch Cosentino experimented incessantly, introducing new varietals and blends including Meritage-style wines. His 1986 Poet was America’s first designated and licensed Meritage. By 1989, he was producing 4,000 cases per year and moved the business to Yountville.
In 1991, Cosentino met Larry Soldinger, a Chicago CPA, and his wife Edie. They recognized the potential of Cosentino Winery and became partners. Larry Soldinger bought the controlling stake in the parent company, Cosentino Signature Wines PLC, from Mitch Cosentino in 1992 and became operating chairman. Cosentino abandoned management of the company, but served as its winemaker until recently.
Throughout the 1990s, Cosentino Winery grew; in August 1999, the company bought 160 acres in Pope Valley for CE2V Estate Winery, which released its first vintage in 2001 with a 1999 Estate Red Meritage and began producing on site with a new facility for the 2007 harvest.
In August 2000, the company acquired a 20-acre vineyard in Lockeford, plus 40 acres of virgin farmland in Clements, both in the Lodi appellation.
The company built a production facility for Crystal Valley Cellars on the Lockeford property in June 2004, and another winery on the Clements property in 2006 as the home of Crystal Valley Cellars.
Planning ambitious expansion, Soldinger had taken the company public Dec. 1, 2005, on the London Stock Markets’ AIM small cap market -- much like the U.S. Over-the-Counter (“penny stock”) market, but with less regulation and oversight. The company issued shares in a public offering. The public offering netted the company almost $5 million of the $20 million raised, after costs. During 2006, the company acquired the intangible assets of Blockheadia Winery LLC.
The company continued to develop new wines -- its website brags that Cosentino Winery’s motto is “Never Enough Wines.” It also introduced other brands: Legends was a joint venture with basketball player Larry Bird.
Meanwhile, the rapid expansion combined with a weak economy caused financial problems. In December 2009, Soldinger said in a financial report, “Winery sales to distributors in the first six months of 2009 dropped dramatically as distributors continued to struggle to get their inventories down to less than 30 days on the floor from their historic 2008 highs of seven and eight months. Wine club sales also are down from previous years as consumer credit has tightened.
“As sales decreased sharply at the end of 2008 and continued into 2009, management and the board of directors concluded that the wine industry would remain hard hit throughout 2009 and into 2010. At the end of 2008, the company moved to drastically reduce its cost base and increase efficiencies. This included the abandonment of the company's non-essential properties and equipment that were the subject of its 2007 sale and leaseback agreement. Since March 2009, the company has been operating only in its Yountville facility in the Napa Valley, Calif., and through new affordable leased facilities in Woodbridge.”
For the last period reported, the six months ended June 30, 2009, Cosentino reported revenue of $2.75 million up from $2.25 million the year before. Operating losses were $584,103 compared to a profit of $118,182 in the second half of 2008, but after other expenses, finance costs, losses and taxes, the total loss for the period was to $2.79 million.
Cosentino missed payments to many creditors including grapegrowers, and eventually its license to buy grapes was revoked. It also asked to be delisted from the London stock exchange, after failing to file required annual reports.
Mitch Cosentino today told Wines & Vines, “Interestingly, business for Cosentino Winery was up in 2009 over 2008 and 2010 was up again over 2009.I don't know the figures or percentages, because I wasn't involved in that end of the business nor was I an officer or board member.”
According to a filing by Soldinger on Aug. 10, “Operations continued to perform solidly despite the difficult general economic environment. Over the first six months of 2010, wholesale sales increased by around 30% over the same period in 2009, and retail sales increased by 4%. The company has, however, taken the decision to cease its custom crush operations due to a lack of space, but with a view to recommencing the operations once the refinancing is completed.”
While continuing to make wine for Cosentino Signature Properties, Mitch founded a new winery, named pureCos Napa Valley (legally) or pureCru Napa Valley, with grocer Don Held, commercial property developer and builder Jim Nylen and oncologist Prabhjit Purewal. He has bought grapes and made wines for the past two vintages. He said the venture takes him back to his roots 30 years ago.
His first wine, pureCos, is an unusual blend of Cabernet Sauvignon (56%), Cabernet Franc (19%), Merlot (12.5%) and Sangiovese (12.5%). The winery will specialize in a small number of limited production wines. Only 380 cases of pureCos were produced. Next up is a white wine, Purety Napa Valley, a 350-case blend of Sauvignon Blanc (52%) and Sémillon (48%).
In addition, Mitch Cosentino, who was once a golf pro, has teamed with golfer Fred Couples to form Couples & Co., a wine brand from pureCru Napa Valley. The company celebrates the duo's shared Italian heritage and desire to make fine, limited-production wines.
It has introduced a Super Tuscan-style Sangiovese and a Napa Valley Cabernet Sauvignon blend. The first Couples & Co. white wine, a 2009 Napa Valley Chardonnay, will be released this month. For details, visit purecruwines.com.