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Gallo Buys Souverain Wine Brand and a Piece of Sonoma History

Treasury Wine Estates streamlines production by selling the Asti winery

Tim Fish
Posted: July 21, 2015

Wine giant E. & J. Gallo is not finished with a recent Sonoma buying spree, announcing on Monday that it has agreed to purchase a piece of American wine history, the Asti winery, as well as its vineyards in Geyserville and the value wine brand Souverain. The seller is Australia’s Treasury Wine Estates, which has been revamping its operations and put Asti publicly up for sale in March.

The deal includes more than 500 acres of land, 275 of them planted to vineyards, a sprawling production facility capable of crushing 35,000 tons of grapes a harvest, and the Souverain brand and inventory. The price tag for the deal, which closes July 31, was not disclosed, but Treasury has booked a $7.5 million loss on the sale.

Souverain, or Chateau Souverain as it was once known, was among the leading value brands in California in the 1990s, and has a history that dates back to 1943. The Asti winery’s roots stretch deeper, back to 1881. It was the longtime home of Italian Swiss Colony, one of the largest and most notable wineries in the United States in the 1950s.

Souverain moved its production to the Asti winery in 2006 when vintner-director Francis Ford Coppola bought its original Sonoma facility. Treasury reworked the brand in recent years, introducing several new bottlings, and volume has been roughly stable for the past five years at about 80,000 cases in the U.S. market, according to Impact Databank, a sister publication of Wine Spectator.

“We look forward to bringing the Souverain brand into our expanding premium portfolio, in order to keep pace with growing consumer demand worldwide,” said Roger Nabedian, senior vice president and general manager of Gallo’s premium wine division, in a statement.

Gallo, the world's largest family-owned wine company, has been heavily invested in Sonoma County for decades. It owns extensive vineyard acreage in the county as well as a large winery in nearby Dry Creek Valley, where it produces brands that include Gallo Family and Frei Brothers. In March of this year, Gallo bought J Vineyards & Winery, a prominent Russian River Valley producer of sparkling wine, Chardonnay and Pinot Noir. Nabedian did not say what wines the company plans to produce at the Asti facility.

Australia-based Treasury Wine Estates, created when it was spun off from global brewing giant Foster’s in 2011, has an extensive international portfolio of wines that include Penfolds, Beringer, Chateau St. Jean, Castello di Gabbiano and Etude. Carolyn Coon, senior corporate communications manager, said this sale was part of a long-term plan to streamline production. As part of the agreement, Treasury will continue to buy grapes from the Asti vineyards for its other California brands.

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