Bacchus Capital Management, a San Francisco-based private equity firm, has purchased a stake in Sbragia Family Vineyards, the Sonoma winery owned by former Beringer Vineyards winemaker Ed Sbragia. Neither side would disclose how big a stake Bacchus bought, but Bacchus co-founder and managing partner Peter Kaufman told Wine Spectator that the firm normally invests in the range of $5 million to $10 million.
“This is an ideal investment for us,” said Sam Bronfman, co-founder and managing partner at Bacchus. According to Bronfman, the company decided to invest in Sbragia because it has a beautiful winery located in a prestigious winegrowing region, has a well-known winemaker and is already producing great wines.
Sbragia founded the winery in 2001 while he was still producing the wines at Napa Valley’s Beringer. In 2006, Sbragia purchased the old Lake Sonoma Winery facility near the end of Dry Creek Valley in Sonoma County. The winery produces single-vineyard wines from Sonoma and Napa using estate and purchased grapes. It focuses on five varieties including Cabernet Sauvignon, Chardonnay and Zinfandel. Sbragia is the president and winemaster while his oldest son, Adam, is winemaker.
Sbragia was looking for capital to grow his brand but also wanted a partner who could take on a management role since he considers himself a “production guy." "There is a chance to make more luxury wines, and I need someone to help manage and sell them,” he said. He had been searching for a partner for more than a year before he approached Bacchus. “It’s a marriage,” Sbragia said, “we kind of found each other.”
While Bacchus has provided financing for several wine companies, this is the first time it has bought a stake in a winery. “We felt that a significant equity investment was what was best for the winery, for Ed Sbragia and for Bacchus,” explained Kaufman. For Sbragia, the equity deal means he doesn't have to pay interest on a loan. For Bacchus, it’s a higher risk type of investment but could potentially produce higher rewards for the company.
Bronfman, Kaufman and Henry F. Owsley co-founded Bacchus Capital Management in 2007. The company focuses on investment opportunities in potentially profitable wineries and wine businesses. The company has previously inked financing deals with Central Coast wineries Qupé and Pietra Santa, Andretti Winery in Napa and Wine By Joe in Oregon.
The deal will allow Sbragia to expand its production and invest in equipment and infrastructure. The winery will produce 12,000 cases of wine this year but Bronfman said the goal is to expand production to 20,000 cases in the next four to five years. Ed and Adam will stay on in their current roles. “We are not planning on producing wines from elsewhere or to expand the size of the winery,” said Bronfman.
Sbragia was the winemaster at Beringer for 32 years. During his tenure he helped revitalize the winery, which had fallen on hard times since prohibition. As winemaker, Sbragia produced two wines, the 1986 Private Reserve Cabernet and 1994 Private Reserve Chardonnay, that were named Wine Spectator Wine of the Year. He continued to produce the wines at Beringer until 2008, when he left to focus on his own brand.