California's Sonoma-Cutrer Sells Majority Stake To Brown-Forman

James Laube
Posted: February 11, 1999

California's Sonoma-Cutrer Vineyards is about to become part of the Brown-Forman Corporation, the Kentucky-based global drinks giant perhaps best known for Jack Daniel's whiskey. On Thursday, Feb. 11, the two companies reached an agreement in principle for the Brown-Forman Wine Group to acquire a controlling interest in Sonoma-Cutrer, with the deal slated to close by March 31.

Terms of the sale were not disclosed, but the winery's net worth was reportedly estimated at about $125 million. Sources familiar with the deal said that figure was close to the sale price. Sonoma-Cutrer is a Sonoma County Chardonnay specialist, with 1,000 acres in vines in the Sonoma Coast appellation and an annual production of 140,000 cases.

"I think it is going to be a good thing for the brand, the people [who work there] and the company," said Sonoma-Cutrer president and CEO Brice Jones. He added that the winery had received several offers since announcing it was for sale last month, but ultimately decided on Brown-Forman because its long-term goals and interests coincided with those of Sonoma-Cutrer. Jones, who founded the winery in 1973, said he retained a small equity stake and will remain in his current position.

"It's not about money," Jones said of the sale to Brown-Forman. "It's about exchanging one side of my investors with another. My side is getting a little long in the tooth." Some of the winery's original investors, now in their 70s, had been looking to cash out. Jones added that the sale will give Sonoma-Cutrer "a little more stability, and it will give us resources to continue to improve quality."

Brown-Forman, a publicly traded company, owns Fetzer Vineyards in California's Mendocino County and Jekel Vineyards in Monterey County. The growth-oriented firm has been rumored to be one of the bidders for Sonoma's Simi Winery, which is also up for sale.

Jones praised Brown-Forman president and CEO Owsley Brown as "a man who shares my vision," adding that "he wants to be an important factor in the fine wine business worldwide, and that appeals to me." Moreover, Jones said Brown's family, which owns a controlling interest in Brown-Forman, "has a huge interest in long-term investments, and they understand that this is a priceless asset. The immediate return is not as important as the long-term return [for them]."

Sonoma-Cutrer's most highly regarded wines are its vineyard-designated Chardonnays, including the Les Pierres and Cutrer Vineyards, which make up about 10 percent of its production. The Russian River Ranches bottling, from the Sonoma Coast appellation, accounts for the other 90 percent.

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