An Inflection Point for Willamette Valley Wineries?
In recent months a number of generational changes have been occurring in the Willamette Valley wine community. Founding wineries such as Adelsheim and Ponzi have been sold (to co-owners Jack and Lynn Loacker and Champagne Bollinger respectively). Jackson Family Wines now owns Penner-Ash and WillaKenzie Estate. Henriot has taken a majority interest in Beaux Frères. And on it goes as the Boomers age out.
Other factors are at work as well. Last summer Laurent Montalieu's expansive NW Wine Company took on an equity partner. And just this past week Rollin and Corby Stonebraker-Soles announced that their ROCO winery had sold a majority ownership position to Santa Margherita USA, the import arm of Italy's Santa Margherita Gruppo Vinicolo.
Each of these transactions is unique and done for quite different reasons that may or may not include the ongoing participation of the sellers. But they all generate press releases that are unfailingly upbeat and offer little insight into the future. Looked at all together as an ongoing trend they hold a more interesting story.
It seems clear that the way forward for the Oregon wine industry, which has been spearheaded for decades by the commercial and critical success of the Willamette Valley wineries, has reached an inflection point. This is partly caused by the difficulties of transitioning small businesses across generations. It is partly the result of the piling on of obstacles to smaller wineries in particular—vastly increased competition, limited distribution, Covid shutdowns, wildfires, disappearing seasonal labor, and on and on. And there's no doubt that well-heeled wine companies in California and France especially have been looking at Oregon and seeing vast potential anchored in unquestionable success.
So what does this mean for the future? Remember that the heart and soul of the Oregon wine industry was fashioned in the back room of Nick's Restaurant by a handful of starry-eyed newcomers. The gestalt of the wine culture ever since has been to propagate that original sense of being pioneers, close-knit outsiders with the goal of making great wine, not great fortunes. Stockholders? There were none for at least the first decades of the past half century.
On the plus side, investment and expertise from outside can enable growth and improvement. Laurent Montalieu emailed me to explain that the sale of the company he spearheads was mostly for "infusion of capital for growth, giving also an exit equity event for some partners. I am staying as CEO," he continued, "and retain some equity and am thrilled to continue the expansion."
Regarding the somewhat similar sale of ROCO, Rollin Soles, who is nothing if not a straight shooter, had a comparably upbeat explanation. "Corby and I had taken ROCO up to a level where ROCO could really thrive with increased sales representation and capital investment. SMUSA represents an incredible sales force, while the Marzotto-owned properties offer an exciting opportunity for exchanging expertise in winemaking and vine growing."
Few outside the wine business know much if anything about Santa Margherita USA apart from their ubiquitous Pinot Grigio, which must be on 95% of the Italian restaurant wine lists in the country. It wouldn't be surprising if your first reaction to news of the sale was colored by the general impression that if this is the future of Oregon Pinot Gris, it's not encouraging.
But in Italy the company has a much more interesting portfolio. My former colleague Kerin O'Keefe, who lives in Italy and covers Italian wines for Wine Enthusiast, explains that “in the States, Santa Margherita is almost synonymous with its Pinot Grigio, but the Santa Margherita group has long invested in top estates in important regions across Italy. Some they’ve invested in include Kettmeir in Alto Adige, Ca’ del Bosco in Franciacorta, Cà Maiol in Lugana and Lamole di Lamole in Chianti Classico just to name a few. So it makes perfect sense that as their first investment outside of Italy they’d want to start expanding into select areas of the US, and in particular an exciting state like Oregon and a celebrated estate like ROCO.”
Rollin wraps it up this way: "It’s a SUPER validating time for us in the Willamette as we’ve seen recent Euro investments by Bollinger, Henriot, Jadot! Smart high quality Euro winemakers recognize the potential, the beauty, and the authenticity of Willamette Valley wines. It is a Marzotto tradition to invest into high quality wine production. This will be the future for further Willamette investment as well."
I tend to agree that this type of investment may turn out to be every bit as important to future growth as the original foreign investment made by the Robert Drouhin family 35 years ago. I'd love to hear further thoughts from others who have been in a similar situation. Both pros and cons, successes and disappointments. The comments are open so please jump in.
