BJ Fazeli and his wife Wendy were floating down the Douro River in a tour boat in Portugal’s wine country on a warm summer evening in 2023.
While sipping wine and gazing at terraced vineyards along the river, his wife of 45 years popped the question: “What is your exit plan for the winery?”
His 67-year-old wife asked because the 71-year-old veteran marketing executive from Orange County wasn’t getting any younger.
Fazeli’s winery, one of 10 in Temecula that make up the De Portola Trail of wineries, is on the brink of change.
“I’ve always said that I’d be carried from the winery to the grave,” said Fazeli. Instead, he listed Fazeli Cellars Winery for sale at just under $20 million in March.
So far, there are no takers for the destination winery that boasts Persian-influenced architecture throughout the hillside grounds, including a production facility, restaurant and tasting room that offers 20 varietals of boutique wines from Cabernet Sauvignon to Sauvignon Blanc.
“There were a lot of tire kickers,” said Fazeli who listed the winery for three months before taking it down. He’ll wait until the dust settles after the presidential election before dipping his toe back into the market.
Fazeli, like many other winery owners in Temecula Valley Wine Country, is part of a wave of owners who want to sell their properties as they approach retirement age or have become burdened with debt, operational expenses and other issues.
After half-a-century, there are a record number of properties up for sale in Temecula Valley Wine Country. The 93 combined vineyard and winery operations have an economic impact of $2.7 billion in the region, according to a study by the Temecula Valley Winegrowers Association and other groups in California hired to provide an assessment of the industry.
These include Falkner Winery selling for $14 million, Palumbo Family Vineyards for $6.95 million; Rancho Pacifica Ranch for $3.98 million; Thornton Winery for $17.9 million; Monte De Oro Winery for $17.5 million; and Avensole Winery for $19.5 million.
“My wife and I, Loretta, have been looking to sell for a few years,” said the 77-year-old wine veteran Ray Falkner. “It has to do with the fact that I’m at retirement age. We’ve just reached that stage of life.”
Nick Palumbo, 57, and his wife, Wendy, 55, are ready to sell their winery as well.
“We’re done and tired,” said Nick Palumbo of Palumbo Family Vineyards. “I do all of the farming and winemaking, and my son said he doesn’t want to run the business.”
Cellar hand Natalie Price works the press at Wilson Creek Winery in Temecula, CA on Wednesday, Oct. 23, 2024. (Photo by Paul Bersebach, Orange County Register/SCNG)
The volume of wineries for sale in Temecula Valley has grabbed the attention of wine aficionados, near and far.
“For sure, it is the most that I’ve seen,” said John Ovrom, president and founder of Exit Consulting Group Inc. in San Diego, who has built a clientele in California’s wine industry.
“It’s a tough industry to make money. People fought through Covid. Now business is trying to get out,” said Ovrom, whose business specializes in transitions and exit strategies for family-owned businesses and others. “Covid delayed the transactional stuff. There’s been a little bit of a backlog.”
Ben Fraleigh, a broker who has been selling wineries in Temecula for nearly 50 years, said he’s never seen so many for sale.
“There’s no growth. You can’t find enough people to harvest grapes,” said Fraleigh with FirstTeam Real Estate. “In the last several months, people are coming out wine tasting and not buying wine. That is a problem. The economy could swing one way or the other. That’s what’s going on.”
Baby boomers
Terri Delhammer, a broker with GRE Land and Commercial Real Estate, sees something else going on.
“I think it’s generational,” said Delhammer, who is handling some of the wine listings for sale. “All of the baby boomers are hitting retirement at the same time. Running a winery is a lot of work.”
Fazeli, as well as other winery owners, also say that mom-and-pop wineries can’t afford to invest the millions needed to keep up with mega-operations.
Vineyards and wine at Bella Vista Winery in Temecula, CA on Wednesday, Oct. 23, 2024. (Photo by Paul Bersebach, Orange County Register/SCNG)
As an example, these insiders pointed to the valley’s hot-spot, Europa Village Wineries & Resort, a destination resort that offers European-themed venues for wine tasting, dining, weddings and other events.
“It’s a tough place to compete. You have to offer something more than just good wine,” said Jim Hart, who sold his Hart Winery for $6.4 million to Paso Robles-based Halter Ranch back in 2022. “We would have had to put quite a bit of money into it to keep up with the Joneses.”
He’s now running a smaller winery, Volcan Mountain in Julian, just east of San Diego, along with his 62-year-old brother, Mike.
