Most American family wineries are prey to corporate takeovers as they lack succession plans, a survey says.
According to 247 family-owned respondents from California and Oregon in a survey conducted by SVB Silicon Valley Bank and Scion Advisors, wineries ‘are not taking steps to prepare’ for a change in ownership.
‘We have found that 51% of wineries plan to go through an ownership transition within 10 years,’ SVB Silicon Valley Bank’s Rob McMillan told decanter.com.
‘But they are not taking adequate steps to prepare. Effective transition planning takes a minimum of five years, probably 10,’ he added. ‘Although the survey shows that many people want a transition, only 10% are actually talking about it to the next generation.’
Most wineries were formed when the business was young and ‘cottage-based’ and the pace was slower with ‘sales often made out of the back of a truck,’ according to the survey report.
Scion Advisors’ Deborah Steinthal said ‘since 75% of winery owners are first generation and most have never been through a change in ownership control, most are not sure where to start or whether it even matters.’
The survey highlighted the tax impact of lack of planning. A 32ha winery in northern California worth $10m transferring ownership control to the next generation can have a net tax impact of $2-3m.
‘With the financial leverage most wineries operate under, it is unlikely that this can be raised strictly from savings, cash flow, or from the sale of winery assets. The more likely outcome in this circumstance is the quick estate sale,’ Steinthal said.
McMillan expects more corporate takeovers of family wineries in the near future. ‘We already see it happening,’ he said, citing examples like Rosenblum, Duckhorn and Stag’s Leap.
Written by Panos Kakaviatos
