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Tuesday, July 31, 2012

Kenwood Vindyards sale to Banfi cancelled

About four months ago Banfi intended to buy Kenwood Vineyards from Gary Heck, owner of Korbel, Valley of the Moon, Lake Sonoma, and Kenwood.

The original owners of Kenwood Vineyards, Sheela and the Lees, bought Valley of the Moon Winery in the 1990s primarily for its wine-making facility to give them increased capacity as Kenwood was expanding production. When Gary Heck bought Kenwood about 13 years ago they were at about one-quarter million cases a year and have now increased to over a half million.

The Kenwood facility has no where near the capacity for this much wine. This may not have been known by Banfi when they originally looked at buying the winery. First, Gary offered to rent them space, but Banfi balked at the price. Then it appears they explored buying the Valley of the Moon Winery, but probably didn't like that price either.  Also, many of the grapes used in Kenwood's wines come from Korbel's vineyards.

So the sale is off. Now what happens?
  • One possibility is Gary looks at repackaging the property differently so the buyer can maintain the production rate. 
  • Another is one of the large "mega-winery" companies buys Kenwood and uses some other facility of theirs to produce most of the wine. This could be anyone from Gallo to Constellation Brands. 
  • The other possibility is Gary decides he can't get what he wants out of the property so he doesn't sell.

Earlier posts on this sale are on March 30 and May 20.

Update 8/3/12: It appears Valley of the Moon and Lake Sonoma Wineries have been sold to Quail's Gate Winery of British Columbia.