Despite recent high-profile winery transactions and a growing industry belief that consolidation would help B.C. wine exports, few wineries have sold even though dozens are on the market.
Hollywood movie mogul James Cameron made headlines and raised the profile of Vancouver Island’s wine industry when he invested an undisclosed amount on February 8 to buy Beaufort Vineyard and Estate Winery – a property listed for $1.3 million plus inventory.
That came on the heels of extremely successful B.C. winemaker Anthony von Mandl expanding his empire by creating VMF Estates and buying CedarCreek Estate Winery for an undisclosed sum in a deal expected to close this month.
Estimating a purchase price for that transaction is difficult because longtime CedarCreek owner Ross Fitzpatrick did not sell all of his family’s vineyard land, nor had he listed his winery for sale.
“Anthony von Mandl has done most of the consolidating and purchasing in the Okanagan in the last while,” Royal LePage South Country Realty broker Tony Munday told Business in Vancouver.
He pointed to von Mandl’s recent acquisitions of vineyard land as well as his 2012 purchase of Antelope Ridge Estate Winery.
The only other recent Okanagan winery transaction was a Calgary buyer acquiring Summerland’s Hollywood and Wine and rebranding it Saxon Winery Ltd. Other transactions have involved investors selling interests in winery properties.
In January, Okanagan restaurateur John Tietzen sold his minority stake in Township 7 Vineyards and Winery to an unnamed Vancouver investor, leaving winery principal Mike Raffan as the operating partner. That followed France’s Groupe Taillan buying joint-venture partner Constellation Brands’ 50% stake in Osoyoos Larose for an undisclosed amount in October.
But Munday said it’s surprising that there have been so few winery transactions, given that there are more than a dozen B.C. wineries listed for sale and at least the same number of winery operators where principals are willing to sell yet have not wanted to be public about listing.
“A lot of the listings are smaller wineries that were started up by people who had the romantic belief that it is fun to have a winery,” said Munday, who is also the executive director of the Oliver Osoyoos Winery Association. “After a few years, they realize the time, effort and work that it requires, and they haven’t built an exit strategy into their business plan.”
Also acting as a drag on winery transactions is that most properties for sale are about 10 acres and have buildings on site. Munday added that buyers are unable to buy 30 acres of contiguous vineyard and often place far less value on pre-existing structures at winery sites than do current owners.
Adding weight to the belief that consolidation would be good for B.C.’s wine industry are statistics showing that the average B.C. winery is much smaller than its counterparts in other North American wine regions.
Bowen Beer and Wine Cellar owner and wine blogger Paul Rickett estimated that B.C.’s 229 wineries process an average of 118 tonnes of grapes each. Ontario produces more wine than B.C., despite having only 140 wineries, because its wineries process an average of 506 tonnes of grapes each per year, he said. The average amounts of grapes processed by wineries in Washington and California are similarly far more than that of the average winery in B.C.
“Having a nice, fragmented, small wine industry is not a bad thing,” Rickett said. “But, if we want to export significantly, what we really need to do is develop scale.” •
