Wineries galore for sale

Photo: Beaufort founders Susan and Jeff Vandermolen

Beaufort Vineyard and Estate Winery in Courtenay is the second winery within a week to announce it soon will have new ownership.

The first, announced last Friday, was CedarCreek Estate Winery of Kelowna which is being acquired by Mission Hill proprietor Anthony von Mandl.

Is this the beginning of industry consolidation? Time will tell. At least a dozen other wineries are listed for sale. One industry insider has been quoted saying that 26 wineries are for sale – one in ten of B.C.’s licensed producers.

Some have been on the market for several years. That may suggest that B.C. wineries may be priced too aggressively. It may also indicate that potential buyers are deterred by the surplus of B.C. wine that is just becoming apparent.

Beaufort was opened in 2008 by Susan and Jeff Vandermolen, a talented couple who levered previous careers in the oil industry into opportunities to see the world. Picking grapes in the Loire in 1991 fired their interest in wine. That interest was consummated in 2005 when they bought an 84-acre farm north of Courtenay. After preparing the land, they planted 7.5 acres of grapes in 2007 (and they have added to that since).

Using both their own grapes and grapes purchased in the Okanagan, Susan and Jeff quickly made a name for themselves with award-winning wines.

Born in 1958 and 1959, Susan and Jeff are young enough for other adventures (they once piloted a sailboat across the Atlantic). That appears the motivation for putting Beaufort on the market, although they will continue to live in the Comox Valley.

The new owners are expected to be disclosed when the transaction closes on February 6. Susan and Jeff have assured Beaufort customers that “it will be business as usual, as we have personally committed to assisting the new owners through the transition period, including the next harvest and vintage.”

What is remarkable about the Beaumont and CedarCreek announcements is that they put the spotlight on the gap between the large number of wineries for sale and the small number that actually have sold.

One 2013 transaction of which I am aware was the decision of Bordeaux’s Groupe Taillan to consolidate its ownership of Osoyoos Larose by buying the 50% owned by Constellation Brands, its former partner.

The other was the ownership transition at Oliver Twist Winery, with Gina and Trevor Mitchell taking over from the winery’s founders, Denise and Bruce Hagerman. The Hagermans structured the sale in a way that made it affordable for the youthful Mitchells. Winery owners having trouble selling might consult with the Hagermans.

A search of the internet shows these B.C. wineries are listed for sale:

• Bonitas Winery at Summerland has been on the market for two or three years, originally at $8,888,000. It comes with eight acres of vineyard, a winery with a restaurant, an executive home and private waterfront on Okanagan Lake.
• Castoro de Oro Estate Winery, a highway-side winery midway between Oliver and Osoyoos with a mature seven-acre vineyard. It is listed for $2.5 million.
• 40 Knots Winery in Comox. This winery, which is on a 23.5-acre property with a large vineyard, opened in 2011. Owner Bill Montgomery has it listed for $4,900,000.
• Glenterra Vineyards in the Cowichan Valley. This winery, which opened in 2000, is on the market because principal John Kelly would like a career as a consulting winemaker and leave the headaches of management to someone else. The winery comes with 5.5 acres of grapes and a boutique winery that includes a bistro. Asking price: $1,997,000.
• Herder Winery & Vineyards near Keremeos. This winery, on the market after the partnership dissolved, comes with nine acres of vines, a house with a winery in the basement and solid reputation. It is listed for $3.5 million.
• Hidden Chapel Winery near Oliver is also on the market after one of the partners left the business. The winery comes with 3.5 acres of Cabernet Sauvignon and a charming wedding chapel. Listed price: $1,590,000.
• Marichel Vineyard is a Syrah and Viognier producer that opened on Naramata Road in 2007. The 18.4-acre property has spectacular views of the lake from the vineyard. Listed price: $3,980,000.
• Mistaken Identity Vineyard, one of three Salt Spring Island wineries, is on the market after a falling out among the partners. The 9.5-acre property includes an organic vineyard. Listed price: $2,100,000. Cliff Broetz, one of the owners, says the issues amongst the partners has nothing to do with the reasons that the winery is for sale, With new management at the winery and with a good crop in 2013, "we can honestly say  that the outlook for our venture is better than ever and the right ingredients are all in place."
• The Rise Cellars in Vernon. This was conceived as part of a real estate development that ran into financial difficulty. The property is 57.5 acres  and includes 17.5 acres of vines. Grapes have been sold to other wineries for several years. Listed price: $2,960,000.
• Saturna Island Vineyards. This scenic 78-acre property, about half in producing vineyards, has been on and off the market for years. Listed price: $7,900,000.
• Sonoran Estate Winery has been on the market because the founders, Arjan and Ada Smits, would like to retire. They own three properties, one of which was already listed in 2009. It comes with a 4.5 acre vineyard, a winery building, a nine-bedroom home and private frontage on Okanagan Lake north of Summerland. A recent listing has an asking price of $3,600,000 for the current winery, located in Summerland.
• Tangled Vines Estate Winery near Okanagan Falls, with eight acres of vineyard, has struggled for several years despite being across the street from two destination wineries (Wild Goose and Stag’s Hollow). Listed price: $997,000.
• The Vibrant Vine in Kelowna, which opened in 2010, comes with an 11 acre vineyard and baronial home with a view. Listed price: $9,500,000.

This is hardly an exhaustive list. I am aware of others that are for sale. These are often struggling wineries that opened for romantic reasons at a time when there was far less competition.

Mistaken Identity's Cliff Broetz, in responding to this post, offers a succinct analysis of the problems that have so many winery owners looking for new ownership.

"What we can't control are the bigger picture issues," he writes. "How hard it is to interpret and comply with onerous regulation; how it remains virtually impossible to get critical help from our own BC Liquor Distribution Branch when it would clearly be for the greater good; how we are buried in compliance costs that our competitors from outside BC are not facing; how the taxes and fees we pay put us at a large competitive disadvantage; how hard it is to sell in our own country; how the big players in our market interpret the rules ( wrongly I think) to their advantage while keeping the small players small; wrong minded ideas like 'cellared in BC'."

 He argues that: "BC could have a much stronger and more vibrant wine industry. Grapes we can grow on the coast and wines we can make are vastly different than our Okanagan competitors. Not better, but different. And it is this difference that COULD make BC known as a vibrant, varied and high quality player in the world of wine. Considerable change is needed. Initiatives that help the small and talented players gain a strong foothold while they develop the potential of our industry. Economic incentives that would render long term paybacks for all stakeholders. Rule changes that would enable us to be stronger in the Canadian marketplace rather than being treated as an import in provinces such as Ontario. BC could be so much further ahead. It would take vision. A vision best developed from the ground up (no pun intended) and not from the offices of bureaucrats."

There is a lot there that needs addressing. I am not sure I saw many of the industry's issues addressed in the recent changes to BC liquor policy.