E&J Gallo Winery’s purchase of Stagecoach Vineyards in the Napa Valley sent a shock wave through the North Coast wine industry. The sale pulled 600 prime cabernet sauvignon acres off the market and triggered a new vineyard buying spree that some say will over time have implications for the very structure of the wine industry.
Consolidation and corporate structuring have been going on for years in America’s most lucrative grape growing region, with large players and wealthy investors looking to buy parcels or expand portfolios along Highway 29.
But there is something about this deal, which according to one industry expert is likely worth well more than $300 million, that has many in the local industry reevaluating their business plans.
The sale has had a tremendous and immediate effect. Stagecoach founder Jan Krupp has been selling grapes for years to almost 100 wineries from his land, which rises around 1,600 feet above sea level on the eastern ridge of the Napa Valley. About half of the farm is cabernet sauvignon grapes, the most expensive in this region.
The buyers range from big wineries such as Gallo and Jackson Family Wines to boutique shops like Pott Wines, owned by the young, heralded winemaker Aaron Pott. Gallo has said it will honor all existing contracts of Krupp’s — some as long-running as 10 years — and will retain his workers.
“I think this one transaction has got everyone sleepless on the next move,” said Joe Ciatti, a principal at Zepponi & Co., who advised Krupp.