Agriculture Capital acquires California table grape vineyard

The move into a new crop fits the firm’s plan to develop a year-round portfolio that may one day include organic crops, vice-president Atish Babu tells Agri Investor.

California-headquartered Agriculture Capital has acquired a table grape vineyard of nearly 7,000 acres in its first investment in the crop.

Located in Kern County, California, Columbine Vineyards grows six varieties of red grapes and four of both green and black grapes. Owned and operated by the Caratan family for four generations since its founding in 1926, Columbine also has a 200,000 square-foot cold storage facility that opened in 2014.

Capital for the investment came from AC’s second vehicle, which beat its $400 million target before closing on $548 million in October. Its LPs include public pensions and other institutions and its strategy focuses on regenerative agriculture. In January, AC made its first investment in Australia when it acquired a 500-acre citrus farm from its founding family.

AC vice-president Atish Babu told Agri Investor that moving into table grapes was part of the firm’s plan to build a year-round farming and processing portfolio that achieves economies of scale and maximizes efficiency across crop cycles. The Columbine Vineyards facility, for example, will also be used to process citrus, and perhaps blueberries, during the grape off-season.

The labor factor

Another benefit to a year-round portfolio, Babu explained, was the firm’s labor force. This is a particularly important concern for grapes, which are among the less-mechanized crops the firm invests in. By building a portfolio including multiple crops and harvest times within the same geography, Babu said AC hopes to be able to offer its workers nearly year-round employment.

“Once you have that type of permanent or semi-permanent workforce, there’s an ability to invest more in training, productivity and help support them from a skill development standpoint,” Babu said.

“They will be sold at Whole Foods as red, green, black; seeded or not seeded, grapes. You may be eating it and you don’t even know”
Atish Babu

About 20 years ago, the grape market underwent a shift from seeded to seedless grapes that in recent years has been replaced by efforts to meet demand for bigger and crunchier grapes. Babu added that part of what attracted AC to Columbine Vineyards was its intellectual property in the form of proprietary grape varieties that are in line with these trends, particularly the Holiday Seedless and Milano varieties.

AC already owns the Sumo citrus variety, and Babu explained the firm is currently exploring ways to get more third-party growers to grow some of Columbine Vineyards’ unique grape varieties, similarly to how it has marketed its citrus.

“We will market and sell for third-party growers that grow the Milano or the Holiday, but the way that that shows up in the storefront will be a little bit different than the Sumo,” said Babu. “You will see Holidays and Milanos on the store shelf. You may not know it is Holiday or Milano, they will be sold at Whole Foods as red, green, black; seeded or not seeded, grapes. You may be eating it and you don’t even know.”

The organic option

Babu estimated that between 1 and 5 percent of the acreage of the Columbine Vineyards property may convert to one of the firm’s other focus crops (citrus, blueberries and hazelnuts). He added that the vast majority of the acres would continue to grow what they are already planted with. A key focus in the near term, he said, will be to continue the progress the Caratan family has achieved in reducing waste and environmental impact of its grape packaging.

Like all table grape growers in California, Babu said Columbine Vineyard has experienced a limited degree of grape powdery mildew, but the blight is not widespread on the property. At Columbine, the mildew has been addressed largely through the use of chemicals, though the firm is “very interested in doing some table grapes in organic” and will be evaluating options over the next couple of years, he said.