Sic Transit Westwood

Sic Transit WestwoodBy the time I post this I will no longer be a partner in the investor group that owns the Westwood Winery and Estate vineyard. I have stepped aside as winemaker, general manager, vineyard manager, and head of marketing and PR — all the hats I have worn for so many years here — and have sold my interest in favor of a new investor.

Just now all three of my regular readers are perhaps saying “wha… WHAT?” After all, I have been keeping Westwood alive since 1994, when winery founder (and my friend) Bert Urch made his untimely passing. It’s a long row that takes 20 years to hoe. As one might expect I’ve got mixed feelings about this transition: frustration and anger, sadness, relief, and excitement — all at the same time.

The Backstory

My investors are a great bunch. We met at a charity event in the mid-90s when I was working at Sonoma-Cutrer. Everybody had high hopes and big plans back in 1998, when I presented the group with the opportunity to acquire the land that would become the Estate vineyard. We bought below market, and land values were appreciating rapidly as money fleeing the burst of the dot-com bubble flooded into real estate. We closed the deal to merge the winery and vineyard operations in 2002 and starting moving everything from the Sierra Foothills to Sonoma, completing that move, opening a tasting room, and doing our first production in town when the vineyard started to give us grapes in 2005.

There were a few hiccups. We lost some of the 2001 and 2002 production to a refrigeration “failure” at the old winery in Shingle Springs (yes, there’s a story behind that), and then we weren’t able to close a badly-needed round of funding when a potential partner got cold feet at the 11th hour. But we were growing direct sales and wine club as well as expanding into new markets, working with a fine group of passionate distributors and brokers who were repping small, specialized books where our little brand got the attention it needed.

Troubles In Paradise

Then the Great Recession crashed around us. We experienced negative cash flow in the third quarter of 2008. Everybody’s investments took a big hit. One investor simply ran out of money. Capital infusions needed for improvements and to plug holes in the operating budget — a fact of life in the long and drawn-out business of establishing a winery — that had been fairly regular became sporadic.

Every one of the small distributors we had cultivated relationships with either went out of business or was absorbed by a much larger distributor who promptly dropped our tiny brand from their books. Yet, though I got knocked by the heels with a serious health scare just before the 2009 harvest, we were still growing revenue every year on direct-to-consumer sales — just not fast enough.

The partners began to express frustration that created discord over not only Westwood but other dealings as well. At the beginning of 2014 it looked as though the partnership was heading for dissolution, and Westwood for liquidation. When most of the partners were ready to wind everything down, one saw an opportunity and made a dramatic proposal.

Resetting The Clock

This one partner, who had made a relatively small initial investment, offered the rest — including me — a deal where he would make a major commitment to shore up the company’s finances, plug the holes, and fund the manpower and capital improvements that had eluded us for the last five years, in return for a controlling interest. The remaining partners would suffer a serious dilution. Turnaround 101 — I was offered an exit deal, which would allow the new majority partner to bring in his own team to manage production and marketing, a deal which I accepted.

Mixed Feelings

Of course I had seen this as a probable scenario. My own frustration over the chronic under-capitalization of our operations had been festering for years, however well-compartmentalized I had kept it. I admit that I initially felt some anger and resentment that this deal had been in the works for months before it was presented to me as a fait accompli. I wasn’t blindsided, or unprepared, but the timing was difficult with harvest imminent.

Timing issues aside, it is frankly a bittersweet relief to be able to un-shoulder the burden that maintaining the status quo had become for me. My own ego aside, I am thrilled to see so many of the things I had hoped for Westwood finally happening: a smart new winemaker with a full staff working for him under the eye of a halo consultant, important upgrades to capital equipment that will make it easier to produce top-quality wine from the top-quality vineyard we built, and — finally — an actual dedicated marketing and PR arm with a mandate and a budget. These are all really good things.

The new team is talented, committed, and well-funded. The 2014 vintage promises to be a good one and I believe these people will make the best of it. Over time I expect the character of the wines will change somewhat, as well as what is produced, and probably the overall direction of the brand is going to follow a new tack. All in all I’m confident that Westwood remains in good hands.

