Forbes India 15th Anniversary Special

Charles Banks's $200-million wine portfolio

As the founder of Terroir Capital, Charles Banks has cultivated the ultimate winery collection, managing a $200 million portfolio of vineyards and hotels globally

Published: Apr 23, 2016 06:07:25 AM IST
Updated: Apr 19, 2016 03:19:15 PM IST
Charles Banks's $200-million wine portfolio
Image: Evan Kafka for Forbes
Glass act: Charles Banks at the wine cellar at Bones Restaurant in Atlanta. He keeps the top price of wines in his portfolio at about $100 a bottle

In 2010, investor Charles Banks and billionaire real estate and sports entrepreneur Stan Kroenke dissolved their joint ownership positions in a high-profile, ultra-luxury lifestyle portfolio that included Napa’s Meadowood Resort, The Napa Valley Reserve and that paragon of wine-collector frenzy, Screaming Eagle Winery. Banks, now 48, would soon prove that there are indeed third acts in American lives.

As the founder and managing partner of Terroir Capital, which manages about $200 million of assets in hospitality and wine, Banks has gone on a largely below-the-radar buying spree over the past five years that has given him a mixed shopping cart of winery holdings from California to France to New Zealand. They include a worldwide, 150,000-case value brand from South Africa (Mulderbosch), a faded doyenne from Napa Valley (Mayacamas) and tiny, collector-cult iconoclasts such as Sandhi and Wind Gap.

If the thread binding these disparate wineries isn’t evident to outsiders, it is as clear as a Chablis to Banks. “We are looking for definitive projects,” he says. “We always ask, ‘Can we be a game changer here?’” He is, to hear him tell it, the wine world’s ‘Man With the Plan’.

Banks’s self-confidence was firmly grounded back in his 30s, when he was known as the guy seemingly bent on the creative ­destruction of Screaming Eagle. He was an outsider to the wine establishment then, a moneyman from CSI Capital Management, whose high-profile client roster included NBA stars such as Kevin Garnett. True, he had already founded luxury-priced critics’ darling Jonata Winery in partnership with billionaires Gerald Levin and Arnon Milchan. Six years later, in 2006, Banks recruited Kroenke to buy Screaming Eagle, which produced one of the most expensive wines in the New World.

After filing the deed to Screaming Eagle, “I drove straight to David Abreu’s yard,” Banks recalls, and told the Valley’s most prominent viticulturist to roll out his bulldozers. “We are taking out 70 percent of the vineyard there, day one.”

“I tore out 70 percent of the grapes because 80 percent of them were being sold to other producers,” Banks explains. “It was a 59-acre vineyard, and only a couple of acres were going into Screaming Eagle. And if I tore out the vineyard, I got out of the evergreen contracts on those acres.”

More important, “there was the perceived scarcity. We weren’t going to make less wine; in fact, we were going to make more. But everybody thought we were going to make less because we tore out those vineyards. It allowed us to triple the price in three years and more than double production. Screaming Eagle was at $250 a bottle when we bought it, $850 when I got out. And production went from 500 cases to about 1,500.”

Banks hasn’t attempted to replicate that level of price appreciation in his post-Screaming Eagle life. The most expensive current releases in his portfolio now are priced at around $100 a bottle. (Some reserve bottles are $300.) Pushing the envelope on prices, as he sees it, was a tactic from the last war; Banks is preparing to fight the next one.

In his view, the high-end wine world is evolving away from extravagance toward authenticity and discovery. “I saw an opportunity for us to make some real changes in this business,” he says, “to centralise a marketing platform. It is almost an incubator, a venture capital model, where I can find a guy like Bob Lindquist at [Santa Barbara’s] Qupé and let him focus on the cellar, where he is unparalleled, and we handle sales and marketing. Over the past five years, we’ve built a national platform that has seven regional sales directors with three district managers under them.”

These salespeople work in parallel with the distributors, doing the missionary work the wholesalers aren’t equipped to handle. “Goal number one is to be our distributors’ favourite supplier,” Banks says. And then to reach beyond, to tell these brands’ stories to the retail tier and the consumer.
His winery ventures currently provide revenues of about $35 million. With his latest project, Napa Valley’s 127-year-old Mayacamas Vineyards, he and his partners, the Schottenstein family, have taken on another significant challenge. Antiquated and backbreaking to farm with its steep, stony vineyards—and somewhat faded in consumer memory from its glory days—Mayacamas is a place where, he admits, “we will be writing cheques for years”.

Not all of his partners are enjoying the ride. NBA star Tim Duncan, who has invested with Banks for nearly two decades, is now suing him for breach of trust over a series of deals, including some winery investments. (Banks, who denies any wrongdoing, says, “We are proceeding aggressively to have his claims litigated.”)

But Banks finds satisfactions other investors may overlook. Like the day when winemaker Andy Erickson, newly installed at Mayacamas, thanked him for buying a new, punishingly expensive high-tech grape sorter—and then asked to return it.

“That was pretty cool,” Banks says. “We weren’t seeking a ‘perfection’ that would filter out the character of the place. We embraced the wabi-sabi of imperfection. That’s the day I felt, ‘Well, it’s working—Maya­camas is driving the story, not Charles Banks, not Andy Erickson. That’s the authenticity. That’s the voice of this brand’.”

(This story appears in the 29 April, 2016 issue of Forbes India. To visit our Archives, click here.)