When assessing how a calendar year went for the wine business, the obvious tactic is to look at what trends were hot, and what trends faded.
In this era of wine as big business, however, one must start with the event that dwarfs all others: the acquisition of the famed Napa Valley icon Robert Mondavi Winery by Constellation Brands, which appropriately enough (just weeks later) changed the name of its fine wine division to Icon Brands.
The billion-dollar deal, which was announced in late December 2004, was a shock to the industry, since Mondavi’s image worldwide is as great as any winery that ever existed, and there had been speculation that the fiscal turmoil through which the winery had waded over the prior two years would be solved in a different way.
Speculation was that the Mondavi family members would choose to sell off the Woodbridge facility and perhaps even the Mondavi Coastal brand, and keep the Oakville facility so they could continue to make Napa Valley wines.
But now, New York-based Constellation, the world’s largest wine company, has vital California brands including Franciscan (and its impressive Napa Valley vineyard holdings), and numerous other properties.
DIAGEO DIVERSIFIES
That deal wasn’t the only one in 2005 that left the industry smaller in terms of total ownership. Diageo acquired the Chalone group of wineries and Fortune Brands, the parent company of Geyser Peak, not only took over ownership of prestigious Wild Horse, but also acquired the portfolio of California wineries that had belonged to Allied Domecq.
That means that Geyser Peak is now a sister winery to Clos du Bois, along with William Hill (Napa Valley), Buena Vista (Sonoma Carneros), Atlas Peak (Napa Valley), Gary Farrell (Russian River Valley), and value brands Canyon Road, J. Garcia, Jake’s Fault, and Haywood.
Consolidation has occurred in much of the American commercial marketplace over the last decade or two, including the wholesale market, and this gathering of brands under one roof should make for some creative and intriguing marketing concepts over the next few years. In particular, the question must be asked, “How will this move affect the pricing of such well-regarded brands as Geyser Peak and Clos du Bois?”
Meanwhile, Fosters, the Australian brewing giant, which had already owned Beringer Blass Wine Estates, wound up acquiring the international behemoth Southcorp, putting the Penfolds, Rosemount and Lindeman’s brands in the same portfolio with Beringer (resulting in two of the world’s greatest red wines Penfolds’ Grange and Beringer Private Reserve Cabernet Sauvignon being under the same ownership).
At the same time, E&J Gallo fortified its position in the marketplace by improving both the quality and quantity of its portfolio. Besides the expansion of its California brands (notably Turning Leaf and Rancho Zabaco), the company also began to import Red Bicyclette from France and expanded its Aussie brand McWilliams. Moreover, Gallo lifted a corner of the tent in mid-year by beginning to allow its wine makers to establish visible presences in the wine community.
Another new development this year plays a role in all this as well, though it is indirect to on-premise marketers. On May 16, the U.S. Supreme Court ruled that the states could not discriminate in the shipping of wine. If a state permitted wine to be shipped to consumers within a state, it had to permit wineries from outside the state to do likewise.
LAW’S ON-PREMISE IMPACT
Although this has little direct impact on on-premise licensees, it may affect them in subtle ways. Before this decision, consumers in New York (for instance) found it difficult if not impossible to get their hands on many of the small-production, “cult” wines of California. By gaining access to such wines, consumers could start getting a lot pickier when it comes to their demands on restaurant wine buyers.
