Success has many flavors: three winery ownership transition stories

by Deborah Steinthal, Managing Director, Scion Advisors (707.246.6830)


As the U.S. wine industry matures, increasingly large numbers of winery owners are retiring[1] and are seeking to sell their businesses to third parties or to their children. Either process is fraught with challenges. For those who have successfully achieved these transitions, the financial and emotional rewards are many.

Since success comes in many flavors, you may find these very different transition stories, from three of our clients – interesting strategic options to consider:

    • CASE ONE – TWO FOUNDERS sell to long time partners – Adelsheim Vineyard
    • CASE TWO – FOUR FOUNDERS sell to large wine company – Patz & Hall Wine Company
    • CASE THREE – TWO FOUNDERS sell to next generation, son – Cristom Vineyards
CASE ONE: TWO Founders sell to partners.

THE CHALLENGE: Adelsheim is a pioneering 40,000 case Oregon brand in national distribution with mid tier wines. They needed better alignment among business partners about the future direction for the winery; improved profitability and cash flow, and a revitalized brand. It was also time to be proactive about succession.

THE SOLUTION: The ownership team hired Scion Advisors to lead a process with them, to develop new leadership and ownership structures; and a blue print for the future. This entailed:

  • Modelling financial ‘what if’ scenarios to spur robust discussion and enable them get on the same page about a viable future business model.
  • Engaging in a facilitated, comprehensive strategic roadmap process with their management team, applying market research insights to rationalize product and channel strategies; and validate brand positioning. 
  • Advising on organization structure, leadership succession and recruiting step.

KEY RESULTS: David and Ginny Adelsheim successfully sell to the their long time business partners – Lynn and Jack Loacker. 

  • Ownership group on the same page, driving succession and future winery vision. 
  • Joth Ricci hired as successor CEO to David Adelsheim. 
  • Business team aligned, motivated and focused on execution.

DEBORAH LED A ROBUST PROCESS THAT WAS INSTRUMENTAL IN CATALYZING A SOLID BUSINESS AND OWNERSHIP SUCCESSION FOR THIS LEGACY OREGON BRAND. HER APPROACH TO STRATEGIC PLANNING ACCELERATED MY ABILITY TO MOVE TO EXECUTION BY ENABLING BUSINESS AND OWNERSHIP TEAMS TO ENGAGE IN AN ESSENTIAL STRATEGIC DIALOGUE AND SET OF DECISIONS ABOUT THEIR FUTURE – LEADING TO MY HIRE AS DAVID ADELSHEIM’S SUCCESSOR.’ Joth Ricci, new CEO, Adelsheim Vineyard. 

CASE TWO: Four business partners sell to large winery.

THE CHALLENGE: Fifteen years ago, Patz & Hall was an emerging, 15,000 case brand on a path to success in national distribution with strong single vineyard relationships. They needed better alignment among business partners; and an ownership and business structure more supportive of growth opportunities.

THE SOLUTION: The four owners hired Scion Advisors to help them develop a strategic organization structure more conducive to growth and their eventual exit. 

  • Explored alternative scenarios that could support profitable growth; and enabled a disunited partner group to have robust, depersonalized dialogue, eventually agreeing to a united future vision for their winery.  
  • Led comprehensive strategic planning process with ownership and business teams, using qualitative/ quantitative market research to drive rationalized product, channel strategies and validated brand positioning. 
  • Implemented next generation consumer direct channel strategies, driving profitability.
  • Designed and deployed organization strategy realigning owners roles in the business.
  • Drove recruiting process; implemented performance management process. 
  • Designed Board of Directors strategy; implementing governance and communications practices. 
  • Stabilized ownership estate and exit strategy through renegotiated shareholder agreements. 

KEY RESULTS: Owners sell 10 years later for a strong multiple – to Ste. Michelle Wine Estates. 

  • Grew EBIT (cash flow) 5.5 times in 3 years; more than doubled in volume over 15 years.
  • Stable organization driving solid decision-making and communications.
  • Divided owners working as cohesive company.

THE ENTIRE SCION ADVISORS TEAM HAS BEEN AN EXCELLENT RESOURCE IN HELPING US ORGANIZE AROUND KEY PLANNING, FINANCIAL AND PERSONNEL DECISIONS. THEY ARE A GREAT RESOURCE TO ANYONE CONSIDERING A DETAILED ANALYSIS, REORGANIZATION, OR REVIEW OF THEIR FAMILY WINE COMPANY. I CAN HONESTLY SAY WE WOULD NOT BE THE SUCCESS WE ARE TODAY WITHOUT THEM. James Hall, Founder & Winemaker, Patz & Hall Wine Company. 

CASE three: Wine business positioned for next generation leadership.

