The Grapevine

Winemakers Welcome Wall Street

April 29th, 2013

There’s no shortage of multinational conglomerates with large holdings in the wine world, but small, privately held winemakers would seem like the last group of people turning to Wall Street for infusions of capital. [level-members]

Apparently, though, they are. According to this New York Times Dealbook piece,

Winemakers seeking capital infusions. WS would seem like the last place they’d look, but it works. For Ed Sbragia, the founder of Sbragia Family Vineyards, partnering with a private equity firm allowed him to continue capitalizing on the success he had achieved and to scale the business to a more sustainable size.

The article mentions the “ruthless financier” reputation of private equity but doesn’t spend much time talking about the potential downsides of dealing with an equity partner. Is that be glided over here, or are the PE titans playing nice because having a piece of a wine maker is sexier than, oh, some heavy manufacturing operation in a location much less chi-chi than Napa or Sonoma.

It might be interesting to see if this model could be taken further. Can you envision a winemaker getting capital to cover up-front expenses from retailers who would have a say in the wines being made – flavor profiles, marketing strategy, labels and branding … it’s a stretch, I know. But an interesting concept and a way that a group of independent wine shops could stand out from the crowd while a cash-hungry winemaker gets the capital it needs. [/level-members]