Ste. Michelle Wine Estates buys Sonoma’s Patz & Hall winery

Ste. Michelle Wine Estates, the seventh-largest wine company in the country, announced Tuesday that it has acquired Sonoma’s Patz & Hall winery.

The Woodinville, Wash., company said it bought Patz & Hall’s inventory, winemaking facility and visitor’s center.

The winery, founded in 1988 and known for its single-vineyard pinot noir and chardonnay wines, will continue to source its grapes from some of the most well-regarded local vineyards. Those include Dutton Ranch in the Russian River Valley, Gap’s Crown Vineyard in the Sonoma Coast and the Hyde Vineyard in Carneros.

The sale price was not disclosed.

The winery’s founding partners - Donald Patz (national sales director), James Hall (winemaker), Anne Moses (California sales director) and Heather Patz (brand ambassador) - will remain with the winery to ensure continuity.

Patz said Tuesday the four were not looking to sell, but that as they were formulating their business plan for the next 10 years, the Ste. Michelle offer “sort of came out the blue.”

The owners, in their 50s and early 60s, thought Ste. Michelle was the right fit because of the autonomy it allows with its local wineries.

“The plan is to keep doing what we are doing,” Patz said. “I think we felt there was a lot of synergy.”

Ste. Michelle is an enormous player in its home state as it accounts for more than half of Washington’s wine production, according to Wine Business Monthly.

The purchase will be the company’s first winery in Sonoma County. In Napa Valley, it co-owns Stag’s Leap Wine Cellars with Italy’s Antinori family, Conn Creek and Villa Mt. Eden. Its parent company is Altria Group Inc., which owns Philip Morris International.

“Patz & Hall is the ideal addition to our ‘string of pearls’ collection of domestic and international wineries,” said Ted Baseler, Ste. Michelle’s president and chief executive officer, in a statement.

Patz & Hall currently produces about 35,000 cases annually. Patz said he doesn’t expect production to “explode to hundreds of thousands of cases a year,” as the focus will remain on the single-vineyard program. Ste. Michelle, however, will be able to provide a much larger sales staff to market the wines across the country.

The purchase is likely the first of many expected this year, as the mergers and acquisition market has been heating up around the North Coast, said Mario Zepponi, founder of Zepponi and Co. industry consulting firm. His firm brokered the sale.

“We expect more of these deals,” Zepponi said. He added that the transactions will continue to be driven by large wine companies looking for more profitable premium brands as well as private equity investors, who so far have only made small forays into the industry.

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