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The New Way to Sell Out

Orin Swift impresario Dave Phinney is the latest to insist that big-money backing can make him a better winemaker
Photo by: Katrine Naleid
Dave Phinney, possibly making deals

Posted: Jan 12, 2017 1:00pm ET

By Ben O'Donnell

One day late last year, Dave Phinney was cruising around Napa Valley when he slowed his truck to greet a fellow winemaker. “What’s it like being Gallo’s new bitch?” came the rather unneighborly response.

Phinney had, in June 2016, sold his California wine company Orin Swift to E. & J. Gallo. Fairly or not, many in and out of the business regard the biggest family-owned wine conglomerate in the world as primarily a peddler of bulk brands like Carlo Rossi and Barefoot, but Phinney’s stablemates also include higher-end California brands like Louis M. Martini, MacMurray Ranch and William Hill.

What’s more, the wine biz-scape has come a long way since deals like the sale of Robert Mondavi in 2004 and even Seghesio in 2011. Those iconic family companies had large-scale operations and valuable landholdings; relinquishing them scattered many family members into the wine wilderness and cleaved them from their own names. Pete Seghesio, for example, was not allowed to release any Zinfandel—the variety that put his family on the map—until 2016, under a non-compete clause.

Understandably, plenty of winemakers are wary of putting their lives’ work and potential legacy on the block, and the perception among drinkers lingers that romance is smothered when a boutique winery becomes just another page in a vast portfolio. But as Phinney said several times during a recent conversation, “I like having the target on my back.”

He may be right to relish an emerging dynamic in wine dealmaking. Nowadays, big companies understand that prestige wines are a growing segment of the market. At the same time, hands-on, small-time winemakers are recognizing that corporate ownership means access to resources like national distribution and sales teams. The winemaker can let someone else hustle the more taxing and less “creative” realities of the business, and in many cases, the original owners keep their real estate, if they had any to begin with.

The past two years have seen the owners of Siduri, Brewer-Clifton, Copaín and Patz & Hall sell their wineries while staying on to run them. Joey Tensley and Charles Smith offloaded some of their brands in order to focus on others.

The Orin Swift presence—mostly in the $30 to $50 range and including Cabernets, Chardonnay and Rhône blends like Machete, the No. 6 wine of 2016—has been increasing in volume. Phinney needed resources beyond his own to manage it and maintain consistency. He has gone from wrangling vinification in a shared custom-crash facility to cracking open the whole Gallo toolkit.

“I [didn’t] have the assets they do, the barrel trials, the R and D”—or the vineyards. Phinney enthuses about his new sandbox, containing sites like Sonoma’s historic Monte Rosso property. “If you don’t get excited when you see that vineyard—this is like vineyard porn.”

If you expect Gallo to drag down Orin Swift, Phinney dares you to doubt him. “I said to my crew, ‘If we’re not making appreciably better wines in 18 months, I’m going to fire all of you and quit.’ I want to disprove that just because a big winery buys a small winery, it goes to shit. In fact, it’s the opposite.”

You can follow Ben O'Donnell on Twitter at twitter.com/BenODonn.

Jeffrey Calder
Madison, Wisconsin —  January 13, 2017 10:50am ET
Gallo's track record with high-end acquisitions is very clear. Louis Martini has been elevated beyond Mike Martini's dreams. Within a month of purchasing Talbott in August 2015, Gallo diverted grapes from their Santa Lucia Highlands property to keep Talbott whole during a short crop vintage. Now, they are dramatically upgrading and building J's table wine business while preparing to make a 2018 splash with J's sparklers. Dave Phinney did the right thing for him.
Canada Wine Consultants
Winnipeg, Manitoba, Canada —  January 17, 2017 12:30pm ET
I agree with Dave Phinney. When you have the talent and experience to produce a quality and notable product, having the financial backing to allow you to focus on what you do best is a huge advantage. Being able to leave other distractions beind gives you the time to focus more of your energies on improvement. I look forward to tasting what Dave and his team accomplish with their new situation. Cheers!

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