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Offering Memorandum
Napa Valley Vineyard & Winery
5221 & 5211 Big Ranch Road
Napa, CA
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This Information Memorandum is based upon information supplied by the owner of the Property (“Owner”). This Memorandum is furnished through Maher Advisors, Inc. (“MA”), as the Owner’s exclusive advisor, solely for the use by prospective buyers in considering an acquisition of the Assets. This Memorandum has been duly approved and delivered by the Owner, the memorandum issuer. This document contains selected information provided by the owner to assist the recipient in making an initial decision to proceed with further investigation. Maher Advisors and the Owner expressly disclaim any and all liability for representations and warranties, expressed or implied, contained in this document or for omission from it. An acquisition of the Property and/or Brand should be based on further investigation. In connection with a transaction with the Owner, the Owner's sole responsibility with respect to the matters described herein shall be as set forth in the final executed agreement with the Owner containing the terms of such transaction. MA, on Owner’s behalf, reserves the right to negotiate with one or more potential parties at any time and enter into a definitive agreement for a transaction involving the Owner without prior notice to you or other potential investors or purchasers. Requests for additional information If, after reviewing this Memorandum, a prospective purchaser wishes to complete a further review of the Property; such interest should be communicated to MA. Under no circumstances should any contact be made directly with Owner, employees, retailers, or customers regarding the Property or Brand. All communications and inquires shall be directed to the following: Sean Maher Maher Advisors, Inc. PO Box 1009 1101 Vintage Avenue St. Helena, California 94574 (707) 963.8266 ext. #2 (707) 484.4604 (Cell) [email protected]
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TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................. 4
THE VINEYARDS ........................................................................................................ 5
THE WINERY .............................................................................................................. 7
THE SEDNA BRAND .................................................................................................. 8
THE NAPA VALLEY ................................................................................................. 10 Oak Knoll AVA History & Background .................................................................................... 11
Oak Knoll AVA Representative Producers ............................................................................ 12
U.S. WINE INDUSTRY REVIEW 2011 ....................................................................... 13
EXHIBITS ................................................................................................................... 14 APN Map ..................................................................................................................................... 14
Aerial Map – Vineyard Parcel.................................................................................................. 15
Aerial Map – Winery Parcel ...................................................................................................... 16
Price Justification ....................................................................................................................... 17
Qualifications of Maher Advisors ............................................................................................ 18
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EXECUTIVE SUMMARY Ownership of a winery in the Oak Knoll Appellation represents a rare opportunity to be an increasingly important player in the high‐end wine market or to enhance a portfolio of wine brands. This property provides an investor with the opportunity to own a winery and estate home‐site, which includes 13.63 acres of premium vineyard acres. With its unique location and permit, this represents a very attractive and unique opportunity that cannot be duplicated. The owner is exploring the sale of their fee simple interest of the vineyard and winery property located in the northern portion of the Oak Knoll Appellation. The Oak Knoll AVA has a long history of selling premium grapes to the Valley’s finest wineries. The property consists of two parcels, totaling 17.19 acres. There are 13.63 acres total of premium vineyard acres which are planted to Cabernet Sauvignon, Syrah, Malbec and Chardonnay varietals. Offering Price: Winery Parcel $3,400,000
Vineyard Parcel $2,600,000 Sedna Brand $ 995,000 TOTAL $6,995,000
Key Investment Considerations
Location – located within the world‐class Oak Knoll AVA of the Napa Valley
Proven High Quality Vineyard ‐ vineyard with an outstanding reputation for producing
excellent Cabernet Sauvignon, Syrah, Malbec and Chardonnay varietals
History of High‐End Grape Purchasers – impressive list of high‐end wineries purchasing grapes
at top prices
Excellent Brand Reputation – the brand is currently in numerous well‐known restaurants (see
pages 7 & 8 for more information)
Real Property ‐ two (2) legal parcels totaling 17.19 acres, with 13.63 net vine acres planted
Winery & Permit – existing winery structures with 20,000 gallon permit
Estate Potential – Excellent home‐site on both parcels
APN Address AcresVineyard
AcresZoning
036‐120‐031‐000 5211 Big Ranch Road, Napa, CA 4.15 2.46 AP (Agricultural Preserve)
036‐120‐058‐000 5221 Big Ranch Road, Napa, CA 13.04 11.17 AP (Agricultural Preserve)
TOTAL 17.19 13.63
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THE VINEYARDS Vineyard Data Block Variety Clone Rootstock Spacing Vines Acres
Year
Planted
1 Chard 17 101‐14 8 x 5 1,358 1.25 1999
2 Chard 96 101‐14 8 x 5 1,326 1.22 1999
3 Malbec 101‐14 8 x 5 587 0.54 2004
4 Cab 337 101‐14 8 x 5 599 0.55 2004
5 Cab 4 101‐14 8 x 5 2,934 2.69 1999
6 Syrah 877 101‐14 8 x 5 2,325 2.13 1999
7 Syrah 2 101‐14 8 x 5 1,821 1.67 1999
8 Syrah 477 420A 8 x 5 1,644 1.51 1999
9 Syrah 2 420A 8 x 5 2,254 2.07 1999
TOTAL 14,848 13.63
APN# 036‐120‐031‐000
APN# 036‐120‐058‐000
Vineyard Yields
Soils The soils are mapped as Pleasanton Loam, 0 to 2 percent slopes.