THE CHALLENGE: 17,000 case producer of world class, estate grown Pinot Noir wines, Cristom Vineyards needed to build a stronger organizational structure, go to market and brand strategy to sustain profitable growth – under the tutelage of Tom Gerrie – a young, second generation owner.

THE SOLUTION: Tom Gerrie hired Scion Advisors to lead a comprehensive process with his management team to develop a blue print for the future. Before engaging in this process, they presented him with organization concepts for building leadership readiness, leading to the hire of a seasoned executive – Steve Thomson, as COO and Head of Sales, who eventually became Cristom Vineyards’ CEO.

  • Assessed alternative, future financial scenarios supporting sustainable growth. 
  • Led strategic planning process, applying market research insights in designing more profitable product and channel strategies; and validated brand positioning. 
  • Expanded consumer direct channel scope and redesigned national distribution strategies. 
  • Refined organization and succession strategy. 
  • Coached the next generation leadership through key execution steps.

KEY RESULTS: Second-generation owner shifts his role to Production Leadership, alongside experienced, professional CEO – solidly taking the business to the next level. 

  • Strategically-repositioned, next-generation winery business model and brand, grew sales 25% in the first year.

DEBORAH PLAYED AN ESSENTIAL ROLE IN ADVISING US THROUGH A MAJOR REPOSITIONING OF OUR BUSINESS. HELPED GUIDE IN 6 MONTHS WHAT THE OWNER HAD BEEN LOOKING TO ACCOMPLISH OVER THE LAST 6 YEARS. WITH HER PROVEN AND HIGHLY PRODUCTIVE STRATEGIC PLANNING PROCESS; AND HER EXTENSIVE WINE INDUSTRY KNOWLEDGE, DEB GAVE US THE CONFIDENCE AND TOOLS TO DEFINE AND ACCOMPLISH STRETCH GOALS – ESSENTIAL TO PROFITABLE GROWTH OF OUR BUSINESS. IN AN EVER MORE COMPLEX AND COMPETITIVE WINE INDUSTRY, WHERE SUCCESSFUL COMPANIES MUST CONSTANTLY CHALLENGE THE FOUNDATION OF THEIR BUSINESS MODEL, SHE IS A CHANGE AGENTSteve Thomson, CEO, Cristom Vineyards; Chairman, Oregon Wine Board | President, Oregon Winegrower’s Association.

Conclusion. There are no magic bullets in managing business growth, succession and ownership transition. Preparing your business for transition to its rightful next phase should include thorough discussions with your family and business leaders about your growth and retirement goals, and how to support these.

As it can take 10 years or longer to get a business ready for a sale, you should consider clarifying your exit strategy – before you develop a strategic plan. To accomplish this, you will need to answer the question: to whom do you eventually want to sell the business (3rd party, your kids or perhaps your employees)? This is complex decision making which can be lonely and fraught with uncertainty. But if you steer a rigorous process, understand all your options and make sound decisions with wide-open eyes – you can reap huge upside benefits from your hard work.

For this reason, you may find it valuable to build a collaborative relationship with trusted advisors like Scion Advisors. We have broad wine industry perspective, a proven approach to family businesses planning; and can help you accelerate your learning curve, avoid false starts along the way, and speed up time to results. Our clients in these case studies will likely support this notion.

[1] 2008 Report: Ownership Transitions in the Wine Industry. Authors Deborah Steinthal, Scion Advisors and Rob McMillan, SVB.

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ABOUT THE AUTHOR. Deborah Steinthal is Founder and Managing Director of Scion Advisors, a leading boutique, strategy consulting firm serving the U.S. wine industry. With a proven approach enabling business owners to position for profitable growth or for exit, she has worked alongside over 130 winery owners and CEOs; and has moderated over 80 Winery CEO Roundtables involving more than 50 top wine industry CEOs for over a decade. Deborah’s expertise is in the area of business growth strategy, family business transformation, and board and leadership development.

Based out of McMinnville, OR; born in Lima, Peru; raised in Belgium and Germany; Deborah has lived, worked and travelled globally. She is broadly published in the national business press, an invited speaker, panelist and widely quoted for research on key practices, such as such as How to Build a Pull Brand, Digital Commerce and Family Business Transition.

For more information call Deborah Steinthal at 707.246.6830.

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Among her clients: Cristom Vineyards, Adelsheim Vineyard, Willakenzie, Elizabeth Chambers Cellar, Patz & Hall Winery, Benziger Family Vineyards, Calera Wine Company, Delicato Family VIneyards, Cakebread, Spottswoode, Gundlach Bundschu, Luna Vineyards, Clos Du Val, Quail’s Gate Winery, Wente, J. Lohr, Choice Lunch,
 Cowgirl Creamery, 
Easton Malloy 
(producers of Peppermint Bark for Williams-Sonoma)
, and McEvoy Ranch.

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