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California Wine Region's Biggest Name Suggests Putting Houses on Its Vineyards

Parent company Allied Domecq is gradually reducing the presence of Temecula's largest and oldest winery, Callaway.

Lynn Alley
Posted: March 15, 2003

Is Callaway Coastal -- the biggest and best-known winery in southern California's tiny Temecula Valley -- pulling out of the wine region? In a surprise move, its parent company, U.K.-based wine and spirits giant Allied Domecq, has asked Riverside County for a zoning change that would allow houses to be built on 800 acres of vineyard land that the winery leases.

The suggestion has caused some hard feelings among local vintners, growers and officials. They say such a measure would be another big blow to Temecula, which has been fighting to recover from the recent outbreak of Pierce's disease, which killed off large swaths of vineyards and forced growers to replant. The appellation only has about 2,000 acres of vines.

The plan would "drive a fatal wedge right through the heart of Wine Country Temecula," said Joe Travis Hart, owner of Hart Winery, next door to Callaway.

County supervisor Bob Buster said building homes on vineyards would destroy one of Temecula's most precious resources. "The county has been planning to invest several million dollars to improve the face of wine country along Rancho California Road," he said. "And there's a whole raft of other businesses dependent upon the wine industry there."

The zoning proposal was made on March 13 at a Riverside County Board of Supervisors hearing on updating the county's general land-use policies. Allied Domecq's plan would allow the development of 390 homes on two-acre plots on the vineyard land.

Allied Domecq attorney Cecily Talbert, who presented the proposal at the meeting, said it was no longer economically viable for Callaway -- which lost 50 percent of its vines to the recent outbreak of Pierce's disease, according to a winery spokeswoman -- to continue to replant large portions of its vineyards.

In a March 11 letter that Talbert brought to the Riverside County supervisors, Allied Domecq said that it "strongly wishes to continue winery operations in the region. It cannot, however, continue utilizing these vineyards for high-volume, large-scale production of wines intended for national distribution. Consequently, Allied proposes that the existing winery at the Callaway Vineyard be converted to a smaller, direct-sales winery and that the remaining portions of the Callaway Vineyard visible from Rancho California Road be converted into two similar wineries of about 10 acres each."

The rest of the land, which is not visible from the main road and would not be needed for grape production, could be developed, the letter continued. Callaway would retain ownership of the 35 acres on which its winery and its surrounding vineyards stand, according to Peggy Evans, manager of hospitality and public relations.

Callaway, whose first vineyards were planted in 1968, is one of Temecula's oldest wineries. It is also the region's largest winery (at times, its production has exceeded that of all the region's other wineries combined), making it a leader in the local wine industry. Callaway's tasting room has been the most heavily visited of all the California wineries under the Allied Domecq umbrella, including Atlas Peak, Buena Vista, William Hill, Clos du Bois and Haywood.

But in recent years, Callaway has been de-emphasizing its connection with Temecula. In 2000, as the winery was expanding production, it began importing grapes from vineyards outside the Temecula region and began marketing itself under the name Callaway Coastal.

Temecula Valley Winegrowers' Association president, Roberto Ponte, said, "Allied Domecq has systematically dismantled the Callaway Winery over the past couple of years." He noted that vineyard manager Craig Weaver now divides his time between the vineyards at Buena Vista in Carneros and Callaway, and assistant winemaker Darrin Procsal went to Atlas Peak. General manager Ron McClendon was released from the company last year.

The company's proposal took the Riverside County Board of Supervisors, the Temecula Valley Winegrowers Association and the rest of the wine community by surprise. Association treasurer Phil Baily, owner of Baily Winery, who had gone to the hearing to voice support for the current zoning laws, said he was "completely taken aback" when Talbert made her pitch.

Callaway's staff didn't appear to have much advance warning of the proposal either. On Thursday, the winery's administrators and staff members issued a joint statement saying they were "opposed to any zoning changes that would in any way be detrimental to those who live and work in our community. We, as a group, are committed to the preservation of wine country, the integrity of the wines we produce, and the resiliency of the community."

Callaway at one time owned the 800 acres currently in question, but sold them to Silverado Partners, a Napa-based vineyard investment corporation, and currently leases them back. Growers who asked to remain anonymous speculated that Allied Domecq is trying to find a way to terminate a costly lease.

"We are simply having discussions with our landlord about workable alternatives at this point," said Allied Domecq CFO Chris Stenzel. "We have made no formal decisions on how we're going to restructure this business. We want to maintain our flexibility with regard to the Callaway property."

Stenzel added, "At the heart of it, we believe in the Callaway Coastal brand, but we need to make a profitable business out of it."

Still, some in Temecula feel abandoned. Ponte said Allied Domecq had said that because they had positioned the Callaway wines at a lower price point, they could no longer afford to buy Temecula grapes. And in 2000, he said, the company's public relations director at the time told the Los Angeles Times that "urban pressures" were creating problems for the Callaway winery.

"They've come up with a million excuses over the years," said Ponte angrily." And now they want to put some houses where their vineyards have been."

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Read more about this subject:

  • July 11, 2000
    Southern California's Callaway Winery Shifts to the Central Coast

  • Dec. 18, 2001
    Hard Hit by Vine Disease, Southern California Appellation Sees New Signs of Hope
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