Napa-Based Duckhorn Wine Co. Buys Famed Sonoma Pinot Noir Producer

On July 17, Duckhorn Wine Company announced its intent to purchase successful Kosta Browne Winery. Duckhorn will become the sole owner of the Winery, taking over for current stakeholders, the investment fund J.W. Childs. Kosta Browne’s CEO and President, Scott Becker, and its winemaker, Nico Cueva, will stay on.

Benefits for Kosta Browne

Kosta Browne, which started in 1998, has become one of the most famous and successful Pinot Noir brands in all of California. In 2011, its 2009 Sonoma Coast Pinot Noir was name Wine Spectator’s “Wine of the Year.” Over the last four years, Kosta Browne has transitioned from purchasing its fruit to owning its own land. This has included Cerise Vineyards’ 60 acres, expanding its Pinot Noir bottlings to include wines from Santa Barbara, adding more Chardonnay to its repertoire, and investing millions into its cellar and winery in Sebastopol.

In an interview with Wine Spectator Duckhorn’s CEO and President, Alex Ryan praised his company’s purchase of Kosta. “Kosta Browne has written a chapter of great Pinot Noir over the last 20 years. Here are a lot of wineries for sale right now, and if we were looking purely for assets that would be one thing, but Kosta Browne has authenticity and you can’t match that.”

Back in 2009 when the original financial backers were looking to cash out, Vincraft, a Sonoma-based investment firm purchased the winery. Then in 2015, Boston-based private equity firm, J.W. Childs took over. Duckhorn, also a Wine of the Year winner for 2017, produces 900,000 cases of wine per year. It is owned by TSG Consumer Partners, a private-equity firm.

Kosta Browne hopes to expand its customer base by joining forces with Duckhorn. As of now, Kosta has a very difficult time gaining new customers, as its 30,000 mailing list members take 85% of its annual production of 30,000 cases. Thus, its wines are hard to find. By uniting with Duckhorn Wine Company, it hopes to expose its wines to a much larger market including distribution to wine shops and restaurants. “All great international brands have a legitimate wholesale component in key markets,” explained Ryan. “They [Kosta Browne] knew that was a step they had to take whether Duckhorn came along or not, and we can share knowledge and connections while still giving them their independence and keeping their culture of doing business intact.”

Benefits for Duckhorn Wine Company

The acquisition of Kosta is expected to help Duckhorn by contributing to its list of luxury Pinot Noir. Becker says that for Kosta, its success comes down to sticking with its plan, seeking opportunities to buy vineyards that fit into its vision for its Pinot Noirs and Chardonnays. “We believe in taking risks. There are 100 different ways to make a 1% improvement, and at the end of the day, our customer demands us to make better wines, and investment gives us a better shot to be among the best.”

If you are considering purchasing or partnering with a winery, it is important that you are familiar with California’s wine laws. The wine and business law attorneys at GM Group, PC are available to steer you in the right direction. Contact us today online or call 805.892.2201.

Posted in: Wine Law