What is obvious to the uninitiated when entering northern California wine country is the beauty and tranquility of the surrounding rolling hills of vineyards and the amazing number of wineries that have staked a claim along Route 29 and up into the surrounding mountain ranges on either side of Napa Valley. Less obvious to the hordes of visitors taking wine country tours is the fact that those wineries are quickly getting sold out of the family hands that started the business and worked the soil toward a hard-earned reputation over a period of decades.
Family owned vineyards and wineries throughout Napa Valley are increasingly being sold off and being absorbed into big businesses: corporate conglomerates, wine groups, or international family wine businesses. While there is often great financial motivation, more often the choice is made because there are no alternatives. The corporate buyers have been swarming in the last few years because so many family-owned wineries failed to consider any long-term plans as to who would succeed the first generation original owners and that didn’t work toward that transition of the business which demands somewhere in the region of five to ten years to affect properly. Leaving such actions to a last minute scramble reduces their options down to one – selling the property.
While many owners would be interested in having their children succeed them and carry on the family business, tradition, and name, that is all too often an impossibility due to estate taxes that are often in the millions of dollars. Given that so many wineries operate with significant debt, and tight cash flow, the prospect of raising such large sums from asset sales which they currently use and need for the ongoing business, or cash flow thrown off from the business, is unlikely. And even if they could raise the money, heirs are often not apparent as nearly half of the wineries’ owners either don’t have children, or have children who don’t wish to go into the family’s wine business. Moreover, many of those heirs have a preference for the cash windfall to come from the sale of the business.
While these circumstances have fuelled a lot of discussion and much dread within the family oriented environment that Napa Valley will become a soulless environment of corporate wine production facilities, there is trend that seems to be reassuring. Just as prevalent as the rash of buy-outs has been, is the culture of the small start-up boutique winery setting out to make high quality wines by hand which always manage to carry status and wield influence on the standards and tastes of the valley beyond their weight. For every big business buyout that one hears of, there always seems to be a handful of small start-up vineyards coming into the valley to reinvigorate the family-style winery environment that has been a tradition in Napa Valley.
