Realm Cellars

This summer, I had the chance to meet Scott Becker, owner and Managing Partner of Realm Cellars (and an HBS grad). Founded in 2002 by fellow owner Juan Mercado, Realm has lived through dramatic ups and downs and built an outstanding consumer brand from scratch. Since 2002, Realm has scaled from 300 cases to several thousand cases across 11 small-batch wines: four proprietary red blends and 6 single-vineyard designant wines.

Realm started out by purchasing fruit from exceptional Napa vineyards and producing wines out of a rented winery space. While at the time, they could use only one of the vineyard names on their wines (To Kalon, part of which is owned by Robert Mondavi), the quality of the grapes and ability to lock-in outstanding relationships early became key to their success.

“Realm. As in the realm of possibility. We hadn’t sold a bottle of wine. We didn’t have a single person on the mailing list. We had all this inventory of great juice but no clear idea of what we were going to do with it. But I knew we’d figure it out. And I had the name.”

Realm continues to produce wines using grapes from those same plots of land and will selectively add new growers and new wines to their portfolio. While Realm relied on its vineyards’ reputation in the early days, its only addition to-date since 2005, Houyi Vineyard located on Pritchard Hill, indicates that Realm now leverages its own brand to elevate those of its vineyards. The Chang family purchased Houyi Vineyard and founded Nine Suns, a new winery, in 2010. Realm began sourcing fruit from the vineyard in 2013; it both displays Houyi on the bottle and makes a plug for Nine Suns on its website.

Scott had graduated from HBS to work in Napa Valley and worked for Bill Harlan on his new project, Promontory. After many years of being mentored by Napa Valley greats, Scott was looking for his own project. Scott and Juan began their partnership at Realm in 2012 at a time when “financial things were piling up” and the winery, despite having a strong brand and great wine, needed a restructuring. I asked Scott about the process of raising capital for a high-end winery in Napa Valley to support this restructuring. I thought it'd have been easy; having read about vineyards all month, a number of high net worth individuals seem purchase and steward them as investments or hobbies (or both). Contrary to my suspicion, raising capital to recapitalize Realm was incredibly difficult.  At the time Scott first met with Juan Mercado in mid-2011, Realm owned no vineyards and no capital; Juan had cashed in his 401k from his job in healthcare and bootstrapped the entire thing. High net worth individuals, even if they like wine, will evaluate an investment in the wine industry like any other.

As the next step in its evolution, Realm purchased Hartwell Estate in Stag's Leap District on December 30, 2015. Realm’s winemaker had worked on the property for more than 10 years, and Realm had outgrown its existing winery space. Although it’s described in Realm’s story as a “fixer-upper,” the property, despite the replanting and rebuilding required, provides Realm a home and a sense of place. Most importantly, it gave Realm its own fruit from which to create exceptional wines. Scott mentioned that the only thing more difficult than raising capital for Realm in the first place was going back to investors asking them for additional money to purchase Hartwell and make the huge capital investments required to rehab it.

Today, Realm competes with the "cult wines" of Napa Valley, and the team has ambitious plans for growth. I encourage you to check out the killer brand they've built and the storied history they've compiled here: https://www.realmcellars.com/pages/up-to-now.html#whole-story.