Photo: Encore Vineyards principal Harry McWatters
In a deal that has stunned the British Columbia wine
industry, Harry McWatters and his partners have sold the storied Sundial
Vineyard and a partially built winery on Black Sage Road.
Sundial is the front half of a 110-acre property
better known as Black Sage Vineyards. Planted in 1993, this was at the time the
single largest block of Bordeaux red varieties in Canada. This was the block
that established the ability of the Black Sage Bench to produce premium wines.
The new owner of Sundial, Bai Family Estates, plans to
complete the 25,000-square-foot winery already under construction there. Superstar
California winemaker Anne Vawter will make the wine. She has already been the
consulting winemaker for One Faith Vineyards, making wine since the 2012
vintage with grapes from Sundial.
One Faith, owned by Vancouver businessman Bill Lui (right),
released its first vintage late in 2014 in a three-box case priced at $495 a
The name of the owner of Bai Family Estates was not
disclosed in the April 1 announcement from Encore Vineyards, the Harry
McWatters company. However, the owner is believed to be a mining executive from
China. Both he and Lui have been guided into the British Columbia wine business
by wine educator and consultant James Cluer MW.
Vawter grew up near Walla Walla, wine country in Washington State. After
considering a career in dentistry, she got a degree in viticulture and enology
at the University of California, quickly emerging an important consulting
winemaker. Most of her clients (such as Ziata Wines, Oakville Ranch Vineyards
and Teaderman Vineyards) are in Napa. Her husband, Cameron Vawter, is the
winemaker at Dana Estates at Rutherford.
has her own label, Red Mare Wines, a name inspired by her equestrian interests.
She has managed Blossom Creek Ranch, a horse farm in Calistoga.
think it is a really fascinating place to make wine,” she said of the Okanagan
(I interviewed her during the One Faith launch). “It is similar in certain ways
to Washington State, but individual as well. The soil where we are making our
wine on the Black Sage Bench area is very uniform sand and very deep sand. That
is distinctive and unique. Most places are not going to have that soil
structure. That is fascinating for me.”
am also drawn to higher latitudes,” she continued. “There is something special
that happens, especially with the blending varieties – Merlot, Cabernet Franc,
Petit Verdot and Malbec. It is interesting when you have that shorter season,
longer days and sometimes higher temperatures … a combination of those things
sometimes produces wines that are a little more interesting. It produces rich
Merlots, strong, mouth-filling, tannic Merlots. I think somehow it has to do
with the shorter season and the longer days.”
McWatters is not out of the wine business, however.
Encore Vineyards produces wines under the labels Time, McWatters Collection and
Evolve. McWatters plans to move the Encore production to another location in
the Okanagan, either building a new winery or modifying an existing one.
McWatters, who has been negotiation the sale of Sundial for several months, has
identified eight potential new locations for Encore.
He is also negotiating new source of grape supply for
Encore. The news release says: “Due to ever-changing
consumer demands, Encore Vineyards now has the flexibility to contract and
purchase fruit to meet the needs of the wine-loving public. It is noted that Encore
has already been in the process of securing fruit from multiple sources. Encore
has already negotiated access to select fruit at its former vineyard in Oliver.”
Lawrence Buhler (left), the winemaker Encore hired last year,
remains part of the McWatters team.
Encore’s news releases addresses some of the “frequently-asked”
questions about the transaction, beginning with the value.
“Encore is bound by a confidentiality agreement and is
unable to reveal the purchase price,” the news release says.
“We got a substantial premium over the appraised value
of the land,” McWatters said in an interview.
In the Encore offering memorandum in June, 2014, when
the group set out to raise $5 million from investors, it was disclosed that
Encore had paid about $10.1 million to purchase the assets – primarily the
vineyard – from McWatters.
Industry observers would be surprised if the new buyer
paid less than five times the value of those assets.
McWatters, the founder of Sumac Ridge Estate Winery,
began looking for vineyard property on Black Sage Road about 1990, two years
after most of the vineyards had been pulled out in the transition from mediocre
hybrid grape varieties. At the time, the previous owners were asking $2,250.
Harry was not successful with a counter offer of $1,800 an acre. Vineyard land
prices began to recover. When McWatters and his partner finally bought the 110
acres in 1992, they paid about $3,650 an acre.
It may have seemed outrageous at the time but the
Encore financing implies the value of the vineyard was approaching $150,000 an
acre in 2014.
The original transaction left McWatters with the
ownership of about 60 acres while the Sumac Ridge winery owned the rest.
Constellation Brands, which now owns Sumac Ridge, kept the Black Sage Vineyards
name when McWatters retired several years ago. He was required to name his
parcel Sundial and that is the vineyard which has just been sold.
“This is about business,” McWatters says. “It isn’t about
being emotionally attached to the vineyard.”
In the news release, Encore says: “The sale of this
vineyard advances our strategy by unlocking the land value in our portfolio. …
Encore will be debt-free, and own all equipment and inventory.”