Hambrecht, Hursts, Dolans Join Wine Forces

Wine industry powerhouses with history of success seek more acquisitions

Hambrecht bought 25% of the existing H.D.D. LLC partnership of Hurst, Paul Dolan and his son Heath, which already owned 4,000-case Truett Hurst Winery in Dry Creek Valley, Sauvignon Republic (currently inactive) and Stonegate Winery in Napa Valley.

Hambrecht is contributing his VML Winery in the Russian River Valley, named after winemaker and business partner Virginia (Ginny) Marie Lambrix. It was formerly C. Donatiello—and before that, Belvedere Winery.

Hambrecht is also contributing grapes from his 100-acre Bradford Mountain Vineyard in the Dry Creek Valley and his 100-acre Floodgate Vineyard in Russian River Valley as well as the Healdsburg Ranches value brand and the 3,000-case Bradford Mountain Vineyard brand.

The Dry Creek vineyard is certified organic and the Floodgate Vineyard is in the process of certification. Paul Dolan is a leading crusader for organic and sustainable grapegrowing and the partnership intends to further that practice.

Among H.D.D.’s immediate plans is expansion of VML Winery’s production. It has a permit to produce 150,000 cases, but previous partner/manager Chris Donatiello had shrunk volume to 5,000 cases of high-end Russian River Pinot Noir three years ago and changed the name of the facility.

“He wasn’t able to meet the goals,” says H.D.D. managing partner Hurst. “Bill wanted a new partner to run the winery more efficiently.”

The partnership intends to expand production while maintaining the high-end Pinot production using new equipment added for that purpose. Fortunately, the volume production equipment remains in place.

Hurst says that the Truett Hurst Winery is doing well. “Tasting room sales have been doubling every year.” Truett Hurst, which was formerly Martin Family Vineyard, sits on a 26-acre vineyard that was one of Italian Swiss Colony’s early vineyards. “It took years to get all the permits; then the previous owners got divorced and sold it,” Hurst recalls.
 
Meanwhile, H.D.D. has acquired the Sauvignon Republic brand from former partners Paul Dolan, chef John Ash; winemaker John Buechsenstein and North Carolina restaurateur Tom Meyer. Its wines are now being sold at Trader Joe’s for $6.99.

It is also relaunching the Stonegate brand, which was once based in the current Toomey Winery in Calistoga, and produces some private labels sold to retailers.

New venture has lots of history
CFO Mark DeMeulenaere is also a partner in H.D.D., along with Sylvia Hurst, Phil’s wife.

Phil Hurst co-founded venture-backed Winery Exchange in 1999 to source, create and develop private label and national brands of fine beer, wine and spirits. He sold part of his share but remains an investor, although he’s not involved in management, including the recent acquisition from Diageo of Napa’s 200,000-case Echelon Vineyards.

Hurst and Paul Dolan worked together at Fetzer Winery starting in 1985. Paul Dolan was director of winemaking and hired recent Hurst, a recent graduate of the University of California, Davis, as one of the winemakers. Years later, Hurst hired Paul’s son, Heath, out of college to work for him.

Paul Dolan, Heath Dolan, Phil and Sylvia Hurst formed a partnership in the Dry Creek Valley that became the Truett Hurst brand.

Bill Hambrecht co-founded Hambrecht & Quist, an investment banking firm specializing in emerging high-growth technology companies. He founded WR Hambrecht + Co in 1998, introducing OpenIPO as a means to level the playing field for both investors and issuers. He has served as a director for numerous private and public companies and has enjoyed a long tenure in the wine industry as a vineyard and winery owner, establishing a broad-based network of distributors. Among his wine investments were the 516-acre Rockaway Vineyard property he sold to 800,000-case Rodney Strong Vineyards in 2003, and Pinot Noir specialist Carneros Creek Winery.

Paul Dolan is an investor in H.D.D. with his son Heath, but he is focused on managing 150,000-case Mendocino Wine Co., which ow ns the Parducci brand and winery in Ukiah, as well as Paul Dolan Vineyards. He is partners with brothers Tom Thornhill and Tim Thornhill in Mendocino Wine Co.

Hurst and partners are already looking at potential acquisitions. Hurst says that they’ve looked at 4-million-case Fetzer Vineyards, which is for sale by Brown Forman, where he and Dolan both once worked, but admits. “It doesn’t look like a good match for us at this time.”

With  IPO expert Hambrecht at the table, is a public offering in the cards? "Bill's vision is to build a company that can go public, as he did with Ravenswood and Chalone, Hurst says. "We want to build a company with an aggregate  of value brands that would be good for that."