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Behind A to Z's Purchase of Rex Hill

Photo by: David Yellen

Posted: Nov 8, 2006 12:18pm ET

When Bill Hatcher left his job managing Domaine Drouhin for the Drouhin family of Burgundy in 2000, he didn't know what he was going to do next. He just didn't want to run a big winery any more. Guess what? He just took on the biggest in Oregon.

A to Z Wineworks, the upstart négociant winery that he started with some friends in 2002, just bought Rex Hill, one of Oregon's most venerable wineries. The combined A to Z and Rex Hill production should reach 140,000 cases this year, exceeding that of Willamette Valley Vineyards and Bridgeview, the two other contenders for the title of largest in the state.

A to Z blends, bottles and sells its wines for $12 to $19, modest prices for Oregon. Partners include his wife, Deb, who handles sales and marketing, and the husband-and-wife winemaking team of Sam Tannahill and Cheryl Francis. Tannahill was the winemaker at Archery Summit until 2002 and Francis at Chehalem until 2003.

The new brand has become a real Oregon success story. After they quickly sold out their first wine, 2,500 cases of a 2001 Pinot Noir at $19, production ramped up to 100,000 cases for the 2006 vintage. A to Z makes Pinot Noir, a red blend, called Claret, and a Pinot Gris. While quality is not quite as high as that first small bottling, I rate the wines consistently around 85-87 points on the Wine Spectator 100-point scale. They represent good value.

A to Z had been making its wines mostly at the Twelfth and Maple winery in Dundee, which specializes in custom winemaking, spreading the rest of the work around five other facilities. That could not work over the long term. Not only were they making more wine, they were buying more grapes instead of relying entirely on the bulk market. Hatcher and his partners had a choice. They could spend $6 million to build a bare-bones winery big enough for their needs, or they could buy an existing one.

Rex Hill Vineyards was for sale. Owner Paul Hart wanted to retire and he put the winery on the market. He had already sold off his own value-priced brand, Kings Ridge, and he could offer an 80,000-case winery that was under-using its capacity. In fact, A to Z was already renting space in the winery.

Hart sees A to Z as a good fit, and that's why he says he accepted the bid over four others. "They're doing what I was trying to do with Kings Ridge, only they're much better," Hart says. "They also understand Rex Hill and I thought they were the most likely to carry on what we have done."

Rex Hill has a reputation for making pleasant Pinot Gris and good, occasionally outstanding Pinot Noirs. Lynn Penner-Ash, who now has her own winery, made the wines starting in 1988, and was president and CEO from 1993 until she left in 2002 to devote herself full time to the winery she had already started with her husband. Some of Rex Hill's best wines are single-vineyard bottlings, such as a Maresh Vineyard Pinot Noir from an independent Dundee Hills vineyard.

Hatcher expects to cut Rex Hill's production down to about 30,000 cases annually, focusing on higher-end wines and keeping A to Z for value bottlings. He points out that Hatcher Wineworks, his small Pinot Noir label, and Francis Tannahill, his partners' own small winery, have the luxury of making tough selections for their own wines because they can divert the culled barrels to A to Z bottlings. "We can do the same with Rex Hill," Hatcher notes.

Tannahill and Francis have a proven record for making noteworthy wine. Hatcher learned how to run a big winery with his experience at Drouhin and the success of A to Z. Given the group's penchant for quality, it looks like a winning combination both for them and for Oregon wine drinkers.

John Guinasso
Portland Oregon —  November 8, 2006 11:41pm ET
HarveyPaul Hart has been an important and positive part of the Oregon wine industry, as have the A to Z folks. We're lucky to have them all.The Oregon wineries open to the public for tasting and futures buying over the thanksgiving weekend. Will we see the report on your recent trip in time for that weekend of tasting?
Apj Powers
Dallas, TX —  November 9, 2006 1:36am ET
where does coach popovich fit in =)
Apj Powers
Dallas, TX —  November 9, 2006 1:44am ET
I had the 99 Rex Hill Maresh earlier this yr. It opened up beautifully. Is that one of Lynn's? Her Penner-Ash Pinots are well-received at our place. Good luck to Deb. As I mentioned before, she was one of our Hosts for OPC 2005. She seemed to know where all the bodies are hidden from the early days of the OR wine industry.
Harvey Steiman
San Francisco, CA —  November 9, 2006 10:49am ET
My Oregon report is scheduled for the Dec 15-31 issue, which will be coming out around the end of November. Gregg Popovich, the coach of the NBA San Antonio Spurs, is an investor in A to Z and has a stake in the new partnership. And yes, Lynn was still president and chief winemaker at Rex Hill in 1999.

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