Water There is one on‐site well located on the vineyard parcel (APN #036‐120‐058) with a production of 1,200 gallons per minute (per well log). The home/winery parcel (APN #036‐120‐031) has one well with an estimated production of 100 gpm.
Kate's Vineyard Historical Avg. 2011 A 2012 P
Varietal Acres Tons Tons Tons
Chardonnay 2.47 12.00 8.70 12.00
Malbec 0.54 n/a 2.00 1.50
Cabernet 3.24 12.00 10.60 10.00
Syrah 7.38 35.00 25.00 43.00
TOTAL 13.63 59.00 46.30 66.50
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2012 Vineyard Pro-Forma
Kate's Vineyard
Varietal Tons $/Ton Revenue
Chardonnay 12.00 2,700$ 32,400$
Malbec 3.00 5,000$ 15,000$
Cabernet 12.00 5,100$ 61,200$
Syrah 35.00 3,300$ 115,500$
TOTAL/Average 62.00 4,025$ 224,100$
Less Farming Cost (60,000)$
Less Harvest (18,600)$
TOTAL INCOME 145,500$
Operating Income 145,500$
Direct Capitalization @ 6% 2,425,000$
Plus
Homesite 750,000$
Value 3,175,000$
Income Approach ‐ Vineyard Parcel
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THE WINERY Structures Winery 660 square feet Tax Paid Cellar 475 square feet Shop/Rec Room 744 square feet (2 story) Crush Pad 504 square feet
Winery Permit The current permit allows for the production of 20,000 gallons of wine annually.
Winery Equipment
STAINLESS STEEL COOPERAGE
Item Quantity Size Total
SS Round, (1) Door, Jackets, MS Base 2 2,000 4,000
SS Round, (1) Door, Jackets, MS Base 2 3,000 6,000
TOTAL 10,000
WINERY EQUIPMENT
Item Quantity
Westec Sorting Table 1
Mori Basket Press 1
Refrigeration Eqiupment 1
Plastic T‐Bins 1
Blue Fermentation Bins 23
Transfer Pump ‐ 1
Transfer Pump ‐ 5HP w/ fittings 1
Barrel Racks ‐ Western Square 60
Winery Ladder 1
Misc Equipment 1
Fermentation T‐bins 24
VINEYARD EQUIPMENT
Item Quantity
Wind Machine 1
Ford Tractor 1
Improvements Square Feet
Main Residence 3,900
Guest House 1,200
Pool Cabana 442
Winery 660
Cellar 475
Shop/Rec Room 744
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THE SEDNA BRAND Sedna is the subject of a creation story among the Inuit, the native people of far Northern Canada. The wines are made exclusively from grapes grown on the estate vineyard. They have a clean, fruity style and are gently made and handcrafted in very small quantities. A combination of new and used French oak is used to subtly enhance structure, color, and flavors. The consulting winemaker is Tim Milos.
