Family ties drive deal between Coppola and Delicato wineries
Mergers and acquisitions in the wine business are like a lot of marriages. Some last decades, while others flame out after initial excitement fades.
The latter includes notable local wineries such as Clos du Bois and Ravenswood, which were picked up on the cheap by E. & J. Gallo Winery earlier this year, after long ago losing their luster with Constellation Brands Inc.
That doesn’t appear to be the case with Napa-based Delicato Family Wines’ purchase last month of the Francis Ford Coppola Winery of Geyserville. The deal has all the markings on paper of a long-lasting partnership based on complementary rather than duplicative assets.
Start with geography. Delicato is based out of the Napa Valley after buying the Black Stallion Estate Winery in 2010, though the company also has an extensive reach across the state with more than 50 brands that include Three Finger Jack and Z. Alexander Brown, and more than 4,000 vineyard acres.
Meanwhile, Coppola helped further cement Sonoma County as a world-renowned wine region with his namesake winery and the Virginia Dare Winery, which was included as part of the sale along with its Archimedes Vineyard.
Critical to why this combination might be a great long-term match is that the two wineries have strengths in different industry segments. Coppola has a strong foothold in the prized premium wine market, at the $15 or more per bottle category, and was ranked as the 17th-largest wine company in the country with 1.7 million cases produced in 2020, according to Wine Business Monthly.
On the other hand, Delicato is much bigger as the fifth-largest wine producer in the country, producing 16 million cases last year, buoyed by phenomenal growth of its affordable boxed wine label, Bota Box. It’s also the third-largest U.S. exporter of wine. And now it has new wine inventory to court international distributors with the well-known Coppola name on the bottles.
The reviews by industry analysts have been mostly positive. Rob McMillan, executive vice president of Silicon Valley Bank’s wine division, said that Delicato can use the acquisition to drive additional volume into market categories where they are not heavily represented.
“They are making a push into the higher price-point wines,” McMillan said.
Jon Moramarco, managing partner of wine industry consulting group bw166, called the deal a “was a good strategic move for both of them.”
As with any commitment, there was a long courting phase. Chris Indelicato, the winery’s chief executive officer, said he had raised a potential union to the famed film director a few years earlier. The pitch was made easier as the two Italian-American families have known each other since the late 1990s. That’s when Coppola started buying fruit from the Indelicato family, whose history in wine dates to when Gaspare Indelicato planted his first vines in 1924 in Manteca, the city in San Joaquin County where the company still has its operations, distribution and administration functions.
That relationship between the families is where the transaction differs from others, as a new round of consolidation has ramped up among California wineries. It’s also what they think will give them an edge.
Coppola isn’t walking away from the wine business. In fact, the Academy Award-winning director of “The Godfather” and “Apocalypse Now” received an equity stake in Delicato and joined the company’s board of directors as part of the deal. The sales price of the transaction was not disclosed.
Coppola recently spoke to a group of more than 200 salespeople over Zoom, and Chris Indelicato said his presence reminded him of his family’s earlier generation growing the business.
“Francis fills that role of optimism. They have no fear in that generation. They grew up in a very different time,” Indelicato said. “Risk doesn’t scare him, and it’s great to have that back in the company.”
As part of the corporate marriage, Corey Beck, Coppola’s chief executive of winery operations, stayed on and became Delicato’s executive vice president and chief winemaker to help carry on the continuity.
Beck said that when his crew was expanding the Geyserville estate with its now signature pool, it was during the 2008 U.S. financial crisis and there was only a large hole in the ground on the property.
“We actually had a board meeting to see if we were going to put a pause,” Beck recalled. “Francis looked at us and said, ‘No, we have to keep going.’”
The pool and Coppola’s collection of movie memorabilia now draws about 100,000 visitors a year to the winery and has made the estate one of the most popular tourist attractions in Sonoma County.