The Hart Winery purchase was bankrolled by Halter Ranch’s Swiss billionaire Hansjörg Wyss, who took just three days to close the deal, Hart said.
“I had a very brief meeting with him. He was very energetic and walked around the property with his team suggesting changes,” said the 65-year-old Hart, who lost his wife and father, who founded the winery in 1980, within months of each other in late 2021 and early 2022.
“You can’t work your whole life away,” said Jim Hart. “My brother and I were both approaching retirement age. Hart was a marginal business that just sold wine.”
Bill Wilson, CEO of Wilson Creek Winery & Vineyards in Temecula, also is facing retirement age. The 63-year-old operator plans to promote his 30-year-old daughter Cassidy to the CEO spot in three-years.
“Everyone thinks it’s glamorous to come into the wine industry, but it’s hard work with little reward. It’s cheaper to buy than it is to build,” said Wilson of the new owners coming into the valley to replace “the old and tired” first generation.
Take, for instance, a partnership from the valley’s Somerset Vineyard & Winery in Temecula that last month acquired Bella Vista Winery, the first commercial vineyard established in the Temecula Valley Wine Country in 1968. It was begun by the Cilurzo family and sold in the early 2000s to a Hungarian couple, Imre and Gizella Cziraki
Server Claire Ashby prepares the tasting room at Bella Vista Winery in Temecula, CA on Wednesday, Oct. 23, 2024. The tasting room will be remodeled, saving only the countertop. (Photo by Paul Bersebach, Orange County Register/SCNG)
Kurt Tiedt, president of the partnership over the two wineries, said that his Somerset group paid “close to $6 million” for the 52.5 acres where he’s now planning to renovate a partially burned down adobe home, and upgrade a tasting room and add other amenities.
The property includes vineyards featuring Petite Syrah and Chenin Blanc grapes, a lake and hilltop views. Tiedt is planning a wedding venue as well.
The winery came into Tiedt’s hands because Imre Cziraki passed away a few years ago, and Gizella couldn’t handle the winery’s demanding work schedule. She sold because she wanted to spend the last years of her life with her sister in Hungary.
“People are aging out,” said Tiedt, who named his Somerset winery after Somerset Drive in Placentia where his neighborhood friends that he grew up with pooled their money together many years ago to invest in real estate. “There’s a lot of wineries for sale right now,” said Tiedt, who didn’t rule out buying more.
Messy sale
Temecula’s wine insiders are closely watching the outcome of a popular luxury wine tasting room and restaurant that fell out of escrow within 24 hours of closing in October.
Malbec grapes are pressed at Wilson Creek Winery in Temecula, CA on Wednesday, Oct. 23, 2024. (Photo by Paul Bersebach, Orange County Register/SCNG)
Avensole Winery and Tasting Room was listed for sale for $14.9 million in July and was in escrow until Oct. 18, when the Lytton family-led ownership group abruptly filed for Chapter 11 bankruptcy protection due to “the high cost of labor and other operational efficiencies,” according to court documents.
“It’s a shame,” said Richard Laski, who is a bankruptcy and turnaround specialist for distressed properties and is working with the Lyttons in court. Laski was appointed interim CEO by the U.S. Bankruptcy Court’s Central District in Woodland Hills to get the family through the process.
Robert Renzoni, owner of Robert Renzoni Winery, also in Temecula, and Dominic Galleano, whose family founded the Galleano Winery in 1927 in Jurupa Valley, have been identified as potential buyers of the property for about $12 million, according to bankruptcy documents. The history of winemaking in the Renzoni family dates to 1886 in the vineyards near Fano, a small Italian village on the shores of the Adriatic Sea.
Avensole’s financial mess resulted from litigation from a small group of Chinese investors who wanted to stop the sale over internal disputes related to EB-5 visas and the possibility that they might not receive green cards if the winery were sold, the documents say.
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Congress created the EB-5 Program in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Overseas investors can become permanent residents of the United States through the EB-5 visa program by spending over $800,000 on a project – like in the case of Avensole.
Europa Village’s sprawling residential, hotel, winery and event space development also was partially paid for through the EB-5 program.
“It’s a real shame what happened here. We were signing paperwork and in the 11th hour, the E5-B people filed lawsuits and wrecked the deal,” Renzoni said. “Unfortunately, there’s some who really got in over their heads. This isn’t a piece of cake.”