Water Magnates Snap Up Napa Winery

The winery's showcase Cabernet has divided critical opinion, but consumers love it.
© Lewis Cellars | The winery's showcase Cabernet has divided critical opinion, but consumers love it.
Lewis Cellars' new owners are no strangers to wine, but their strength lies in water.
By W. Blake Gray | Posted Friday, 03-Sep-2021

Napa Valley has the best wine marketing in the world. Southern California-based The Wonderful Company is probably the best agricultural marketing company in the world. Now, we'll see what Wonderful can do in Napa as it has purchased the boutique winery Lewis Cellars.

But watch out for your water, Napa Valley: your new neighbors are famous for hoarding it.

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Terms of the deal were not disclosed, but Wonderful – also owners of Justin Vineyards in Paso Robles and Landmark Vineyards in Sonoma County – did not get any vineyards in the deal because Lewis doesn't own any. All they're getting is a brand name and, importantly, the production team that makes the wines.

Maybe that's enough. Viticultural land is expensive in Napa Valley, but brands without vineyards have sold for even more: Meiomi sold for $315 million in 2015 and The Prisoner sold for $285 million in 2016.

"Lewis is a strong brand. They get quite a bit for their wine," said Mike Fisher, a partner at St. Helena-based mergers and acquisition firm Global Wine Partners. Fisher also said that a major reason for the sale is that co-founder Randy Lewis wants to move on after 29 years. "He's in his 60s and he's thinking, 'I've been doing this for 30 years, I'm ready to move on.' He could gradually phase out with the buyers and make the transition make sense for the buyers. There's a lot of wineries out there that fit this profile. We'll continue to see this."

Lewis' son Dennis Bell joined the winery in 1999.

"I'm sticking around," Bell told Wine-Searcher. "Notwithstanding what you may see in other media, I've been running the business for years now and I'm going to continue to run the business, every aspect of it. Randy's going to stay on and he's going to participate in a consultative role. All the existing staff is going to stay in place. The core team that's been behind all of our great wines."

Lewis Cellars makes 10,000 cases of wines annually and is the rare winery to split the major critics. In 2016, Wine Spectator named a 2013 Lewis Cellars Cabernet Sauvignon its Wine of the Year, a singular and important distinction. But Robert Parker never gave a Lewis Cellars wine more than 93 points and stopped reviewing them after the 2002 vintage. Nonetheless, the brand has been very popular in the high-end world of Napa wine.

"We have no problem selling out every vintage quickly," Bell said. "We have great long-term partnerships with our national distributors. We have a thriving wholesale direct in California. And we have DTC [direct to consumer]. Between those three channels we're very successful."

Bell said Lewis Cellars wines are currently poured by the glass at some of the most prestigious properties in the US, including Blackberry Farm in Tennessee, The Breakers in Palm Beach and the Hotel Bel-Air in Los Angeles.

Water signs

As for the buyers, marketers everywhere should genuflect to The Wonderful Company, which is owned by water barons Stewart and Lynda Resnick. In the early '00s, they made pomegranate juice popular with cute hourglass-shaped bottles and marketing based on its health benefits; they later lost a Federal Trade Commission complaint that the marketing was deceptive. In California, boxes of "cuties" – mandarin oranges – are ubiquitous in grocery stores. That's Wonderful. They are the world's largest growers of almonds and pistachios.

And it's not just produce. The Resnicks bought the Franklin Mint business in 1986 and successfully expanded what had been a small company making coins into Elvis figurines and other souvenirs.

But the greatest foresight they have shown, living in a drought-ridden state, has been by buying up water rights. They bought the Fiji Water brand in 2004 and within three years turned it into the largest imported-water company in the US. They initially paid one-third of one Fijian cent per liter for the water from the aquifer, and when the Fiji government tried to raise the payment, they closed the plant and laid off workers, twice. The Resnicks later came to an agreement to pay higher prices, but the Water Authority of Fiji said in 2018 that 12 percent of Fijians do not have access to fresh water.

The Resnicks have made millions of dollars in contributions for years, both charitable and political, and the latter have paid off. In 2016 Mother Jones ran a story about them titled "Meet the California couple who uses more water than every home in Los Angeles combined". Through a series of astute political moves the Resnicks were able to gain control of the Kern County Water Bank, essentially allowing them to, in Mother Jones' words, "farm water", because they can store water during a rainy winter and sell it back to the state the next summer.

In the wine industry, there was a controversy in 2016 when Justin Vineyards cut down thousands of mature oak trees on its property and got a citation from San Luis Obispo County for improper grading of hillsides. However, that was just before every summer in California became fire season; it's hard to imagine neighbors complaining about it in 2021 the way they did five years ago.

That said, the tree controversy was also ultimately about water: the winery had filed for permits with the county to create a massive 6.5-million gallon irrigation pond.

"It's one thing if they were just putting in a vineyard," Saxum owner/winemaker Justin Smith told Wine-Searcher in 2016. "We all share the same groundwater. When you build a reservoir you're stockpiling it. Half of it's going to evaporate. So you've got to pull out twice as much as you need for your vineyard. It's something nobody does around here. If you're stockpiling and you're planning on putting your neighbors out of business, that's scary."

PR representatives of Justin Vineyards asked for questions by email, but did not respond by our deadline. Wine Spectator broke the story as an "exclusive" on Wednesday. Terms of that deal were also not disclosed, but Wine Spectator noticeably did not mention any of the controversies about Wonderful or Justin, while the San Francisco Chronicle used the headline "Controversial owners of Fiji Water just bought an esteemed Napa winery""

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