The US wine industry saw a handful of notable vineyard sales and investment partnerships last year, but none was quite as impressive as the acquisition of DAOU Vineyards by ­Treasury Wine Estates. The California winery, founded in 2007 by ­brothers Georges and Daniel Daou, sold in December to the Australian wine giant for $900 million plus an earn-out of up to $100 million. How did two brothers go from making wine in their garage to a billion-dollar deal in less than two decades? A dream and a mountain.

The Dream

The dream of making wine started early for the Daous. After fleeing Beirut with their family at the beginning of the Lebanese Civil War, Georges and Daniel spent their formative years in the south of France savoring the exceptional food and wine of that gastronomic paradise.

They brought this acquired taste to California in the early 1980s. But wine was not their first calling. They were students at UC San Diego. After graduating with engineering degrees, they founded Daou Systems, a networking-technology company, which they sold in 2005.

As Daou Systems grew more profitable, Daniel evolved into the ­consummate oenophile, collecting select vintages, reading classic works, and even producing a wine in his garage from a one-acre parcel of ­Cabernet Sauvignon that he personally tended.

While the dream of DAOU Vineyards was shared by both brothers, Daniel made it a reality. After innumerable field trips into the California countryside, he discovered a perfect piece of land in what was then an unlikely spot for growing his beloved Cabernet Sauvignon.

Daniel recalls telling his father, “I’m going to buy this property in Paso, and I want to become a winemaker, and I think I can make one of the best wines in the world.”

The sale included 400 acres of vineyards in the Adelaida District of Paso Robles plus DAOU’s award-winning, mountaintop tasting room.

The Mountain

In 2007, the brothers purchased their first Paso Robles vineyard. A second, much larger purchase followed in 2012: Hoffman Mountain Ranch, which would be rechristened DAOU Mountain.

Thanks to Dr. Stanley Hoffman, ­Hoffman Mountain Ranch is considered the birthplace of modern winemaking in Paso Robles. He constructed the first commercial-scale winery on its steep slopes in the 1960s. He did so under the guidance of André Tchelistcheff, who praised the mountain as “a jewel of ­ecological elements.”

“How is a great wine made? The first thing you need is great terroir. Great wines are made in the vineyards,” says Daniel. “I can vividly remember the first moment I laid eyes on this mountain, because I had already seen it in my mind. I had been searching for a terroir exactly like this — the soil, the slopes, elevation.”

Hoffman Mountain’s terrain is covered in a rare, calcareous clay soil that is also found in the world-famous grape-growing regions of Bordeaux and Saint-Émilion. It is ideal for growing the Cabernet Sauvignon and Bordeaux varietals that Georges and Daniel dreamed of cultivating.

Perched at 2,200 feet and steeply sloped, it is the highest winery on California’s Central Coast and offers unparalleled views and an ideal climate that is cooled by breezes off the Pacific Ocean just 14 miles away.

“We have, arguably, the most perfect climate in the world to ripen Bordeaux varieties and Cabernet Sauvignon,” ­Daniel says.

The Wine

The terroir may have been perfect, but there was still plenty of investment required before the brothers could begin to make wine. “We didn’t buy a winery,” says Georges. “We bought dirt; no wells, no vines, no buildings, no power, no tasting room. Just dirt. But we did bring passion, imagination, hard work, and energy to unlock the potential that was there to begin with.”

It didn’t take long for Daniel’s exacting standards to transform steep, rocky cliffs into a world-renowned vineyard. He brought exceptional Cabernet clones from Bordeaux and Napa to Paso Robles. When the brothers arrived, the area was known best for its Zinfandel and Rhone varietals. Today, it consistently produces world-class Cabernet. Using a proprietary vine-planting structure, Daniel achieved impressive yields by growing more than 3,500 vines per acre on the mountain’s steep slopes.

Daniel’s approach to winemaking was similarly rigorous. After cultivating hundreds of native yeasts, he isolated one from DAOU Mountain that could thrive in higher temperature fermentations while also offering exceptional color stabilization. It was so impressive that vintners in more than 30 different countries use it today.

Phenolics, the chemical ­structure that helps to determine a wine’s age-­ability, also distinguishes Daniel’s wines. “DAOU Mountain is blessed with arguably some of the highest phenolics the world has ever seen for Bordeaux varieties, allowing us to deliver wines that have texture while maintaining the elegance, classiness, and balance that you often don’t find in California wines,” Daniel says.

The Terroir

For his barrels, Daniel is equally meticulous. He uses only the finest French oak, including a proprietary bois rosé barrel that is crafted from a rare pink wood which is air-dried for five years before being custom-toasted.

“My purpose is to create a pure expression of this terroir — to allow this mountain to speak through the wines that come from it,” says Daniel.

His wines quickly found their voice. Only three years into winemaking at their new vineyard, the inaugural bottling of Soul of a Lion Cabernet ­Sauvignon received 96 points from ­Robert Parker. The rating was especially meaningful because Soul of a Lion honors their father. This recognition set the brothers on an upward trajectory that saw DAOU become the fastest-growing luxury wine brand in the US at the time of its acquisition in October 2023.

The Deal

Treasury Wine Estates has had a presence in Paso Robles for decades. The company recognized the potential of DAOU as a prestigious American brand that was accessible to a large number of wine consumers. “This is a transformative acquisition that will accelerate the growth of our luxury portfolio,” says Treasury CEO Tim Ford.

While DAOU’s Soul of a Lion and PATRIMONY range will no doubt strengthen Treasury’s luxury tier, the winery’s many quality offerings priced at the super-premium level of $20 to $40 will also “fill a key portfolio opportunity,” according to Missy Waldrop, senior vice president of marketing at DAOU.

The transaction also includes 400 acres of vineyard in the prized Adelaida District of Paso Robles that are crowned by DAOU’s award-winning, mountaintop tasting room.

“DAOU has done an incredible job with regards to the experience at DAOU Mountain, as well as engaging with younger wine consumers across the country,” says Treasury President Ben Dollard. “We see very significant opportunity to take that experience global.”

“The last frontier has always been international, and as part of the ­Treasury Wine Estates portfolio, we have unlocked the potential to be among the highest-end wines for consumers to enjoy globally,” says Daniel.

The brothers, ever the restless entrepreneurs, have already broken ground on a new winery in Tuscany, but they remain devoted to their original dream in Paso Robles. Daniel will remain chief winemaker at DAOU.

“In Treasury Wine Estates, we have found a partner that not only understands the value of our brand and the premium assets we have cultivated but also the importance of ensuring that we maintain a relentless focus on quality and craftsmanship as we step into our future,” says Daniel.

Published in The Land Report Spring 2024.

Prior to DAOU’s debut, Paso Robles was best known for its Zinfandel and Rhone varietals, not Bordeaux-style Cabernet Sauvignon.