Leading Brands of Domestic Table Wine, 2000-2004
BRAND
% CHANGE
Franzia Winetaps
The Wine Group
20,550
19,728
20,692
21,350
23,630
10.7%
Carlo Rossi
E & J Gallo Winery
13,600
13,500
12,900
13,300
13,200
-0.8%
Twin Valley
E & J Gallo Winery
10,100
10,500
10,000
9,500
9,700
2.1%
Almaden
Canandaigua Wine/
Constellation
9,380
9,730
9,680
9,480
9,634
1.6%
Beringer
Foster’s Wine
Estates Americas
5,850
6,200
7,000
7,350
7,720
5.0%
Sutter Home
Trinchero Family
Estates
7,215
7,005
7,084
7,050
7,229
2.5%
Livingston Cellars
E & J Gallo Winery
7,530
7,510
7,200
7,300
7,200
-1.4%
Woodbridge
Canandaigua Wine/
Constellation
6,376
6,588
6,805
6,747
7,075
4.9%
Charles Shaw
Classic Wines
of California
– –
– –
1,800
5,000
5,000
0.0%
Peter Vella
E & J Gallo Winery
4,200
4,350
4,300
4,500
4,775
6.1%
Boone’s
E & J Gallo Winery
4,500
4,650
4,700
4,500
4,500
0.0%
Inglenook
North Lake Wines/
Constellation
4,770
4,520
4,340
4,120
3,997
-3.0%
Arbor Mist
North Lake Wines/
Constellation
4,050
4,230
4,340
4,570
3,911
-14.4%
Kendall-Jackson
Kendall-Jackson
Wine Estates
3,144
3,576
3,740
3,624
3,687
1.7%
Vendange
Canandaigua Wine/
Constellation
4,600
3,920
3,870
3,530
3,520
-0.3%
Turning Leaf
E & J Gallo Winery
2,750
3,025
3,050
3,250
3,200
-1.5%
Glen Ellen
The Wine Group
2,526
2,695
2,283
2,335
2,495
6.9%
Corbett Canyon
The Wine Group
3,010
2,850
2,662
2,730
2,475
-9.3%
Fetzer
Brown-Forman
Beverages
2,396
2,237
2,355
2,221
1,926
-13.3%
Foxhorn
The Wine Group
1,026
1,245
1,419
1,580
1,880
19.0%
Robert Mondavi
Private Selection
Canandaigua Wine/
Constellation
1,142
1,260
1,356
1,414
1,676
18.5%
Clos du Bois
Allied Domecq
Wines USA
1,192
1,341
1,447
1,505
1,655
10.0%
Columbia Crest
Ste. Michelle
Wine Estates
1,303
1,490
1,515
1,451
1,628
12.2%
Stone Cellars
Foster’s Wine
Estates Americas
– –
400
1,100
1,400
1,540
10.0%
Blackstone
Pacific Wine Partners/
Constellation
412
582
1,009
1,275
1,400
9.8%
Wild Vines
E & J Gallo Winery
2,500
2,350
2,000
1,600
1,300
-18.8%
Meridian
Foster’s Wine
Estates Americas
1,150
1,200
1,260
1,235
1,210
-2.0%
Copperidge
E & J Gallo Winery
1,300
1,300
1,270
1,200
1,200
0.0%
Beaulieu Vineyard
Diageo Chateau
& Estate Wines
1,261
1,353
1,312
1,217
1,195
-1.8%
Chateau Ste. Michelle
Ste. Michelle
Wine Estates
773
853
975
1,054
1,175
11.5%
Paul Masson
North Lake Wines
/Constellation
1,830
1,610
1,460
1,300
1,152
-11.4%
Redwood Creek
E & J Gallo Winery
– –
27
1,000
1,100
1,100
0.0%
Taylor California Cellars
North Lake Wines/
Constellation
1,270
1,160
1,120
1,050
1,032
-1.7%
Delicato
Delicato Family
Vineyards
803
836
890
970
1,020
5.2%
Sterling Vineyards
Diageo Chateau
& Estate Wines
430
514
605
757
950
25.5%
Total Leading Brands
132,939
134,335
138,539
142,565
145,986
2.4%
Others
31,795
30,509
32,044
34,815
37,154
6.7%
TOTAL DOMESTIC TABLE WINE
164,734
164,844
170,583
177,380
183,140
3.2%
Another result of the consolidation in the wine business is the obvious detriment it poses to marginal grape varieties. Right and left these days, wineries are honing down their portfolios to the few politically correct and commercially profitable varieties, trimming out the grapes that are perhaps more exciting, but harder to sell.
Having a large and versatile portfolio of wines that included chenin blanc, petite sirah, riesling, and gew