30-04-2025
- Business
- San Francisco Chronicle
It looked like Napa's most promising wine empire. What happened?
Just seven years after a surprising billionaire investor began buying up a series of major Napa Valley wineries, funding flashy remodels and installing high-profile winemakers, cracks are emerging in his ambitious empire.
Arkansas agriculture tycoon Gaylon Lawrence Jr. shocked the wine world in 2018 when he scooped up Heitz Cellar, one of the region's most storied wineries. To lead it, and eventually his company, Lawrence Wine Estates, he then installed a prominent yet unlikely CEO, master sommelier Carlton McCoy Jr.
Together, the pair quickly became two of Wine Country's biggest power players. Money seemed like no object as they bought wineries and vineyards. Though McCoy had no winery experience — he was previously the wine director at the Little Nell restaurant in Colorado — he and Lawrence displayed a keen eye for historic Napa properties that had lost a bit of their former luster.
They snatched up the Haynes Vineyard, Stony Hill and Burgess in quick succession, hiring a celebrated young winemaker for each. They bought more vineyards and winemaking facilities in prime neighborhoods, started new wine brands — Brendel, Ink Grade and Trailside Vineyard — and launched an import company, Demeine Estates. They bought a chateau in Bordeaux. They gave Heitz, Stony Hill and Burgess dramatic, multi-million dollar makeovers.
'We're rebuilding old brands that haven't always been seen as luxury estates,' McCoy told the Chronicle in 2022.
But behind the scenes, Lawrence Wine Estates has struggled and appears to have veered from its founding vision. Most of the buzzy winemakers are gone. One tasting room closed, just two years after opening in Napa's revitalized downtown, and construction on another is paused. The company is significantly decreasing the production of some of its brands and, for now, consolidating winemaking operations in fewer wineries — something McCoy had once openly opposed. Earlier this year, it laid off its three-person production team at Haynes, whose volume is getting slashed in half, McCoy said.
'You have to have a sustainable company,' he said. 'To do that we just couldn't keep all the overhead.'
McCoy blamed these challenges partly on what he views as Napa County's excessive restrictions on winery hospitality. This has become a hot-button issue in the region; McCoy's wife, Maya Dalla Valle, is also engaged in a battle with the county over winery visitation privileges. If the county had allowed visitation to Haynes, a Coombsville vineyard famous for its Chardonnay, 'financially, that would have changed things,' said McCoy. Lawrence Wine Estates has halted construction at its Howell Mountain winery over construction permitting difficulties, McCoy said.
Lawrence Wine Estates has also simply fallen prey to the punishing effects of today's plunging wine market, and it's not the only large company making major changes. Vintage Wine Estates declared bankruptcy in 2024, and in April, Constellation Brands sold off its low-end wineries while Jackson Family Wines confirmed layoffs. 'It's a really difficult transitional period for our region,' McCoy said. 'Wineries have to do restructurings to push through this really pretty miserable era.'
Yet the company's goals may always have been unrealistic, suggested Michael Honig, the second-generation owner of Napa Valley's Honig Vineyard & Winery, who has been in the business for over 40 years. 'Today's buyers don't know the history of why these are legacy brands,' Honig said. 'Buying brands on the decline and thinking you can fix them, I think that's a challenge. You can throw as much money as you want at them, but it's hard to come back.'
Building a pedestal
Lawrence, who has delegated McCoy as the figurehead of the company, follows in a tradition of successful businessmen from other fields who make a big splash upon entering the wine industry, like Foley Wine Estates' Bill Foley or the Wonderful Co. 's Stewart Resnick.
'All of a sudden you have this person who understood ag and wanted to amass luxury assets that would appreciate,' said Mario Zepponi, managing director of BMO bank's wine-industry mergers and acquisitions group. 'I think Gaylon's probably one of the savviest acquirers out there.'
When he purchased Heitz, the winery was one of the last remnants of a bygone era in Napa Valley before glitzy wine estates, Michelin-starred restaurants and luxury resorts became the norm. Heitz in 2018 was still offering free tastings at a standing bar inside a 19th-century building. But this model was untenable, according to McCoy: 'I don't know if free was ever a good business decision,' he told the Chronicle in 2022.
The company completed its multi-year renovation of Heitz that year. At the end, the building's original stone exterior was the only recognizable feature. Inside, it looked more like a fine dining restaurant than a tasting room. The tables were covered with crisp white linens, Iberian pork was sliced tableside and hospitality staff hailed from world-renowned restaurants like the French Laundry. Tasting fees started at $125 (which McCoy said the company was still losing money on) and went as high as $1,000.
The Heitz remodel set the tone for the Lawrence Wine Estates playbook. The company, often described as a disruptor, wasn't just revitalizing forlorn wineries; it was reinventing them.
Stony Hill's modest family home-turned-tasting room was transformed into a hip, 1950s-inspired party pad that seemed straight out of the Hollywood Hills. Lawrence Wine Estates purchased the former Luna Vineyards on the south end of Napa's Silverado Trail and moved Burgess in, relocating it 20 miles from its hilltop perch of nearly 50 years. McCoy hired a James Beard award-winning restaurant designer to reimagine the space, which included a speakeasy hidden behind a secret door. 'I wanted a design that doesn't look like a winery,' he told the Chronicle when it was completed in 2023.
Suddenly, these antiquated wineries were back in vogue, and McCoy was at the center of it. He became a media darling, his round-rimmed glasses peering out from the pages of the New York Times, Washington Post, Food & Wine and Town & Country magazine. He landed his own CNN travel show, was named a Lexus brand ambassador and became the official master sommelier for the Formula 1 Grand Prix in 2022.
