for sale

Tuesday, March 09, 2010

Mrs. G and I have been tracking the real estate market pretty closely these past couple of years. We have a couple of properties on the market right now ourselves.

But what I have not seen much evidence of is a fire sale among Washington wineries. I get the eerie sense that more than a few are holding on to a 30th story ledge by their fingernails, but they are still in the air. A recent news story in Business Week claimed that seven percent of the vineyards and wineries in the Napa valley had finances that were “very weak” or “on life support.” The story went on to profile a number of people who paid way too much and now find themselves in deep doo-doo. Nothing surprising about any of it.

Washington is protected from a Napa-style plunge off the cliff by a number of factors. First and foremost, the state’s biggest winery conglomerate, Ste. Michelle Wine Estates, is doing quite well thank you very much. Sales are good to better than good across all their brands.

It helps too that Washington’s land prices barely reached a tenth of California’s for the most desirable vineyard locations, so there simply isn’t nearly as far to fall. Washington’s wine production is even less than ten percent of California’s total, again meaning there is much less risk. And the hundreds of mini-wineries in this state, provided they have not gone out on a wild spending spree, can probably sell their 500 or 600 cases of wine through direct marketing, if they take advantage of the endless tastings, tweet-ups, tours, conferences, etc. that bring potential customers right to them. Of course there is one final caveat - the wine has to be good, and it has to be fairly priced.

A quick scan of various winery for sale websites didn’t turn up much of anything north of Oregon. The most recent Washington listing is for a Yakima valley winery – Eaton Hill. Along with the winery itself is a 11.5 acre vineyard and orchard. Interestingly, the ad notes that a prospective owner “can petition TTB to be included in prestigious Rattlesnake Hills AVA.” Asking price: $2.2 million.

Here in Waitsburg, my local business barometers – the Whoopemuphollow Café and the jimgermanbar, were both humming this past weekend. A nice mix of locals and tourists. Daylight savings starts next weekend. All good.

9 comments:

Anonymous said...

Paul, the reason you don't see more wineries going under is because probably half of them are part time weekend wineries with another full salary to support the hobby gone out of control, or they are owned by someone with deep pockets to weather the storm.

OTOH, things have been very busy (sales wise) here in Woodinville the past couple of months...

Anonymous said...

Hi there-

Eaton Hill has been listed for sale on and off for the past four or five years. I saw the recent listing on Wine Business and thought that they had actually raised the price from a couple of years ago.

Terry Hall said...

Hi Paul,
The Bloomberg story could have been about any business anywhere in America in this economy. At an annual rate of foreclosure at around 1% in Napa Valley--it's not exactly a fire sale here either. The national rate of business foreclosure is hovering around 3%--property values are off 15% and that's also far under the national average.

Chris said...

Paul, I recall seeing Eaton Hill for sale about a year ago for $2.95. Another Washington winery currently on the block is Fox Estate on the Wahluke http://www.foxvineyard.com/

I've sampled from both of these and know the vineyards can make good wine. I particularly like the riesling from Eaton Hill and sangiovese from Fox.

Anonymous said...

Paul:
There are far more Washington, even Walla Walla, wineries that are looking to sell than the listings might suggest.

A major CA outfit that specializes in selling wineries, has been visiting here over the last eight months and suggested that perhaps as many as five Walla Walla wineries would entertain a serious offer. Of course, these properties do not have a FOR SALE sign on their lawn.

Nicolas said...

Paul,

You usually don't see wineries for sale in the classified because it is always a tricky affair to sell a winery and people want to protect their brands and their market share.

Also, many wineries can stop harvesting for a year or two and run on inventory cash flow. One telling story will be the amount of uncommitted fruit this coming harvest and the price that every varietal will command.

Nicolas

Peter Bouman said...

Paul,

I would have to say that your observation of WA wine property listings mirrors the situation here in Oregon. Of the many vineyard / winery properties that I currently have listed or am in discussions with the motivation seems to be a perfect storm of aging owners wanting to retire, and a difficult wine and fruit sales market convincing them that now is as good a time as any. While there is a financially influenced reason for putting properties on the market, very few of these are desperate situations. Even so, sellers are fully aware that the market conditions favor buyers, and sellers are anticipating and responding to aggressive offers. The energy on the buying side is very high, and I anticipate several properties changing hands this year.

Peter Bouman
www.oregonvineyardproperty.com

Anonymous said...

Paul,
I am a small lot winery in Prosser. My step dad who is the winemaker still has his Orchard as well as a field man for fruit packing wherehouse, and I keep my day time Job serving legal documents which gets me by even though it hard when one interfears with the other. One thing is for sure is alot of open fruit at low cost. With olsen Estates on the maket, three horse heaven hills vineyards in Forclosure it will be intresting to see what happens in October.
The funniest part is when customers think your rich. Every car we drive has over 200,000 miles on it. I think if we get threw this we will stand up with Walla Walla as the hard work and dedication is in every ounce of our wine.

PaulG said...

Anon - thanks for the update. Please feel free to give me further specifics (confidentially if you wish) with emails to paulgwine@me.com. I will keep the information strictly between us.

PaulG

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