September 21, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Ste. Michelle Wine Estates, the largest winery in the Pacific Northwest and third largest premium winery in the U.S., has made its first major acquisition since being acquired last year by private equity house Sycamore Partners Management for $1.2 billion in cash. 

Ste. Michelle dominates the Washington wine industry, contracting the bulk of the region’s wine grape growers to produce 7.3 million cases of wine per year, or about 60 percent of the state’s annual sales. Farming almost 30,000 acres in Oregon, Washington, and California, its flagship brand is Chateau Ste. Michelle, however, the winery also includes a number of other brands such as 14 Hands, Columbia Crest, Erath, Patz & Hall, Red Diamond, Two Vines, Stimson, and Seven Falls, among a host of others. 

Adding to its portfolio, Ste. Michelle announced it has acquired A to Z Wineworks (A to Z), one of Oregon’s top-selling wineries, that together with existing portfolio asset Erath, will make Ste. Michelle a leading provider of Pinot Noir in the state. 

A to Z is one of the state’s largest wineries and is the first certified B Corp winery in the world, gaining the distinction in 2014 in recognition of its positive environmental practices. The company is known for setting the standard for cool climate, food-friendly Pinot Noir, Pinot Gris, and Chardonnay.

“We are delighted to welcome A to Z to the Ste. Michelle family,” said David Dearie, president and CEO, Ste. Michelle Wine Estates. “Erath and A to Z share the same passion for producing high quality wines at fair prices, making A to Z a natural fit for Ste. Michelle. The future of Pacific Northwest wines – both Oregon and Washington – is bright and we’re excited to introduce new consumers across the country and around the world to the full complement of our region’s outstanding wines.”

Under the terms of the deal, Amy Prosenjak, president and CEO of A to Z, will join Ste. Michelle as president of Oregon Brands, where she will oversee the company’s combined operations.

“I’ve long admired Ste. Michelle’s leadership in the Pacific Northwest and their decades-long commitment to promoting the region’s wines,” said Prosenjak. “Bill Hatcher, who is retiring as Chairman of the Board for A to Z, gave me the great gift of mentorship over the years. With such deep roots, I look forward to joining David and the Ste. Michelle Senior Leadership Team and together raising the bar even higher for Oregon and the Pacific Northwest.”

Additionally, A to Z founding partners Deb Hatcher, Cheryl Francis, and Sam Tannahill will join Ste. Michelle as consultants. 

“We could not have found a better partner than Ste. Michelle to carry on the legacy of both A to Z and REX HILL,” said Hatcher. “They understand the Pacific Northwest better than anyone, and they know what it takes to promote an entire region on the global stage.”

“Ste. Michelle has always taken a long-term view regarding grape-growing and winemaking,” added Tannahill, “including their commitment to sustainability and their support for viticulture and enology research.”

Throughout the deal, Bank of the West acted as the lender to both Ste. Michelle and A to Z.

“Bank of the West’s approach to this deal proved why they are such a valuable partner for wine industry leaders,” said David Dearie, CEO, Ste. Michelle Wine Estates. “The acquisition of A to Z Wineworks by Ste. Michelle Wine Estates gives us a substantial presence in Oregon and complements our roots in the Pacific Northwest. We believe there are exciting growth opportunities ahead of the combined business and we look forward to working with Bank of the West as we continue to scale.”

“We’ve provided both financing and strategic guidance to A to Z Wineworks for over 15 years,” said Adam Beak, managing director, head of beverage vertical, Bank of the West. “It was particularly gratifying to facilitate the acquisition to another Bank of the West client. This deal is the result of a long and successful relationship.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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