It’s not only vines that do the climbing. Lodi-based Michael David Winery said Thursday it had bought Silver Oak Cellars’ Geyserville winery and vineyards – including 12 acres loaded with Sonoma’s Alexander Valley Cabernet Sauvignon. The announcement comes the same week that Silver Oak said it had bought Ovid Napa Valley in St. Helena, which comes with 16.5 acres of Napa Cabernet Sauvignon.
Just to clarify, Lodi, which makes perfectly fine wines, but doesn’t have the cachet of Sonoma or Napa, buys a vineyard in Sonoma. Sonoma, which is three times the size of Napa but doesn’t have Napa’s cachet for Cabernet Sauvignon, bought a Napa vineyard known for its Cabernet Sauvignon.
To illustrate the difference a few hundred miles, or a 15-minute drive can make, we offer the following: a gallon of bulk Lodi Cabernet Sauvignon wine could be had for between $14 and $16 in early April; the same gallon filled with Sonoma bulk Cabernet Sauvignon wine would fetch between $30 and $40 a gallon; and finally, a gallon of Napa bulk Cabernet Sauvignon (yes, Napa has bulk wine), would have set the buyer back between $40 and $60 a gallon. The prices are from WineBusiness.com.
Of course, no one was ready to talk sales price. However, CNBC, quoting an unnamed industry source, thought the Ovid Napa Valley deal was in the $50-million range.
One insider said Silver Oak Cellars’ Geyserville sale was unrelated to its purchase of Ovid Napa Valley. The source, speaking on condition of anonymity, said the opportunities just arose pretty much at the same time.
All of Geyserville’s employees will be transferred to Silver Oak’s new Alexander Valley production facility which opens in June when the sale of the Geyserville winery and land is finalized. Silver Oak bought the winery and vineyards from the Lyeth family in 1992 when it was a white wine facility. In the 25 years they have had it, they converted it into a Cabernet Sauvignon facility.
The Geyserville facility gives Michael David Winery, which produces several brands including The Seven Deadly Zins, a toehold in Sonoma. It has sourced fruit from the North Coast for years as part of its wine program. Before the purchase of this winery, its annual production was 750,000 cases. The Geyserville facility “can crush approximately 1,500 tons, which is slightly above our current total tons purchased from the North Coast region,” a spokeswoman for Michael David Winery said.
“Even though our roots are in Lodi, quality fruit from the North Coast region has always played an important role as blending components to our wines,” said Kevin Phillips, vice president of operations at Michael David Winery in a press statement. “Being sixth-generation Lodi growers, we see the North Coast as similar farming traditions and values. For that reason, we are even more excited to be an active contributor to the community.”
Zepponi & Company served as the exclusive financial adviser on the sale, the terms of which were not disclosed. The sale did not include any brands.