There have been some dramatic acquisitions in the wine business the past several months. Most recently, Jackson Family Wines purchased Copain winery, a highly regarded boutique Sonoma County producer of syrah, pinot noir and chardonnay. In April, Ste. Michelle Estates, the parent company of Washington state's Chateau Ste. Michelle and Columbia Crest wineries, purchased Patz & Hall, another Sonoma County specialist in chardonnay and pinot noir. The sale amounts for these purchases were not disclosed.
Contrast those transactions with two mammoth buys carried out by Constellation Brands, one of the world's largest wine companies. Also in April, Constellation purchased the Prisoner Wine from Huneeus Vintners for a reported $285 million. And last year, Constellation paid a whopping $315 million for the Meiomi brand of pinot noir, a transaction that did not include a winery or vineyards.
This may just sound like a lot of money changing hands, but these sales affect how the wines are made and ultimately how they reach us through the distribution system.Both Ste. Michelle Estates and Jackson Family Wines have a reputation for buying well-regarded wineries and maintaining the quality. Ste. Michelle Estates also owns Oregon's Erath winery, as well as Conn Creek and Villa Mt. Eden in Napa Valley. And in partnership with Marchese Antinori, the company bought Napa's venerable Stag's Leap Wine Cellars in 2007. Jackson Family Wines has been on a buying spree; the acquisition of Copain brings its portfolio to 50 wineries.
Constellation, a publicly traded company, saw immediate gains from the Meiomi purchase, crediting strong sales of the brand for a 22 percent increase in profits during the third quarter of last year. The Prisoner Wine's five labels - the Prisoner, Saldo, Cuttings, Blindfold and Thorn - sold more than 170,000 cases last year, according to Wine Spectator magazine. That's double the production in 2010 when Huneeus Vintners purchased the brand from its founder, Dave Phinney, for a reported $40 million. We may wonder, with so much more wine being sold under a popular brand, can quality be sustained?
In contrast, Jackson Family Wines looks for producers who "have tremendous pedigree and prestige but are inefficient producers and are under-represented in the market," company president Hugh Reimers told me via email.
Jackson Family's late founder, Jess Jackson, created the popular Kendall-Jackson brand that defined chardonnay for many consumers in the 1990s. And he always enjoyed poking a stick at the moribund three-tier system that in many states gives distributors inordinate power over producers, especially small wineries. So he established his own distribution network. Joining the Jackson Family Wines portfolio not only gives small producers financial security, it also gives them access to additional vineyard sources owned by the company, as well as administrative and sales support.
That support was attractive to Adam and Dianna Lee when they sold their Siduri winery to Jackson Family Wines last year. When I interviewed Adam Lee shortly after the sale, he expressed optimism that the quality of his wines would continue to improve. (Lee agreed to stay as winemaker for at least three years. Copain's founder, Wells Guthrie, will also stay on as winemaker, Jackson said in the announcement of the sale.) He would also be free of the administrative work that takes so much time for small-business owners, and he looked forward to traveling less and leaving sales efforts to the Jackson network.
When news broke of the Copain sale, I checked in with Lee to ask his impressions one year after the sale of Siduri. He said via email that he still spends a lot of time on the road selling the wine, which he attributed to the transition to the new ownership and sales network.
"As far as winemaking goes, they are pretty much leaving me alone," he wrote. "I get to do what I want [and] I am using some of their vineyards in addition to my [usual sources], many of which are pretty fantastic. So that's all good."
Lee did note one aspect of corporate ownership different from being independent: "I do have a lot of meetings," he said.