The Road Goes Ever On…

For the time being I’m still here. We are all working to make this handoff smooth and amicable. The partnership has hired me as a consultant through the end of the year to facilitate the transition. In the meantime I’ve launched a new wine company (more on this later) and am busy preparing for harvest. I am proud of what we accomplished when I was part of Westwood, to the point that I am looking to the Estate for some of the grapes for my new project. Looking forward I’ve got a lot to do to get licensed to produce and sell, and to start to build a new clientele. I’m back in start-up mode and it feels very exciting.

I started writing this post on July 15th — the day after the other partners informed me of the new regime — but really I’ve been writing this chapter for the last five years. It’s part of a book I started writing when I took a job in a wine shop in Davis, California in 1985 — the ninth chapter in that book, in fact. Now I’m busy writing the tenth.

I can’t wait to see how it turns out.

14 thoughts on “Sic Transit Westwood

  1. Marcia Macomber

    Holy moly, John! That’s some big news. It’s couched in a type of deepest-sympathies-congratulations response mode. Excited to hear about your New Project. For now, enjoy harvest and take the time to recharge your batteries!

    Reply
  2. Cesar

    This is sad news for us on the customer side of Westwood. Westwood wines changed the way I thought of Sonoma wine as well as how generous you were always with your time in the tasting room talking bout yeast and fermentation. I’ll forever be grateful. I’m very interested in what you’re going to be doing next. Mind sending me an email so we can chat?

    Reply
  3. Thomas Pellechia

    Ah yes, the end result of under-capitalizing a winery. I know it well.

    Best wishes, John, on the new beginning, and when the book is ready let me know if you need an editor–these days, publishers don’t provide those important people.

    Reply
    1. John Kelly Post author

      The new majority shareholder hired Dave Ramey as consultant, and Ramey got them to hire Ben Cane, recently of Twomey Cellars, as winemaker. Ben has no other duties besides making wine, and they have bought him new equipment and allowed him to hire three full-time people under him. No question but that the Westwood wines will get more attention than I was able to give them on the budget I had. The new team retained the vineyard management crew I started with, so I know the Estate vineyard will continue to be well cared-for.

      Reply
  4. Daniel

    Nice post, I had a lot of questions when I met with you for lunch but thought they were best left for you to disclose on your own time. I’m excited to see what you are going to be doing. I’ll never forget what a somm once said about Westwood while at the sunset grille in Nashville. That, and my mom thought it was the best wine she had ever tasted. I’m sure you’ve already got your hands close to the wine. Good to hear you are moving forward.

    Reply
  5. James

    What to say but we love John and his wines either way, no matter who he is working for the goods will com. Here is to new things. Where ever I am there will be wine from signor Kelly as long as there are John Kelly wines.

    Reply
  6. Diane & Beau

    wow, what news! We love your wines John! And many thanks for all the knowledge you have shared over the years. We look forward to hearing about your new adventure, and tasting Signore Kelly wines 2.0.

    Reply
  7. Steve Pinzon

    Make sure and let us know where/when your new venture starts. I will never forget telling Eddie about my bias towards Oregon Pinot Noir, and he said ‘prepare to have that bubble burst.’ He poured your Pinot and I was blown away. You put your heart and soul as well as your health into Westwood. Can’t wait to see what your next effort is

    Reply
  8. Mitch & Barb Winter

    John…Your email brings many mixed feelings. Sad to see you leave Westwood but very excited for you and the fresh adventure it will bring. Can’t wait to hear about your next project. You have made some great wine and there is more of that in your future. You have our email address so please keep us informed. All the best to you, friend.

    Reply
  9. Don and Patti Dolan

    John,

    It’s been quite an adventure since that day so long ago when we followed a ‘Wine Tasting’ sign in Shingle Springs, and found you and your wines. We wish you well on your new endeavors, and want you to know that wherever there are John Kelly and his wines, we will be there, too.

    Wishing you all the best.

    Don and Patti.

    Reply
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