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Costa Browne $40 Million Deal

manreadingKosta Browne, a small Sebastopol winery that has become one of the state’s most coveted producers of high-end pinot noir, has struck a deal estimated at almost $40 million to sell a controlling interest to a high-powered Sonoma investment group.

The winery, whose owners got their start while pooling tip money from their restaurant jobs, completed the deal Friday with the Vincraft Group.

The agreement will allow some of the winery’s original investors, mostly friends and families, a chance to cash out their investments, said Dan Kosta, who is partners with Michael Browne and Chris Costello. Business management and operations won’t change, he said.

“I think the partnership with Vincraft offers us just a little more strength,” Kosta said. “These guys have a lot of wine industry experience.”

It was the first acquisition for Vincraft, which announced plans this spring to build a portfolio of small, high-end wineries.

The group’s principals include Walt Klenz and Pete Scott, former top executives for Beringer and the Australia-based Foster’s Group, and Bill Price, who helped found the private equity firm Texas Pacific Group, now TPG. That firm acquired Beringer Wine Estates in 1995 for an estimated $350 million and sold it to Foster’s in 2000 for $1.5 billion.

TPG is an investor in Vincraft, Scott said. The Sonoma investment group hopes to invest in a half-dozen wineries in the next two to three years, he said.

“We’re focused on Napa and Sonoma and the Central Coast,” Scott said. Vincraft invested in Kosta Brown because its owners manage the winery well, he said.

“We share a point of view on high quality,” Scott said.

Financial terms were not disclosed. The Wine Spectator, a magazine that covers the world of wine, valued the deal at almost $40 million – an eye-popping sum for a typical winery of that size.

But Kosta Browne is no typical winery.

Kosta and Browne, who formerly worked at John Ash & Co. restaurant in Santa Rosa, are self-taught winemakers who put out their first vintage in 1997. They went into business in 1999 and now produce about 10,500 cases a year. The pair brought in Costello as a partner to help oversee business operations.

Their wines, which sell for $52 to $72 a bottle, regularly receive strong reviews and sell out quickly. The winery has a waiting list of almost two years for newcomers wanting to buy its wines.

Their success, said Kosta, came about mainly by doing what they love.

“It was just a matter of going after our passion and going after what we like to drink,” he said.

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Thursday, September 21, 7:09 am

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