Demand for wine investments in California has never been higher says M&A specialists

By James Lawrence

Published: 29 January, 2014

Demand for wine properties and investments in the Californian wine industry have never been higher, according to International Wine Associates, merger and acquisition specialists in the American wine industry.

Robert Nicholson, president of IWA, told Harpers.co.uk that in the 23 years he has been involved in the US wine business he has not "had more viable and international buyers". "We estimate that over $175 million dollars of international investment has come into the region over the past 12 months," he said.

But he said demand far outstripped supply. Nicholson explained: "We will see a large number of increasingly international buyers chasing a small number of coveted wine properties."

The growth in wine consumption in the US was also having an impact on the amount of wine now being imported in to the country due to the restraints of growth in the domestic market. Nicholson said the US had now opened "the door to imported wine, and it's foreseeable we'll see a 50% growth in imports this year".

He added: "The growing US wine market will continue to put upward pressure on vineyard values and the values of strong performing ultra premium wineries in all AVAs in California, Washington & Oregon, particularly for Cabernet Sauvignon and Pinot Noir vineyards and wineries.

"I believe the sale of wineries for generational reasons will continue to grow with a small number of private companies seeking an exit."

Limited vineyard plantings in California over the last seven years had also seen wineries looking to protect their supply, explained Nicholson. "We witnessed a firming up of vineyard values in all AVAs as wineries scramble to find suitable acreage to guarantee supply and we are seeing more of the same in 2014. There are always discounted or 'distressed' properties for sale, although how many of these will successfully find a buyer is hard to say. It is extremely difficult to re-stage a broken winery or brand!"

* You can read a wider interview with Nicholson in our Q&A section of Harpers.co.uk by clicking here.

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