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BMO bolsters US wine unit with new hires, bets on industry recovery By Reuters

By Nivedita Balu

TORONTO (Reuters) – Montreal-based Bank of Canada is betting on a recovery in U.S. wine sales, boosting the business it acquired last year with its $16 billion purchase of Bank of the West with more hires and a focus on wealthy individuals, the head of the unit. said.

BMO sees opportunity as the $107 billion U.S. wine market slowly recovers from years of bumpy sales, when temporary restaurant and pub closures during the pandemic wiped out millions of sales, resulting in inventory surplus. High interest rates have also increased borrowing costs.

“We’re even more focused on being the financing source and advisory source for wine transactions, for wineries buying and selling to each other,” said Adam Beak, who heads BMO’s Napa, Calif.-based wine and spirits group. in an interview.

He did not provide details on the number of hires.

Beak, who previously led the team at Bank of the West, said the lack of a strong US capital markets team prior to the acquisition made it difficult to serve larger clients seeking access to capital. He is betting on BMO’s mid-market advisory team and wealth management businesses to sign up clients for new services.

“We kind of hit the ceiling of what we could do at Bank of the West. And this (acquisition) just opened up opportunities for us,” Beak said.

A partnership with California M&A consultancy Zepponi, which has advised wineries and vineyards on acquisitions by Constellation Brands (NYSE: ) and E. & J. Gallo Winery, gives BMO access to its high-profile clients.

BMO and Silicon Valley Bank are among the largest advisers to the U.S. wine industry, industry experts said.

Beak said the BMO team is expanding its wealth management products by focusing on premium wine producers, which are typically smaller businesses owned by wealthy individuals.

Its competitor, Silicon Valley Bank, focuses on its roughly 400 major wine industry clients, offering them guidance and standard commercial banking products.

“Ironically, our expertise has more value in down markets, so we’re still growing and adding substantial new business,” said Rob McMillan, founder of SVB’s premium wine division, now part of First Citizens Bancshare.

© Reuters. FILE PHOTO: A sign for the Bank of Montreal in Toronto, Ontario, Canada, December 13, 2021. REUTERS/Carlos Osorio/File Photo

Banks’ reports on the wine industry in 2024 had divergent views. SVB noted the industry’s need for production efficiency and better marketing, while BMO said 71% of US wineries were forecasting revenue growth this year.

“It’s not a good time yet, but we think we may have bottomed out and the recovery is starting,” said Erik McLaughlin, CEO at wine industry consultancy METIS, referring to the sector’s mid-priced bottles .

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