Diageo to sell off even more -- this time, Chalone


#1

From the drinks business: Diageo is putting its Chalone Vineyard winery up for sale after it was left out of last week’s £361 million deal with Treasury Wine Estates.

Diageo has so far declined to comment publicly on Chalone Vineyard, with media reports quoting unnamed company spokespeople confirming the sale. It is unclear what price Diageo is looking to achieve with the sale.

Diageo purchased the Californian winery for $260 million (£170m) in 2004, when current CEO Ivan Menezes led the company’s operations in North America. It’s sales went from 30,000 cases to 200,000 cases just a matter of years, but in 2014 they stood at 166,000 cases, down 15%. (article continues)


#2

So when you go from 30K cases (of probably all estate grown grapes) to 200K cases in a relatively short time frame, what is in most of those additional bottles? The same grapes that may “grace the insides” of another dozen Diageo labels? In this case, I have no idea, but I would not be surprised.


#3

All one needs to do is look at the wines or, if that’s too difficult, look at their website.

Since the days when Philip Togni – later of Cuvaison and his own winery – was the winemaker (1960), Chalone produced Chenin Blanc. I’m not sure what else Philip made, but by the time Dick Graff first bought (1964) and then made the wines himself (1966), Pinot Blanc, Chardonnay, and Pinot Noir were estate grown and bottled.

In 1998, Syrah was planted in the estate vineyard, and sometime after than, so too was Grenache. Both are produced as varietal wines.

Chalone became a publicly traded company in 1985, and by 1989, Domaines Baron Rothschild (Lafite) had acquired 6 percent of Chalone stock (and vice-versa). By 2004, DBR has actually acquired 46 percent of Chalone stock, and in October 2004, a deal was entered into for DBR to buy the rest. However, Chalone pulled out of that deal three months later when Diageo outbid DBR by $2.50 a share. Challenge was sold to Diageo for approx. $260 million. Diageo agreed to buy out DBR’s shares and to pay DBR Chalone’s “termination fee” of an additional $2.48 million.

That said, it should be remembered that, at the time of its acquisition by Diageo, Chalone, Inc. owned a total of NINE wineries in California – Acacia, Chalone, Dynamite, Echelon, Hewitt, Jade Mountain, Moon Mountain, Orogeny and Provenance wineries. It also had a 50-percent stake in Edna Valley Vineyard. In Washington State, Chalone also owned Canoe Ridge and Sagelands wineries, and had a nearly 25 percent Château Duhart-Milon. It also owned some 1,500 acres of land in California, with vineyards in Napa, Sonoma and Monterey counties (besides what was owned directly by the various wineries). Several of these labels have now ceased to exist.

(To be continued.)


#4

I have no reason to doubt the original article – that

– but all you need to do is look at the labels, as I said above.

These five wines clearly state they are from the “Monterey County” appellation, as opposed to the Chalone appellation, so there is no attempt to claim these are estate wines. As for being the same wines as can be found in Diageo’s other brands, one could (probably) tell quite easily by looking at either the P&B line on the label, or the BW number on the cardboard case.


#5

They really did a number on Rosenblum. Was it you who pointed to their “Rose n Bloom” rose? And a couple of months ago the Rosenblum non-vintage “cuvee” was in big stacks at Trader Joe’s for $2.99. I happen to live on the same street as Roger Rosenblum, and when I told him about the TJs deal he shook his head sadly (but they seem to be having fun with their new venture, Rock Wall.


#6

The only Rosenblum wine I’ve had since the sale was at an event at the old facility. They poured 5 various tastes from the low end (or rather, rear end) and we actually used the spittoon. We did wander in to the new JLS space to take a peek. A nice space, but we didn’t drink anything.


#7

Name two wineries that have improved under large corporate ownership. (I can think of one, but it’s the exception.)


#8

I can’t even name one. On the other hand, if I ever set foot in St. Supery again (my last visit was ca. late 1980s/early 1990s), I will certainly expect a complimentary Chanel handbag with my overpriced tasting. :smiley:


#9

Well, their wines were/are on the jamberry side, but I appreciated that they made some wines from very local grapes, Contra Costa zinfandel and mourvedre. And a former grape manager used to offer us home winemakers small batches of their higher-end grapes. I bought some bottles of one of their Paso zinfandels to compare how they aged with how my own wine from the same grapes did (mine started off better, but after five or six years theirs had become much better than mine).