Cabernet Sauvignon: This wine is fermented in small bins and punched down by hand and then aged in French Oak for 2 years. The wine has flavors of blackberry, cassis and plum, with highlights of violets, olive and game. Typical production is around 500 cases. Chardonnay: The Chardonnay is whole cluster pressed, fermented in French Oak with wild and inoculated ferments, and aged sur lies for 1 year. The wine has flavors of ripe comice pear, with hints of lemon zest and toasted nuts. Typical production is around 900 cases. Rose of Syrah: This wine began as a saignier of Syrah on the evening of crush. It then underwent a cool fermentation and was aged for 5 months in neutral French Oak barrels. It has fresh, juicy fruit flavors with strawberry and raspberry, and a hint of hibiscus and rose petals. Typical production is around 100 cases. Syrah: The Syrah is fermented in small bins and punched down by hand. Then it is barrel aged for 2 years. The wine is complex, with flavors of raspberry, plum, leather and spice. It is medium bodied, with soft tannins, bright acidity and a long finish. Typical production is around 900
cases. Inventories Case Goods Cases2011 Reserve Cabernet 150
2010 Reserve Cabernet 150
2009 Reserve Cabernet 150
2004 Syrah 500
2005 Syrah 1,359
2006 Syrah 1,254
2006 Chardonnay 500
2006 Cabernet 843 2007 Chardonnay 500
2007 Syrah 790
Total 6,196
Bulk Wine Gallons Cases
2011 Malbec 356 150
TOTAL BULK AND CASE GOODS 6,346
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Restaurant Placement
Sedna wines are placed in over 80 of the finest restaurants in the Bay Area. Below is a selection
of those restaurants:
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THE NAPA VALLEYThis valley, snug between the Mayacamas and Vaca mountains in Northern California, claims some of the most expensive agricultural land in the world. The main ecological factor of the region is the cool wind and fog that is sucked in from San Pablo Bay during the afternoon, cooling the vines. The long growing season is marked by sunny, warm and dry days followed by cool evenings, an ideal combination for allowing grapes to ripen slowly and evenly. Within the Napa Valley Viticultural Area, the microclimates are distinctive and dramatic. The most moderate temperatures are found in the Carneros region due to the San Francisco Bay influence across San Pablo Bay. Farther up the valley, the Pacific Ocean exerts less
influence: temperatures are warmer in the summer and cooler in the winter, and rainfall is greater than in the south. Temperature fluctuations from north to south can vary as much as 15 degrees, even though the valley is only 30 miles long and five miles wide. Configuration of hills, exposure and elevation all work to create distinct microclimates within the Napa Valley appellation imprinting recognizable characteristics on the grapes grown within them. Vintners and growers within these regions delineate the boundaries of these growing areas, giving them names that reflect their regional designations, or appellations.
Cabernet Sauvignon is the acknowledged "king" of red grapes in Napa Valley. Some Napa Valley Cabernet vines from the 19th century are still producing, but most were replanted in the last
20 years. Cabernet Sauvignon is a complex grape; its character can emerge as black currants, green olives, herbs, bell peppers or combinations of these with mint and leather. These wines age beautifully like their counterparts in Bordeaux.
Appellations in Napa Valley
Within the Napa Valley, regions have emerged that possess distinct microclimates and terrains, imprinting recognizable characteristics on the grapes grown within them. Vintners and growers within these regions delineate the boundaries of these growing areas, giving them names that reflect their regional designations, or appellations. Data supporting a proposed American Viticultural Area, or AVA, is submitted to the government, which decides whether the proposed appellation designation will be granted.
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The Napa Valley is itself an appellation. Within the Napa Valley appellation exists 15 subappellations, or AVAs, including: Atlas Peak, Calistoga, Chiles Valley District, Diamond Mountain District, Howell Mountain, Los Carneros, Mt. Veeder, Oak Knoll, Oakville, Rutherford, St. Helena, Spring Mountain District, Stags Leap District, Yountville, and Wild Horse Valley.
*CF = Cabernet Franc, CH = Chardonnay, CS = Cabernet Sauvignon, ME = Merlot,
PN = Pinot Noir, ZN = Zinfandel
Oak Knoll AVA History & Background The Oak Knoll Appellation is located toward the southern end of the Napa Valley. In 1850, a horticultural enthusiast named J.W. Osborne purchased 1800 acres of land a few miles south of Yountville and called it Oak Knoll. He was the first to plant wine grapes in the Oak Knoll region. He is believed to be one of the key players responsible for bringing Zinfandel from the east coast to the Napa and Sonoma valleys for the first time. The appellation resides at a relatively low elevation on the valley floor, making it accessible to the climate‐moderating effects of San Pablo Bay. Cooling breezes and coastal fog extend the growing season which can last up to eight months. Enthusiastic advocates of the new AVA argue that Oak Knoll strikes the perfect climatic balance, not too warm and not too cool. Oak Knoll has less annual rainfall than most of the Napa Valley, which allows for warmer soils. In these conditions, a wide range of red and white varieties ripen with the perfect balance of sugar and acid. The principal varieties of the region are Merlot, Chardonnay and Cabernet Sauvignon.
