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Foley Family Wines to buy Ferrari-Carano Vineyards and Winery of Healdsburg

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Wine and sports businessman Bill Foley has scored his biggest deal to add a trophy property to his collection of Sonoma County wineries by agreeing to buy Ferrari-Carano Vineyards and Winery in Healdsburg from the Carano family.

The acquisition announced Tuesday, which one industry source estimated to have a price tag between $250 million and $300 million, represents a turning point for two prominent county wine families as the industry continues shrinking amid a backdrop of flat wine sales and the nettlesome coronavirus pandemic.

For the Carano family, the sale represents its final chapter in the wine sector. About 40 years ago, founders Don and Rhonda Carano turned their Alexander Valley ranch into the well-regarded winery specializing in white wines and complete with a grand Italian villa on the property, plus more than 1,000 vineyard acres elsewhere in the county.

After Don Carano’s death in 2017, the family’s focus shifted to its publicly traded Nevada gambling business Eldorado Resorts, which is close to finalizing a $17 billion blockbuster buyout of Caesars Entertainment, owner of Caesars Palace in Las Vegas.

For billionaire Foley, the deal expected to be completed July 1 is his most ambitious yet to expand his collection of wineries in the Foley Family Wines portfolio, which includes Chalk Hill, Sebastiani and Banshee. Since making his fortune in the financial services sector and parlaying that into ownership of the National Hockey League’s Vegas Golden Knights, Foley has been an aggressive winery buyer over the past decade. His goal has been to reach annual production of 2 million wine cases through his various labels to better compete in an intensely competitive market.

On top of competitive pressures, the pandemic hit the North Coast wine sector with its biggest challenge since Prohibition, which ended in 1933.

“Probably COVID-19 hit us harder than some of the other large-size wineries,” Foley said in an interview. “As restaurants open and they start to run through some inventory, they will start buying again. This acquisition will give us the leverage to really expand our distribution.”

Besides the Ferrari- Carano Estate Winery, the sale includes: the winery’s Villa Fiore Tasting Room and three other tasting areas; the PreVail Mountain Winery on the east side of Alexander Valley; and 3,183 acres of land —1,223 planted at 21 vineyard sites — across the wine appellations of Alexander Valley, Russian River Valley, Dry Creek Valley, Carneros Napa Valley, Mendocino Ridge and Anderson Valley.

Also part of the sale are several residential properties, a large temperature- controlled warehouse, and the Estate Winery Garden, home to more than 2,000 plant species. The deal does not include the Vintners Inn, the Santa Rosa luxury resort the Carano family will retain.

“I’m happy to see our winery become part of a family-owned and operated company that shares our vision and core values,” Rhonda Carano, chief executive officer of Ferrari-Carano, said in a prepared statement. “Foley Family Wines has shown that they value the individual character of each of their estate wineries. We know that the reputation we’ve worked hard to build over the last four decades is in good hands.”

The Ferrari-Carano Winery and related assets have been on the market for some time, though given their size and reach had a limited pool of potential buyers, according to one wine industry analyst who spoke on the condition of anonymity.

Foley said the purchase will help him boost wine caseloads to attract greater interest of wine distributors and supermarkets, as well as desperately needed production capacity. He said he had been prepared to spend tens of millions of dollars to expand production at Sebastiani in Sonoma and Langtry Estate and Vineyard in Lake County, if he couldn’t strike a deal with the Carano family.

“We were basically out of production capacity,” said Foley, whose winery was ranked No. 18 in the country last year by Wine Business Monthly at 1.5 million cases produced.

The Ferrari-Carano acquisition also will give Foley — whose daughter Courtney is head of winemaking at Chalk Hill — his largest wine brand, one that produces 480,000 cases a year. The fumé blanc has production of about 230,000 cases a year and is well regarded by critics. Its 2017 vintage won the Sonoma County Harvest Fair as the top white varietal two years ago. The chardonnay has production of about 120,000 cases annually, and it provides Foley another premium varietal at the $20 a bottle or higher premium category. The two wines represent almost 75% of Ferrari-Carano’s production, he said.

“Traditionally, I have been a value buyer. I buy things that are broken and try to fix them,” Foley said. “And Ferrari-Carano is not broken. It’s really a great brand. The fumé blanc is a terrific wine. It gives us one that does a lot of volume.”

Foley intends to keep most of Ferrari-Carano’s production, tasting room and wine club staff at the winery. There’s not going to be “wholesale layoffs,” he said.

Foley Family Wines has been adjusting its portfolio. Heading into the pandemic the company generated about half of its revenue through restaurants and hotels, wine bars and other customers that sell wine on premises. These sales channels dried up almost overnight when health officials nationwide closed eateries and tasting rooms in March. Before COVID-19 struck, sales of Foley’s core wine brands were up 30% compared to a year ago, he said.

Despite the rough-and-tumble wine industry exacerbated by the pandemic, Foley expressed optimism in the sector and this eye-opening deal demonstrates it.

To have a proven Sonoma County vintner acquire the prime Ferrari-Carano Healdsburg wine business is “something to celebrate,” Michael Haney, executive director of the Sonoma County Vintners trade group, said of Foley’s pending purchase. “It’s nice to have someone with Sonoma County ties and roots.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.

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