ETA: “they” being Rosenblum, not Chalone. I probably hit the wrong “Reply” button.


#10

There are, in fact, several, but most of then started life as corporate entities – e.g.: Cardinale (KJ), Domaine Chandon (LVMH), Roederer Estate (Champagne Louis Roederer), Chateau Ste. Michelle (UST, which was in turn acquired less than a decade ago by Altria), etc. There are very few wineries, however, that started out in private hands and then survived corporate ownership.

OK, I can think of two. The one I originally had in mind was Ridge Vineyards, which was sold to Otsuka Pharmaceuticals of Japan, which took a definite “hands-off” approach – leaving Paul Draper in charge, and the rest of the staff intact.

But as I write this, I am recalling what happened in the 1970s when Heublien took over several California wineries, most notably Beaulieu and Inglenook. BV got a much better deal, and retained a high degree of independence. Certainly their George de Latour Private Reserve Cabernet Sauvignon has retained its high level of excellence, despite being a) sold to Heublien, and b) having Heublien acquired by Grand Metropolitan, only to have Grand Met being merged into Diageo. Inglenook, however, went from being one of Napa Valley’s top Cabernets, to being a jug wine producer (Inglenook Navalle), to finally disappearing completely . . . only to be resurrected by Francis Ford Coppola


#11

In the late '80s, my group at work took a trip up to Inglenook. Everyone was skeptical because by then they only produced the jug wines, but the older samples we had at the winery were excellent. A few years later, I found a couple of bottles of old Napa cabs at a yard sale in San Francisco. One of them was an early '60s Inglenook, and it was at the time the oldest wine I’d ever had, and was excellent, building and improving in the glass.


#12

"Back in the day . . . "

The five grand old names in the Napa Valley – at least in so far as it came to making great Cabernets in the post-World War II era – were (alphabetically) Beaulieu (Private Reserve), Beringer, Charles Krug (Vintage Select), Inglenook (Cask), and the smallest of the bunch, Louis M. Martini (Special Selection).

By the 1960s, Beringer was moribund, and was the first to be sold to a big corporation (Nestlés, only to end up – after a few intermediary changes – to be owned by the Australian, Treasury Wine Estates). It needed to be, the wines were pretty close to $#|+. It took 20+ years, and there’s no doubt that it was their White Zinfandel that saved them, but they are once again highly respected as a premium producer – across a wide spectrum of wines and prices. In terms of their portfolio of wines, they are (one of) the last of the “American industrial” model wineries¹. As near as I can tell, Beringer makes over a dozen different Cabernet Sauvignons . . .

Beaulieu and Inglenook were next, both being swallowed up by Heublein. The difference was that BV was an independent company, whereas Inglenook was taken over by United Vintners, which was based around Italian Swiss Colony. No wonder Inglenook was neglected and vineyards sold off, while Heublein focused on making Inglenook Navalle into a better jug wine, to compete with Almadén, Paul Masson, and eventually Taylor California Cellars – while ISC was focused on competing with the lower priced jug wines from Gallo.

This,of course, brings up the matter of the so-called GAMIT tastings, but that’s for another time . . .

BTW, Almadén had been purchased by National Distillers Corp. (NDC) in the 1940s, while Paul Masson was owned by Seagram’s. Taylor California Cellars started out owned by Coca-Cola, but was eventually acquired by Seagram’s as well.

The Louis M. Martini Winery was, and remains, a family-owned winery. It’s just changed families – the Martini family sold their winery in 2002 to the Gallo family.

And that leaves Charles Krug, which has been in the Mondavi family since 1941 (IIRC).


¹ This is my term for the virtually extinct model of “old school” U.S. wineries. In one sense, they were just like General Motors or Kellogg’s. (You want a sports car? You want a station wagon? A heavy-duty truck? We make that. You want sugary-sweet kids cereal? Corn flakes? Something with a lot of bran? We make it!) You want a White Zin? A modestly priced varietal? A truly world-class Cabernet? What about a dessert wine? “Yeah, we got that.”