Now it’s official:
Rumors had been flying for some time as all the details were being worked out.
Its definitely going to be fun to watch them give it a go up here. They already hit many hurdles unheard of to our south that is all a part of what makes AV AV. There are so many unique blocks up there that all need different treatments at different times. There has also been a lot of new development on that property since Peter Kenez bought up the whole hillside to the east of me. There are 2 other parcels they owned that are also for sale that were not part of this deal as there were not vineyards on them. I think he owned nearly 800 total acres up there.
As far as honoring contracts, in my experience it is often not done and not worth fighting over. If a winery had a contract with Kenez and they no longer own the property there really is not much to squabble over. Even if you were to win in court you think they are going to give you the picking date you want, I don’t think so. Also even though every time this happens to a winery or vineyard and they claim they will change nothing everything changes and usually not for the better. I would guess that Littori won’t want the fruit as they likely won’t farm his blocks organically with some biodynamic treatments though I do know he often does contracts by the acre so maybe that will be enticing enough for them.
Hobby projects like this rarely last longer than 10 years especially up here. Spending that kind of money and then underpricing your wine for the market to get it to move/gain any market share is a never ending and downward spiral that only works as a loss to offset income from other sources. On top of that selling it mostly thru distribution at FOB/50%+ off retail the brand was never going to get in the black and out of the red.
Unfortunately another story of a AV vineyard bought out leaving some wineries who don’t own any vineyard with one less SVD for their programs.
Well, there’s this:
Also, good luck fighting some venture capital firm with TONS of money over some grape contract. They won’t sell to you if they don’t want to, regardless of any contract. Even if you spend a ridiculous amount on attorney fees and win, it won’t have been worth the money or hassle. Then there’s the issue of picking dates that was already mentioned. As far as relationships and image, I agree with what you’re saying, but not everyone cares, especially if their plan is to not sell fruit (or not much fruit) in the future. Look at the Seven Springs fiasco.
I agree that someone coming in with money can be the bad guy and not honor contracts. While there have been past fiascos like Seven Springs, there have also been takeovers that have gone smoothly, see Gap’s Crown and Durell as well as Sun Chase.
And in case no one took the time to read the article:
“Kosta Browne will oversee this coming harvest at Cerise Vineyards, and will honor the existing contracts with winemakers who source its grapes. In terms of creating new labels, Becker said they’ll let Mother Nature tell them whether to use each site for a vineyard-designated wine.” (WS)
Joe, any word on what will be happening with the Knez label? Anthony Filiberti left as their winemaker awhile ago, I believe last year.
That bears repeating, since everyone was in a rush to assume otherwise.
Now the question is who had contracts for grapes from those vineyards and for how long. I think the only winery I personally buy from who still makes a SVD from those vineyards is Anthill Farms (Demuth). And while I like that wine, I don’t think the loss of that one bottling would materially change my Anthill Farms experience for the worse.
No word yet. Its very weird for Kenez not to also have a press release to go along with the Kosta Brown one. It leaves the rumors to run free until they make an official statement. I assume no statement as to “were still here in business” means the opposite. They have not even notified their mailing list as I am on it as I like the wines. I know their last email had listed a event in the vineyards some time this month. No updates to Facebook either, no posts for 3+ weeks.
All the 2015 Knez wine in barrel is being bulked out, so I assume that is the end of Knez as a producer.
Guilty as charged. I thought it was more of a theoretical discussion to me since I had no idea what they planned to do. That’s good, though. It is best not to burn bridges.
FWIW, inquiring (and thirsty) minds inquired, and pasted below is the response received, without commentary:
Thank you for your interest and inquiry regarding the recent press releases regarding the sale of Knez Winery vineyards.
You are correct- Knez sold the vineyards and winery to Kosta Browne. Kosta Browne has plans for the vineyards to be integrated into their portfolio of fine single vineyard designates of Pinot Noir, with Anderson Valley AVA being the most recent addition.
The Knez brand will carry forth, with the future being more of a mailing list/allocation style of consumer sales and service.
The Knez family and staff feel it is not necessary to address the sale of the vineyards when the Knez brand is still viable and retains plenty of inventory to move forth in the wine business with vigor.Thank you so much for the inquiry; we look forward to sharing our newest single vineyard designates-- 2014 Cerise, Knez and Demuth vineyard Pinot Noir this fall. Look for our email for notification.
