First, Gruet was in the Texas wine business. Then, it wasn’t. And don’t worry if those two sentences are confusing, because Gruet’s 16-day foray into the Lone Star state has left quite a few people confused.
The simple explanation is that Laurent Gruet, who runs the critically- and popularly- acclaimed New Mexico sparkling wine house, bought Texas’ bankrupt Cap*Rock Winery for $6.5 million at auction on July 12. Then, some two weeks later, Gruet said he didn’t have the money and withdrew his bid. And yes, the state’s collective wine jaw dropped when that happened.
The less simple explanation? There isn’t one. No one knows what Gruet was thinking when he spent money he didn’t have. He isn’t talking about it, and that includes my attempts to reach him by phone last week. More, after the jump:
What is certain is that Gruet’s failure to conclude the Cap*Rock deal is not good for Texas or regional wine. Gruet is a top-flight national producer, and unless the bankruptcy fiasco is an indication of other financial problems, it has marketing and production expertise that most of Texas’ other 200 wineries don’t have -- and need. Gruet’s wines are sold in 49 states; by comparison, 90 percent of Texas-made wines are sold in Texas. it’s difficult for an industry to grow unless it expands its base.
More importantly, Gruet’s move into Texas would have shown that the regional wine industry is becoming sophisticated enough to do these kinds of deals. No one thinks twice when companies like Constellation buy another brand, but it’s huge news when a regional producer does it. If regional wine is going to be something more than a cute and cuddly plaything, it needs to have the wherewithal to do projects like the Cap*Rock deal.
And that Gruet wasn’t able to complete the deal will, unfortunately, reinforce that cute and cuddly perception. Yes, there is quality regional wine, and yes, it has improved, and yes, it deserves to be taken seriously. But when it comes to important stuff like making money, the wise guys will claim, it’s still second rate.
There are any number of theories floating around the cyber-ether and Texas tasting rooms about what happened. Did someone in New Mexico with a grudge do something to wreck the deal? Did someone in Texas? Then there is Laurent Gruet’s drunk driving problem. He has been arrested five times in New Mexico, with two convictions -- a legal predicament that would have caused difficulties in getting a license to run Gruet Texas.
But, and again assuming that Gruet is not in some other financial difficulty, the collapse of the Cap*Rock deal probably isn’t anything more than Gruet betting on the come, and playing with money he didn’t have. That's called being an entrepreneur, isn't it? Then, thanks to the recession, it wasn't possible to raise the money to secure the sale.
A friend of mine, who used to be in the commercial real estate business and was involved in these sorts of transactions (and asked that his named not be used for that reason), said what happened with Cap*Rock isn’t common. But it’s not unusual, either. More interesting, my friend said, is that Gruet was allowed to participate in the auction, even though he didn’t put up all of the necessary bond. That isn’t supposed to happen. The bond is supposed to ensure that bidders can pay for their actions, and they forfeit the bond if they have to back out. Since Gruet didn’t put up the bond, there was apparently less money to forfeit.
Finally, I need to mention the role of a couple of Texas wine bloggers -- Russ Kane of Vintage Texas and Ben Simons of Vintology -- in breaking this story. Neither, as far as I know, has any journalism training, but their hard work and quick study impressed this cranky ex-newspaperman. Well done, fellows.
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