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Constellation Eyes Purchase of Sutter Home

Deal for the nation's fifth-largest wine producer could be worth as much as $1 billion.

Tim Fish
Posted: November 8, 2001

With additional staff reporting

Constellation Brands, which has been on a buying spree the past three years, is poised to add another wine giant to its bulging portfolio -- Trinchero Family Estates, the owner of Sutter Home Winery in Napa Valley.

The two companies are in final negotiations that would make Sutter Home, the nation's largest producer of White Zinfandel, one of Constellation's most prominent holdings. One insider believes the sale price for Trinchero -- the fifth-largest wine marketer in the United States based on 2000 sales figures, according to Impact Databank -- could be upwards of $1 billion, putting it in the same league as the $1.14 billion sale of Beringer Wine Estates in 2000.

Sources familiar with the deal said an announcement about the sale could come any day. "They're in the final phases of discovery," said one person, speaking on the condition of anonymity.

The source said the sale of Sutter Home, a 10 million-case winery based in St. Helena, apparently would also include two smaller brands -- M. Trinchero, which makes Napa Valley Cabernet and Chardonnay, and Montevina, an Amador County—based Zinfandel specialist. The deal could also include most of Sutter Home's vineyards, which total more than 5,000 acres, with nearly half of that planted to Zinfandel.

Neither Constellation nor Trinchero Family Estates would confirm the deal. "Rumors about the sale of our winery have cropped up periodically over the years," said Stan Hock, senior communications director of Sutter Home. "The family is getting tired of responding. They choose not to address the rumors."

If the sale goes through, Constellation, formerly known as Canandaigua, would challenge Gallo's standing as the largest wine marketer in the United States. Since 1999, Constellation -- previously best known for jug wines such as Almaden, Arbor Mist and Paul Masson -- has beefed up its line of wines, adding upscale California wineries such as Simi and Ravenswood in Sonoma County, Franciscan Oakville Estate and Mount Veeder Winery in Napa Valley, and Estancia in Monterey.

It also paid $52 million earlier this year for Corus Brands, which includes high-end wine brands such as Covey Run, Paul Thomas and Columbia in Washington, as well as Alice White in Australia. That deal followed the $295 million acquisition of the bulk-wine operations of Sebastiani Brands, including six brands: Vendange, Talus, Nathanson Creek, La Terre, Heritage and Farallon. And this summer, the company formed a joint venture, called Pacific Wine Partners, with Australian wine producer Hardys; the partners then bought California's 500,000-case Blackstone winery.

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Read past news about Constellation's acquisitions:

  • Oct. 1, 2001
    Hardy-Constellation Venture Buys California's Blackstone Winery for $140 Million

  • June 13, 2001
    Australia's BRL Hardy Forms $100 Million Joint Venture With U.S. Wine Giant

  • May 31, 2001
    After the Sale: The Future of Sonoma County's Ravenswood

  • March 27, 2001
    Canandaigua Swallows Washington-Based Wine Group

  • Feb. 2, 2001
    Sebastiani Brands Sold to Canandaigua Wine for $295 Million

  • April 22, 1999
    Canandaigua Buys Franciscan Estates in Blockbuster Deal

  • April 2, 1999
    LVMH Sells Simi to Canandaigua for $55 Million
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