The latest changes in ownership in wine country are more like transfers of sports teams, W. Blake Gray find out.
By W. Blake Gray | Posted on Friday December 10, 2021
You would think that, like American professional sports, wineries have a negotiating deadline, after two big deals were announced yesterday.
Just like in baseball, these agreements, combined with the one from three weeks ago, are exchanges of challenges. Three major wineries believe they know more about the future performance of these wineries and regions than their competitors, and they are betting hundreds of millions of dollars on their opinions.
At the heart of it are two companies betting on Napa and one taking a contrarian position on Sonoma. Here is the transaction report, sporty style:
- November 18: Treasury Wine Estates acquires Frank Family Wines
- December 8: Treasury Wine Estates sells ChÃ¢teau St. Jean to Foley Family Wines
- December 8: Elizabeth Spencer sells her estate to Jean-Charles Boisset
The two transactions involving the Treasury are fascinating. The Treasury decided last month that it needed more high-end Chardonnay in its wallet. But rather than trying to make it at (or for) Chateau St. Jean – which is much, much closer to prime Chardonnay vineyards than Calistoga, the warmer part of Napa Valley where Frank Family is located. – Treasury decided to buy Frank Family anyway. The agreement to unload ChÃ¢teau Saint-Jean should already be in progress.
Put simply, the Treasury has decided that consumers who love buttery chardonnay will spend more on it with a Napa Valley label, even though the best Chardonnay grapes come from Sonoma. The Treasury is betting against climate change and against changing consumer tastes. The Treasury is a public enterprise, and it doesn’t have a great track record on its investments in American wine. It’s not a Gallo or Constellation deal that says, âWell, I don’t quite understand it, but they know what they’re doing. Maybe they don’t.
To be fair, the Frank family were managed very actively by their former owners, the, uh, the Frank family, with a nice tasting room, a good PR program, and forays into Hollywood celebrities who are still potential influencers. . The TrÃ©sor had its turn with ChÃ¢teau Saint-Jean, and under its ownership, CSJ made the sad transition from a winery to a brand. CSJ has a very nice wine building in Kenwood, but Treasury stopped producing wine there and inflated the CSJ brand with hundreds of thousands of cases of California appellation wines made largely from purchased fruit. The Treasury hadn’t exactly driven CSJ into the ground, but it had become a struggling asset.
Step into Foley Family Wines: This is precisely the kind of winery that sets the reputation Foley enjoys buying: previously he would buy other wineries that had fallen, including Chalone Vineyard, Chalk Hill, Firestone, and Ferrari-Carano.
âBill Foley is no stranger to acquisition,â Gerard Thoukis, marketing director of Foley Family Wines, told Wine-Searcher. âHe understands the type of things that are undervalued from a brand point of view and from a land and vineyard point of view. He knows how to find opportunities in whatever market he is in because he is very diversified.”
Chateau St. Jean has retained some branding value from its heyday, particularly the fact that its 1996 Bordeaux Cinq Cepages-style red blend was the first Sonoma County wine to win the wine of the year award. from Wine Spectator, in 1999. The cellar building can be restored to function, and Thoukis said that was the plan. There is also an estate vineyard surrounding it.
âChateau St Jean has the right bones and the right history and the right legacy, the right number of fans and fans, and the brand recognition, to restore it,â Thoukis said.
If you believe in Sonoma County – global warming should be milder for the Sonoma Coast, but we’ll see future wildfire seasons – Chateau St. Jean seems like a reasonable bet. And in fact, Thoukis said the plan is to focus on Sonoma County sub-AVA wines and single vineyard wines. âThe California level (appellation) will likely go away over time,â Thoukis said.
Foley started out in the wine business on the central California coast, and is multinational, with six properties in New Zealand, but with Sebastiani, Roth Estate, Lancaster Estate and now Chateau St. Jean, Sonoma County is now definitely the business center of Foley.
The French connection
So, what does this have to do with Jean-Charles Boisset and Elizabeth Spencer? Boisset, originally from Burgundy, bought his first American winery in Sonoma County in 2003, when he bought DeLoach Vineyards. But in 2009, Boisset bought Raymond Vineyards in Napa Valley and since then has focused his US portfolio in Napa Valley.
One might think that as a Burgundian, Boisset would be more interested in acquiring vineyards. His wife, Gina Gallo, certainly is.
But lately, Boisset has bought some historic Napa sites with no vines included. He bought the perfectly located Oakville grocery store and the Victorian house next door; it is now the Oakville Wine Merchant. He bought the Ink House Inn. He opens a tasting room in an old building in Napa City for Buena Vista, and he bought the Calistoga Depot.
This is also the case with Elizabeth Spencer. There is a cellar in a former post office, built in 1872, but the deal is done without any vineyards. But the winery is in an incredible location, a convenient corner of the main State Route 29 tourist route, right in the heart of Rutherford. Every wine tourist who visits Napa Valley has seen the Elizabeth Spencer winery. I would bet a lot of money that Boisset, Napa’s first showman, will soon give people a reason to stop and visit.
âWe think this is one of the smartest destinations in Napa Valley,â Boisset told Wine-Searcher. “Rutherford is the absolute epicenter of Napa Valley. It is Rutherford Cross and this incredible space in the center of Napa Valley.”
So Boisset and Treasury bet on Napa, but in a different way. The Treasury is betting that distant buyers will pay more for a Napa brand on a bottle, even if the grapes eventually have to come from elsewhere. Boisset is betting that affluent tourists will continue to come to Napa. These are also short and long term bets. The Treasury, a state-owned company, will be happy with the deal if it can detonate a few hundred thousand cases of Frank Family Chardonnay over the next five years. Boisset, like his wife’s family, has a much longer vision.
âFor me, as a Frenchman, Rutherford is the dream,â said Boisset. âThe wines are earthy, they are warm, they are complex. They have this sense of belonging. They are closer to the wines of France. This is why Georges de Latour came here. This is why some of the best estates can be found in Rutherford. We really feel like this is the perfect place to express who we are through fine and elegant wines. “
But there are no vineyards! In this case, that is not the question.