Sleepy Creek Vineyards For Sale
Joe Taylor, the owner of Sleepy Creek Vineyards in Central Illinois, has decided put the winery up for sale.
Taylor said the winery is profitable at its current production of 7,000 gallons per year. “The winery has exceeded our expectations. Now we want to find a new owner who has the motivation and resources to continue what we started,” he said.
Taylor’s situation is not unusual today in the Midwest where many wineries have recently come up for sale. “Due to the age of many winery owners, I think we are going to see a lot of this (winery sales) in the next several years,” Taylor said.
Many Midwest winery owners started their wine careers their late 40’s and early 50’s. After a decade or two in business, they are now ready to retire. “This business is both physically and mentally demanding,” Taylor said, “and there’s always the issue of burn out to contend with.”
Taylor still has plenty of energy and he plans to continue with the winery if he can’t get full value for his business. Growing Sleepy Creek to 10,000 gallons in the next few years is achievable Taylor believes.
Sleepy Creek is located in Fairmont, Illinois, off I-74 between Danville and Champaign, Illinois. The area has some of the most productive corn and soy farms in the world. Another cog in the local economy is the nearby University of Illinois. Taylor says his customers are comfortable with his bottle prices which range from $13 to $20.
Sleepy Creek has been open eight years. Back in 2002, Taylor planted 10 acres of hybrids grapes that are used to produce about half of Sleepy Creek’s wine. Estate grown cultivars include Foch, LaCrescent, Niagara, Cuyuga and LaCrosse. Taylor has relationships with growers in Southern Illinois who provide the other half of Sleepy Creek’s grapes.
The winery’s most popular wine is called ‘Winey Mary.” This non-grape wine is the product of fermented tomatoes and jalapenos and tastes like a Bloody Mary. Taylor said he is working to get Winey Mary in national distribution.
Selling bottled wine is the core business for most wineries, but many wineries require multiple streams of income to produce consistent profits. Sleepy Creek has a lodging component, which they call a “B &W” for Bed and Wine. The room rate is $150 per night and it’s usually booked solid during the summer and fall.
Taylor thinks Sleepy Creek could also support a limited menu restaurant. “Half the people who visit the winery ask about food and I think a small restaurant would be huge for us.”
Starting a restaurant would require another building. Financing such an expansion with debt is not attractive to Taylor at this stage in his life. ‘It (food service) is a place where a new owner could definitely make money,” Taylor said. “But it takes money to make money.”
Events are another potential profit center for wineries, including Sleepy Creek. “To be honest, I am not that interested in weddings,” Taylor said. “I would never close the winery to accommodate a wedding.” To make weddings work, Taylor said that he would need more interior square footage and paved parking. “But the demand for weddings is there,” he added.
Many small business consultants say that having a good exit strategy is as important as having a good business plan in the beginning. Like many winery owners, Taylor is looking for a cash sale. But finding buyers willing or able to put 100% cash on the barrelhead is not easy.
Contractual provisions making the sales price contingent on future sales are common with closely held businesses. That’s because the owner of a small business is usually largely responsible for the previous success of the business. So-called “earn out” provisions often keep the previous owner involved in the business for years after the sale.
And then there’s the issue of pricing a winery. Unlike more common small businesses, there are no accepted valuation multiples for regional wineries. Taylor said that 10 times free cash flow or three times revenue is reasonable for a regional winery these days.
In regard to soliciting offers for the winery, Taylor is just “floating it out there” currently. He would not divulge an asking price. But based on the multiples he provided, his business could be valued at about $1 million. That may seem like a lot for a Central Illinois winery, but Rustle Hill Winery in Southern Illinois is on the market for $4 million.
As the Midwest wine industry matures, it will be critical for new buyers to replace the aging “pioneers” who got it all started. For successful, established wineries like Sleepy Creek, the current economic recovery is a good time to test the market.