In terms of creating new labels, Becker said they’ll let Mother Nature tell them whether to use each site for a vineyard-designated wine. > “Of all the tastings we’ve done, we’ve noticed there is some differentiation and diversity between the three sites, but we’ll wait and see how it all tastes after this year.> ”
Happy to see they have identified something that vaguely hints of distinctive terroir amongst the 3 vineyards!!!
I’m sure that their wait and see till next year approach should produce some spectacularly flame worthy posts on this board… ![[snort.gif]](/uploads/db3686/original/2X/b/bdc3944606213c4dca6c1169cf0a166c8bc4f8c9.gif "snort.gif"){kind=small}
So they sold the winery and vineyards they source from. Per paul the are buliking out the '15 vintage.
I just got an offer on the flash site invino for 2012 Kenez Cerise.
That does not look like positioning for an allocation or mailing list style sales and service to me.
Where will it be made and by who? Where will the fruit come from? To not be ahead of this transaction with a press release/email/social media message is dumbfounding to me. CarlaH thanks for reaching out to them to get some kind of official statement.
Hawks butte is for sale too if you like yorkville Syrah.
Do places like these pencil out? or do you really have to like the wine
I think very little at the small end of the CA wine biz pencils out which is why all these vineyards and wineries are turning over!
All depends on your parameters. To farm and sell SVD fruit more of a break even over 10 years, but… Time value of money plus real estate value, yes there is money in it if you have it to start and don’t do it all on debt. Are you going to live in the house or try and rent it?Monthly/vacation rental/as a benefit to who primarily takes care of the vineyard? Up here to find a nice house on 40 acres with anything planted makes this look like a pretty good deal. Clearly they are looking for a lifestyle buyer as no “wine company” wants a house just acres pnatable and planted. Most lots up here are way bigger. Last 3 larger vineyard deals that went thru were 100k per planted acre. If you got 10, 20, 30, 40+ years can you really go wrong with any real estate in CA wine county and/or real estate 2 hours from the bay area in CA?
Even if you loose money on the vineyard (cash flow year over year not considering the real estate value) you get the lifestyle, the tax right offs, and a home in AV. Again what are your parameters, no traffic, small great schools, knowing your neighbors and half the residents? Last research done in Sonoma county a while ago, 10 or more years when I lived there, said 100k per year lifestyle cost. As in if you built a brand around a vineyard vs you as a “consumer buying in at retail price” all the food/wine/events etc. that being in the wine biz gets you in lifestyle though not cash.
What are your parameters? What do you value lifestyle at? What is your emotional return on this kind of investment? BTW I do wine business consulting on all models like this, small(hobby) or large(50+k cases) single family ownership kind of models. No corporate BS or investors for me on that side of things.
Zac Robinson one of the owners of Husch bought this place in 2006. He lives in Ukiah so not a resident in the on site house. He sells fruit to wineries who do it SVD and could always buy it himself for his brand but gets a better price selling it.
Kevin you mean chashing out? or aging out? Wine business monthly has done multiple articles stating 50%+ would M&A or retire entirely thru the 10 year period were a few years into, baby boomers and all. There are a couple up here where the families are so well off the kids don’t want to and don’t have to work as hard to take things over and/or like their lifestyle some where else in some other well paying (though non equity owning) business they work for. Turing over to stop the bleeding is not something I’ve seen at the small end, medium maybe but there are a lot of factors. Many are waiting on the sidelines with cash hoping for another downturn to get in.
What are the yearly input costs for high end pinot like these or the neighboring morning dew?
Generally up here its pretty high for a small spot only one company to go to. You need gross income over 10K/acre so less than in inputs unless you want a loss for the write offs to offset other income. There are lots of variable costs (picking/spraying/thinning etc.) compared to fixed costs (taxes, pruning, equipment, etc.) so its kind of a vintage by vintage thing. 10 year averages work pretty good for production so younger vineyards do have a tougher time establishing “average/normal”. Tones per acre targets (mother nature willing/10 year averages) or contracts by the acre vary as well. For bubbles you can often hang nearly double the fruit though almost half the price.
Again what are the parameters one is looking for, high end 3 tons or less per acre at a high price or bubbles picked early at 5 tons per acre? Do you want to be involved at all or farm by “email/just sign the checks” to the vineyard management company?
Morning Dew was bought by Sittui and they don’t do much in the way of farming. Burt used the same company most all use who are not large enough to have their own crew year around. Plus he did some of it himself.