by Andrew Chalk
I got a shock on Thursday when I read on a wine blog that Llano Estacado had been sold. It is one of the largest, possibly the largest, Texas winery and has always taken Texas grapes and Texas farmers seriously. Virtually all their wines are Texas-grown, except for the very cheapest which use bulk California fruit to compete with the other wines on the bottom shelf at the supermarket. At the top end, their best wines win medals, in and out of state. As recently as November I tasted a ten-year old Viviano (a cabernet sauvignon and sangiovese blend) and was pleasantly surprised at its freshness.
Apparently, the sale occurred back in December, but there is no press release on the Llano Estacado web site or retrievable on Google. Indeed, the website “Who We Are” page lists the same familiar cast of characters who were there a year ago.
All we have is an 850 word piece that is a mixture of hagiography, partial personnel changes, incomplete plan descriptions, and loads of omissions from a publication that doesn’t claim any competence in business journalism. It doesn’t even start from the premise that it is a concern to hear of an ownership change at a winery despite the national wine market being in the worst state that most people can remember. One has to ask whether this was a fire sale, but the article doesn’t even explain why the existing owners wanted to sell (or who they were).
It is also unclear why the purchasers wanted to buy. They are an odd jumble of skills and experiences with a worrying large contingent from outside the wine industry. There is a Lubbock attorney, a Walmart personnel manager, and a private equity guy. Are the names below all the people on the ownership side? We aren’t told.
The entity they represent is called Llano Operating, LLC. Its leader (no title given) is Kevin Glasheen, described as a “longtime Lubbock attorney”. On Google his first listing comes up as a personal injury lawyer with 30-years of experience.
Aaron Handler does get a title. He is Llano’s new CEO and is Managing Partner and Founder of Elm Creek Partners, a Dallas private equity (PE) firm that “focuses most of its time” on “Niche Manufacturing, Healthcare Services, Transaction Processing, and Business & Industrial Services”. No mention of wine, or even anything agricultural.
Three other names, with no titles: Bryan Miller is a retired Walmart personnel Senior VP. Noe Valles is Kevin Glasheen’s partner at their firm Glasheen, Valles & Inderman Injury Lawyers, and Ron Ross is owner of Triple R Ranch & Winery in Whitesboro, Texas.
Most of the article is just platitudes. The only commitments that come out are plans to open a tasting room in downtown Lubbock (the winery tasting room is Napa-quality, but is on the outskirts of town), and in The Hill Country.
The article leaves Texas wine lovers unsettled. So much is missing. Did the existing owners (on a 2016 media tour I was told that there were about 70) sell at a loss? Why would they suddenly want to sell? With 70 of them, something must have forced agreement but none of them stayed on. Did they bid? What other bidders were there? How much capital did Llano Operating, LLC pledge? Llano Estacado is a private company but they might find it in their interest to reveal some financial P&L data.
One giant elephant in the room is that every appointment has a departure. What happened to longtime, gregarious CEO Mark Hyman? He is not even mentioned. I did make contact with him last week and he explained that he is retiring to spend the time with his family and grandchildren that he missed out on while building the winery.
A new position is General Manager, and Bret Perrenoud, formerly with Becker Vineyards and current co-owner of Airis’Ele Vineyards will take that. Although it is not clear how, since he already has a vineyard and winery to run. I contacted him but had not heard back by press time.
Most of the platitudes in the article are about loyalty to Texas grapes.
What is notable about the new ownership group is the heavy presence of non-wine people. How could this change the strategy and priorities of Llano Estacado? PE funds create a portfolio in which each company becomes a μ and a 𝛔. Mu (μ) is the Greek letter used to denote the mean and sigma (𝛔) is the equivalent for the standard deviation (variation). In this case of profits. If a company does not perform, PE is famously unsentimental about changing things to get these in line. Usually, this is good, returning the company to health and safeguarding jobs. However, the wine industry is famous for extraordinarily long time horizons, wearing the patience of PE investors. How many late frosts or hailstorms in the High Plains, or years of market slowdowns, will it take for a major change in Llano’s Texas grape strategy?
If the C-level wanted to change that, maybe becoming a marketer of other states wines with Llano’s name on, expanding “For Sale In Texas Only” (FSITO) wines, then Bret Perrenoud should know how to do it. Becker is one of the biggest sellers, maybe the largest (they don’t respond to my requests for information), of FSITO wines. On the Airis’Ele website, wines for sale are from Washington State and California, as well as Texas.
The article fails to get at hard commitments and that makes me, at least, worried that Llano will diminish the importance of Texas grapes in its mix.
It is good to hear they have a tasting room planned in The Hill Country, the Texas wine industry’s de facto shop front. For a long time they have been the only large Texas winery without a Hill Country tasting room. The article doesn’t press on the size of this facility, or whether it will be in the prime locations of US-290 or Main Street Fredericksburg.
Also positive is that Jason Centanni continues as winemaker. He has continued the great work of his predecessor, Greg Bruni.
We have all read about wineries and vineyards being sold or closed nationally in the current contraction of the wine market. We have all read about brands being axed. Llano Estacado may be flourishing, but there are lots of unanswered questions surrounding this sale. If it is as positive as the vague and gushy blog piece says, why was there no press release or public announcement?