Exclusive: Banfi Signs Letter Of Intent To Buy Kenwood VineyardsMarch 30, 2012
In an exclusive interview with Shanken News Daily, F. Korbel & Bros. president and owner Gary Heck and Banfi Vintners chief operating officer Marc Goodrich confirmed that Banfi has signed a letter of intent to acquire Sonoma’s Kenwood Vineyards from Korbel.
“We have an agreement in principle to purchase Kenwood, subject to getting through the due diligence,” said Goodrich, “with a closing scheduled for June.”
The deal would include Kenwood’s estate, winery, vineyards and all other assets. Banfi plans to integrate the Kenwood sales team into the Banfi organization, placing the brand into the same portfolio as Riunite, Castello Banfi, Bolla and the other brands in Banfi’s stable.
If completed, the acquisition will mark Banfi’s first foray into California. “We’ve been looking at California for quite some time and have explored a number of opportunities,” Goodrich said. “But until now, we hadn’t found any wineries that fit our criteria. We were seeking a brand with sufficient volume—and growth potential—to work well in our portfolio. We also wanted a brand that was very highly regarded. Kenwood was an ideal fit. It’s at over 500,000 cases, which is significant—certainly for a brand from Sonoma. And it’s always had a great reputation. So it perfectly fits with what we were looking for. We’ve always wanted to be in the domestic wine business in a big way, and this acquisition will do that for us.”
Banfi’s initial entry into the domestic wine business came in December 2010, when its owners, the Mariani family, purchased Pacific Rim Winemakers, a Washington state Riesling brand. Pacific Rim’s sales and marketing are separate from the Banfi organization, and last November Pacific Rim was regrouped into a new venture called VinMotion, which handles the Pacific Rim brand ($10-$13) as well as Sweet Bliss ($10), another Washington brand which focuses on sweet blends from vinifera grapes, and Rainstorm, an Oregon label which offers a Pinot Noir ($16) and Pinot Gris ($13).
“Pacific Rim was our first step into domestic wine, and that brand is now at slightly over 200,000 cases, so it’s in very good shape,” Goodrich said. Indeed, Pacific Rim has grown sharply in recent years, having stood at 90,000 cases as recently as 2008.
The Kenwood portfolio includes wines priced from $9 to $70, all sourced from Sonoma County: the Kenwood Vintage Wines ($9), which include a Vintage Red and Vintage White; the Sonoma Series varietal line ($12-$18); the Kenwood Vineyards Reserve varietals ($22-$30); the Jack London series ($22-$30); the Yulupa Series, an on-premise brand with a by-the-glass price of $7-$10; and the Artist Series ($70), a Cabernet Sauvignon. Kenwood, founded in 1970, has a 22-acre producing estate in addition to making wines from fruit sourced from throughout Sonoma County. Kenwood Vineyards’ total depletions for 2011 were at just over 550,000 cases.
“If we go into any region or segment, we like to be in a leadership position,” Goodrich said. “With Pacific Rim, we felt that we did that in the Riesling category. We think with Kenwood it put us in a very strong leadership position in Sonoma. Pacific Rim, of course, is a much different brand, in that it’s in very early development stages. Kenwood already is a very strong brand.”
Even after selling Kenwood, Gary Heck’s F. Korbel & Bros. will remain a key player in California, with a portfolio that includes Korbel sparkling wine and California brandy, as well as Valley of the Moon, Lake Sonoma and other smaller labels. Heck said he plans to focus his efforts on the Korbel brand. “After its worst recession in 70 years, the California wine industry has emerged in pretty good shape, so I thought this was a good time to explore the sale of Kenwood,” said Heck. “Champagne and sparkling wine sales are at an all time high, so I want to focus on Korbel. The Kenwood sale will give us the freedom to explore more opportunity for Korbel Champagne and brandy.”