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Oregon Brand A to Z Grabs Rex Hill

Purchase allows A to Z to move into a winery that better suits its size as largest producer in the state

Harvey Steiman
Posted: November 7, 2006

A to Z Wineworks, which has carved out a niche for itself as Oregon's leading producer of quality-for-value wines, has acquired high-end producer Rex Hill Vineyards. Rex Hill has been producing wine since 1983, but the move makes A to Z, operating since 2002 (primarily as a négociant), the largest winery in Oregon.

A to Z's total production of 100,000 cases is large by Oregon standards, where average production for a winery is less than 10,000 cases. "We needed someplace to make the wines," said Bill Hatcher, managing partner of A to Z. "We realized we could not go beyond 2006 in the facility we are currently using." A to Z has blended and bottled wine at the Twelfth and Maple winery in Dundee, a custom winemaking facility owned by Corus Brands of Washington and at Rex Hill and other rented facilities.

"We did the math, and realized it would cost $6 million to build a no-frills winemaking facility that's big enough," said Hatcher. "Rex Hill is an 80,000-case facility. We couldn't find a better fit." A to Z will still have to make some of its wine in rented space elsewhere.

Financial terms of the deal were not disclosed, but the sale includes Rex Hill's brand, inventory, the winery and 100 acres of vineyards in the Willamette Valley. Also included is an affiliated vineyard management company called Oregon Grape Management, which handles about 500 acres of vineyards.

Rex Hill's vineyards are around the winery just outside Newberg, 22 miles south of Portland, as well as in Dundee Hills and the Chehalem Mountains. The winery also has long-term contracts with other growers in southern Oregon and the Willamette Valley, most prominently Maresh Vineyard in Dundee Hills, which Oregon Grape manages and Rex Hill bottles as a single-vineyard wine. A to Z also has grape contracts of its own.

To make the deal, Hatcher had to broaden his list of partners in A to Z, which are primarily his wife, Deb, and the husband-and-wife winemaking team of Sam Tannahill and Cheryl Francis. San Antonio Spurs head coach Gregg Popovich, who had been a minority partner, will become a more prominent investor, Hatcher said. Others include investment bankers in Portland and Chicago.

Rex Hill was put on the market last year. Founders Paul Hart and Jan Jacobsen bought the land for Rex Hill in 1982 and started planting their vineyards in 1983. "I'm 66 years old and I decided it's time to retire," said Hart. "We got five offers, and I chose Bill's group because I felt they understood Rex Hill and were most likely to carry on what we've done. That was important to me."

Though A to Z is a relatively new company, its founders have winemaking experience in Oregon reaching back as far as Hart's. Hatcher ran Domaine Drouhin, the Burgundy winemaker's Oregon company, from its inception in 1988 until 2000. Tannahill made wine at Archery Summit and Francis made the wine at Chehalem before the two started their own consulting business and a small winery of their own, Francis Tannahill. Hatcher also has a small winery, Hatcher Wineworks, which specializes in Pinot Noir.

The sale of Rex Hill is Hart's second retirement. When he founded Rex Hill, he retired from his own actuarial consulting business. "I blew it last time, and wound up with another business that took up all my time," he joked. "This time I am really looking forward to doing nothing."

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