Appellation Approx. Vine Acres Key Varietals*
Atlas Peak 1,500 CS, CH
Calistoga n/a CS, ZN
Chiles Valley 1,000 CS, ME, CF
Diamond Mountain 500 CS, CF, CH
Howell Mountain 600 CS, ME, ZN
Los Carneros 8,000 CH, ME, PN
Mount Veeder 1,000 CS, CH
Oak Knoll 3,500 CS, ME, CH
Oakville 5,000 CS, ME
Rutherford 3,300 CS
St. Helena 1,500 CS, ME
Spring Mountain 1,000 CS, ME
Stag's Leap 1,200 CS, ME
Wild Horse Valley 100 CS
Yountville 2,700 CS, ME
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Oak Knoll AVA Representative Producers
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U.S. WINE INDUSTRY REVIEW 2011 (source: Gomberg Report) Explosive sales growth helped drive up 2011 wine shipments into U.S. trade channels by 17.3 million cases, up 5.3%. Total wine shipments from all sources, including California, and other states, climbed to a record 347 million cases. This market growth was particularly impressive because it came under a recovering U.S. economy. Most wineries finished the year with volume gains and more balanced inventories. At this new volume level, the United States is now the largest wine consuming nation in the world, but still ranks low among nations based on per capita consumption.
After slipping back during the recession of 2009, California wine exports recovered to a record high in 2011. Boosted by a strong 13% jump in packaged wine exports, total California wine exports grew 6% to 44.6 million equivalent cases. Comparative Wine Shipments to the U.S. Market 2007‐2011:
Rank Country Amount
1 France 49 litres
2 Portugal 43 litres
3 Italy 42 litres
4 Switzerland 38 litres
5 Denmark 32 litres
6 Austria 30 litres
7 Spain 28 litres
8 Greece 26 litres
9 Belgium 25 litres
10 Argentina 24 litres
18 United States 9 litres
Actual
2006
%
Change
Actual
2007
%
Change
Actual
2008
%
Change
Actual
2009
%
Change
Actual
2010
%
Change
Estimated
2011
%
Change
Table
Wine264.0 3% 273.5 4% 275.8 1% 281.9 2% 285.2 2% 299.3 5%
Dessert
Wine 24.1 12% 26.5 10% 27.6 4% 27 ‐2% 29.3 8% 30.6 4%
Sparkling
Wine13.6 4% 13.8 2% 13.5 ‐2% 13.9 3% 15.2 11% 17.2 13%
Total
Wine301.6 4% 313.8 4% 316.8 1% 322.8 2% 329.7 3% 347 5%
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EXHIBITS APN Map
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Aerial Map – Vineyard Parcel
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Aerial Map – Winery Parcel
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Price Justification
Operating Income
Direct Capitalization @ 6%
Plus
Homesite
Value
Income Approach ‐ Vineyard
Winery Parcel
Units Unit Type $/Unit $
Planted Acres 2.47 acres $185,000 $456,950
Homesite 1 parcel $600,000 $600,000
Main Residence 3,900 sf $105 $409,500
Guest House 1,200 sf $85 $102,000
Pool Cabana 442 sf $85 $37,570
Winery Site 1 parcel $625,000 $625,000
Winery Permit 1 parcel $625,000 $625,000
Winery Buildings 1 parcel $350,000 $350,000
Winery Equipment 1 parcel $157,000 $157,000
Misc. Improvements 1 parcel $275,000 $275,000
Total $3,363,020
Vineyard Parcel
Units Unit Type $/Unit $
Planted Acres 11.16 acres $185,000 $2,064,600
Homesite 1 parcel $750,000 $750,000
Less one acre of vines 1 acres (185,000)$ (185,000)$
Total $2,629,600
Total Both Parcels $5,992,620
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Qualifications of Maher Advisors
Sean Maher started Maher Advisors after an eight‐year career as a broker at Cushman &
Wakefield; a New York based Rockefeller Group Company. At Cushman & Wakefield Sean
specialized in commercial leasing and investment sales and sold or leased over
$120,000,000 in real estate. Since 1995, Sean and his firm has focused on mergers and
acquisitions, equity investments, management consulting and strategic sales and marketing
within the wine industry. Sean has successfully completed merger & acquisition
assignments for clients such as; Beringer, CalPERS, Taittinger family, St. Supery, Bill
Hambrecht, and Bill Harlan. Sean received his undergraduate degree from UCLA and has a
MBA from St. Mary’s College of Moraga. Sean was licensed as a real estate broker in 1987.
Sean is a member of the National Association of Certified Valuation Analysts (NACVA).
Maher Advisors’ Services Include:
Winery & vineyard mergers & acquisitions Winery & vineyard valuations Exit strategies General management consulting Strategic planning
Exclusive Agents: Sean Maher
Maher Advisors, Inc.
1101 Vintage Avenue
St. Helena, CA 94574
C: (707) 484.4604
www.maherwine.com
Henry Schlangen
Maher Advisors, Inc.
1101 Vintage Avenue
St. Helena, CA 94574
C: (707) 235‐5951
www.maherwine.com
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Selected Wine Industry Transactions completed by Maher Advisors:
