Family values, time, and business-bank relationship: the Antinori - Stag’s Leap business transaction

Marchesi Antinori, the family par excellence of Italian wine, has acquired an icon of Napa Valley wine, Stag’s Leap Wine Cellars that boasts 100 hectares of vineyards and a turnover between 70 and 80 million dollars a year, (talk around town is that the total transaction is worth more than 1 billion US dollars, ed.), and obviously it is front page news. And the main reason for the buzz is that Antinori is the first Italian company to put down roots in one of the most important wine territories in the world, in terms of prestige and value of the land (priced at 1 million US dollars per acre), bottles of wine, as well as one of the most visited, especially by high level tourism. The purchase opens up a new perspective for a 26 generation family business and direct imports on the the US market, the most important market in the world for wine consumption, by a company whose history and future is right in its name: “Vinattieri 1385 ”, the certified year of Antinori’s foundation. This extraordinary news was revealed at the magnificent Antinori Winery in Chianti Classico, during the talk show staged by Marchesi Antinori and Intesa San Paolo, the largest bank in Italy and the main partner in the transaction. Cassa Depositi and Loans, the Italian national promotional institution as well as other players were also involved in the business deal, and witnessed Italy taking root in Napa Valley, where it had not been present up until now. “There is another aspect to be considered; an Italian family winery has bought from an investment fund, and not vice versa”, as Marchese Piero Antinori proudly stated. He is honorary president of Marchesi Antinori, which is now led by his daughters Albiera, Allegra and Alessia, and CEO, Renzo Cotarella. “The acquisition has certainly given us a great perspective, in an area where the added value is very high. For instance, the average price of Stag's Leap wines is over 40 US dollars per bottle, and it has allowed us to create a direct import company, finally making us masters of our destiny, on the very important US market, where it is difficult first for an importer and then a distributor, to prioritize all the products that a company like ours has”, Renzo Cotarella, CEO of Marchesi Antinori, commented.
“This is the story of how such an important business transaction was completed, the most important in our entire long history, from every point of view. We are extremely proud because it has given us an international profile, and a significant presence on the USA market”, Marquis Piero Antinori said. “It is significant, especially at a time when many Italian companies are considered a land of conquest for foreign companies. We, instead, did the opposite, and went against the grain. Usually investment funds buy family businesses, while we are a family that has bought from an investment fund. We, as Italians are very proud of and satisfied with this transaction because Italy is finally in Napa Valley, one of the most important areas in the world, where there are French, Chinese, Australian and South American investments, and now we have filled this gap. However, this would not have been possible without the support of Intesa San Paolo Bank, which believed in the company, in the project, in the employees (who are the ones who make the companies), and is sensitive to the territory and to the sector”, the president, Antinori added.
“The strategic, economic, and also the emotional aspects are crucial in this type of business transaction”, Renzo Cotarella, CEO of Antinori, who continued, retracing all the stages of the long negotiation, and the story that began many years ago. “We have known and been to Napa Valley for decades, and every time we visit, we fall in love with it. When Warren Winiarski, the owner of Stag's Leap, called us in 2006 to say it was for sale, we were building the Antinori winery in Chianti Classico and the Cortona winery as well, at that time, so we declined the offer. Warren Winiarski, though, had every intention to sell only to Antinori, because he could guarantee a management model capable of enhancing the wine and the territory. He wanted to be sure that the stylistic continuity and values would remain the same. Therefore, we decided to participate with a small stake, and that is how it all started. We have never concluded an acquisition that did not also include an emotional aspect, and often times love has helped us overcome many difficulties”, Renzo Cotarella said.
“Making wine without a vineyard is no longer conceivable for us now, as it was in the past, and having a vineyard at Atlas Peak that supports Stag's Leap is fundamental, as is the fact that Stag’s Leap is neither too big nor too small, produces 130.000 cases, like Jermann, plus it is iconic and has deep historical roots. In 1976, its Cabernet beat Bordeaux, in the “Judgment of Paris”. Furthermore, it will support Antinori’s participation on the US market. There will be a direct presence on the market, and ample margins for growth, in terms of product mix and turnover. This will then allow us to set up our distribution and import structures; in other words, to be masters of our destiny in the USA, after 50 years, which could radically change the future of Antinori”, Antinori’s CEO said.
Renzo Cotarella, continued, emphasizing that Napa Valley is “one of the most important territories in the world for Cabernets and Chardonnays, as its big successes on the market have demonstrated and critics have shown. Tourism is high level the area, and now many American Cabernets cost more than Bordeaux’s premier crus, which is also thanks to policies that wine producers have put in place, who have adopted a quality-based vineyard management system for decades, and a market willing to pay the right price. But, it has crazy climate as well. It rains very little in summer; however, there is a lot of underground water. There tend to be stable climatic conditions from year to year, and less variability compared to Italy and the Mediterranean, which is very helpful for a wine company”.
Getting into the more purely financial aspects of the transaction, “the impact was heavy, but the company has never given dividends, and this is an aspect that has made Marchesi Antinori solid, letting us do things in foresight, even in moments that didn’t seem ideal. For instance, we had a small stake in Atlas Peak, 5%, and in 1993 we had the opportunity to buy it. The same thing happened in Chile and in Stag's Leaps, where, in 2007, we participated with a 15% share. These situations have allowed us to be there, and ready to seize opportunities, but not obliged to do so”, Renzo Cotarella continued.
“We must consider the acquisition of Stag’s Leap also from the perspective of creating an import and distribution company in the USA. It is a challenging market because it involves three steps, and getting the message across can be complicated, just as it is not simple for an importer to give priority to all of Antinori’s needs. We are not a group, but rather a family company, and we have many specific features that are not followed on the US market, but they are all priorities for us. Becoming our own importers offers us a great perspective. 2023 will be a year of consolidation of 2022’s results, where we have grown a lot, but we cannot grow indefinitely, it all also depends on production capacity and values. Last year, we reached +14%, but we think that normal growth should be between +3% and +8%, making it clear that the company's logic is growth”, the CEO of Marchesi Antinori said.
“Today, Stag's Leap Wine Cellar, not to be confused with Stags' Leap Winery owned by Treasury Wine Estates and a subarea of Napa Valley, has a turnover of between 70 and 80 million dollars a year, is a super premium company, the average price per bottle is around 40 dollars, and 1.5 million bottles produced. The vineyard has 100 hectares in 4 different areas, not enough to support production, while instead we support growth with our 240 hectares of Atlas Peak vineyard, and this is why it will become an integrated production company, from the vineyard to the bottle. It was very expensive, but it was worth it. The added value is very high, as vineyards cost up to 1 million dollars per acre, it’s all oriented towards evaluating value, far from our calculation model. We must think of an investment for the next 27 generations”, Renzo Cotarella commented.
The Marchesi Antinori transaction in Napa Valley was described in detail by Sara Giusti, Industry Research Intesa Sanpaolo, who said the agri-food system has “great importance in the Italian context. It is worth 3.8% of the added value, around 66 billion euros, generating 1.3 million jobs - numbers that make Italy the third country, in terms of added value, in Europe. Quality and typicality are its strong points. The food sector boasts 319 PDOs and PGIs, 526 wine, for a total of 879, and 16.8% of the SAU (Utilized Agricultural Area) is organic, the highest percentage of all in Europe, and 2.1 million hectares (even though France and Spain have more, respectively, 2.7 and 2.6). In the first half of 2023, wine exports, at current prices, registered +7.7% growth, and however, a slowdown in July (-0.4%), following the 20% growth between 2019 and 2022. Wine exports would be 65%. In 2008, they were less than 40%, while during this last year, recovery of the HORECA (hotel restaurant catering) sector has been significant, also thanks to the return of high level tourism”.
The role of the top bank in Italy, Intesa Sanpaolo, was defined by Stefano Barrese, Head of Banca dei Territori Intesa Sanpaolo, “the relationship with Marchesi Antinori is long-standing, consolidated and based on trust, and in transactions of this import the financial aspect, and the relationship between bank and company is fundamental. Trust, strength of the brand, quality of the products are fundamental, but there needs to be a profound relationship, based not on conditions and documents alone, but what goes beyond the merely economic aspects. It was a complex operation, completed by a pool that included Cassa Depositi e Prestiti, SIMEST, BNL and others, with our share being around 150 million euros (the value of the operation exceeds 1 billion euros, ed.), but the significant thing for others is to understand how it developed. It started with a small entry in part, accompanied by funds that sooner or later will perhaps want to exit, offering others the possibility of consolidating their position”.