BARODA — Deals in the craft beer sector have become commonplace in recent years, but now the deal flow has spread to Michigan’s more mature wine industry.
Round Barn Winery & Distillery, headquartered in the tiny Southwest Michigan town of Baroda, this week said it acquired nearby Buchanan-based Tabor Hill Winery & Restaurant, one of the state’s original wineries.
As in many cases in today’s business climate, the deal came about as part of a succession plan for the owners at Tabor Hill and a growth strategy for Round Barn, according to executives.
“We were running out of production space at Round Barn on the winery production side. We started looking into building another production facility and looked around,” Chris Moersch, co-owner of Round Barn, told MiBiz. “We knew there wasn’t another generation coming up with Tabor Hill. We figured we’d reach out and ask if they were interested.”
Moersch’s father worked for Tabor Hill in the late 1970s before opening Round Barn in 1992.
“We were very familiar with the brand,” Moersch said. “We have kind of a deep love for it. They had expressed that they were ready to get out and it just kind of went from there.”
Terms of the deal were not disclosed, but Moersch said the purchase will offer a number of advantages for the Round Barn brand.
Specifically, the acquisition will allow Round Barn to scale up its winemaking capacity, going from about 15,000 cases annually to more than 30,000 cases over time.
“We have no plans to immediately double,” Moersch said. “We’ll let the market (sort that out), but it gives us some room to grow for sure.”
Moreover, the deal paves the way for Round Barn to sell its craft beer and distilled spirits in Tabor Hill’s restaurant, which is allowed under state law.
A statement released earlier this week announcing the deal referred to the acquisition as “the largest Michigan winery purchase in the state’s history.”
Asked to put that statement into perspective, Moersch noted that dealmaking has been slow to materialize in the state’s wine industry. But given Tabor Hill’s position as one of the largest wineries in the state and the limited deal flow in the sector, he said the statement is likely true.
Tabor Hill was the fourth-largest winery in the state by sales volume with more than 345,000 liters, according to data from the Michigan Liquor Control Commission. By comparison, Round Barn sold more than 110,000 liters of wine last year.
Round Barn’s acquisition of Tabor Hill was financed by Berrien Springs-based Honor Credit Union. The company also worked with the Michigan Small Business Development Center, housed within Grand Valley State University.
“They kind of helped us go through the financing structure, what the deal could possibly look like and did we have our ducks in a row with our books — putting in a plan for hiring and timelines in place,” Moersch said of the SBDC. “It was like almost having a CFO, if you will, before we could afford to hire a CFO.”
While Michigan frequently receives acclaim for its cluster of craft breweries that began largely in the 1990s, the state’s wine industry dates back decades earlier, with many wineries opening in the 1970s.
Today, the state is home to approximately 130 wineries — a figure that includes cidermakers and meaderies, according to data from the state-supported Michigan Grape & Wine Industry Council. The state produces about 2.4 million gallons of wine annually and production has increased 34 percent over the last five years, according to the group’s website.