The changes were also controversial, however, at a time when Napa Valley was gaining a reputation for being exclusive and inaccessible. Longtime followers struggled to reconcile these classic, traditional brands with their flashy new looks and prices. At Stony Hill, the cost of the Chardonnay has soared from $60 to $125 and the Cabernet Sauvignon from $90 to $250. 'The wines are very deserving of the prices,' McCoy told the Chronicle in 2023 after an earlier round of price increases, adding that he wanted to 'put them on a pedestal.'
Some in the Napa community have bristled at these changes. 'They really have this attitude that their s— doesn't stink,' said Bill Cadman, owner of Napa's Tulocay Winery, which bought Haynes Vineyard grapes for 47 years before Lawrence Wine Estates stopped selling to them in 2022. And as a longtime admirer of Stony Hill, Cadman recoiled at the 'puffery' he saw in the branding changes there.
'They're releasing $250 bottles of Chardonnay into a market where we've run out of suckers to buy $250 bottles of wine,' Cadman said, referring to the price of a Haynes Vineyard Chardonnay. 'I can't help but repeat the word: ego.'
The estate model
One element that distinguished Lawrence Wine Estates from its peers was its commitment to the estate model: Each brand would have its own team, its own winery, its own vineyard. McCoy viewed that as the best way 'to ensure that each estate had its own identity' and didn't all taste the same.
But it wasn't long before this model would be tested. Stony Hill lost two prominent faces: Estate director Laurie Taboulet departed for another job in 2021, after just 11 months, while winemaker Jaimee Motley, a former Chronicle Winemaker to Watch, left the company in 2023.
Meanwhile, a former cellar technician filed a proposed class-action lawsuit in 2023 against Heitz. Court documents allege that employees including Michael Paul Sheridan, who worked for Heitz for six months in 2022 before being fired, were not paid for all wages, including overtime; were denied meal and rest breaks; and were not reimbursed for business expenses. Lawrence Wine Estates denies the claims, according to court documents.
'It was one of the most disorganized operations I have ever been a part of,' Sheridan said, adding that there was a 'very clear and present lack' of communication. A hearing is scheduled for May.
McCoy declined to comment on specifics, but said 'the issue isn't a systemic issue, it's a single-employee issue,' adding that 'our team up at Heitz is the most thorough, fair, respectful team.'
In early 2024, the downtown Napa tasting room for Brendel — a millennial-oriented brand that incorporated fruit from Lawrences' various vineyards — shut down abruptly. The brand is still alive, said McCoy, but the tasting room never penciled out. 'To grow and be financially stable you have to have memberships,' he said, 'and that really isn't how people interact with wineries' in downtown Napa.
McCoy said the Brendel wines perform well in retail shops and at restaurants. They've recently been sold at major discounts through retailers like Grocery Outlet, which is selling a 2020 Brendel Chardonnay for $7.99, discounted from $29.99, at a North Bay location.
In the middle of the 2024 harvest, some of Burgess' staff left the company, but McCoy would not confirm how many or why. 'I don't work with the individual teams, so it's really up to their management,' he said. Of the staff departures, he said, 'it was only one or two people.'
A massive slowdown
Last fall the company announced Trailside Vineyard, a Cabernet Sauvignon made from the Wildwood property, which Lawrence bought in 2019 for a reported $25 million. Haynes winemaker Nico Cueva would be making Trailside in collaboration with Jeremy Seysses, the winemaker of Burgundy's Domaine Dujac and one of the most revered figures in global wine.
But Haynes has not been the success Lawrence had hoped. Though the wines were well received by critics, 'there's been a massive slowdown,' McCoy said.
'With a decrease in demand out in the market, we made the decision to reduce production especially on our new estates,' he continued, referring to Haynes and Ink Grade. When he cut the production of Haynes in from about 3,000 to 1,500 cases, he said, it didn't make sense to have an entire production team anymore. Earlier this year, he let go of the team. Ink Grade winemaker Matt Taylor is now making Haynes and the 500-case Trailside at Burgess, though next year he will move to a new facility in Oak Knoll, which McCoy said has also been held up by permitting.
While luxury wine brands are faring better than lower-priced ones in the market right now, even wineries with 'a legacy effect' like Lawrence's are not immune to the downturn, said BMO's Zepponi. 'The larger the volume, the more difficult it becomes,' he said.
In March, Burgess winemaker Meghan Zobeck left for Opus One. Burgess is not hiring a replacement for her, but rather putting Stony Hill winemaker Reid Griggs in charge. Griggs is already making the Stony Hill wines at the Burgess facility, according to McCoy, but by next year will move Stony Hill into the Oak Knoll winery.
'When you have to drop production, it puts you in that situation where you can't have the same amount of people making half the wine,' he said. 'You just lose money.'
McCoy plans to eventually return to the original model of separate estates, and noted that he has built 'a wall in the middle of the facility' at Burgess so that 'Reid can be on one side and Matt can be on the other side,' with different equipment, as a way of keeping the wines distinct. Since all the wines undergo native fermentations, McCoy said it's important for them to each have their own microbial footprint.
'I think the sad part is that the estates are making the best wine in a really long time,' McCoy said, 'and it's just in a really tough market.' He said he's fielding lots of queries right now from owners of 'notable' Napa vineyards and wineries that are looking to sell, but Lawrence Wine Estates is 'definitely not looking to buy anything.'
Honig, however, is skeptical that the company can make a comeback. 'Anyone with a little bit of money and access to some grapes can make wine,' he said. 'But can you sell it? They brought in a lot of cash, they added all this flash, but there was no splash and the market was like, so what?'
