In a major strategic move, Sebastiani Vineyards in Sonoma sold its bulk wine business to The Wine Group on Wednesday, paving the way for Sebastiani to focus on high-end Sonoma County wines. Neither party revealed the value of the deal, which is reportedly priced at about $300 million.
"Sebastiani is becoming Sebastiani -- we're getting out of the high-volume business and getting back to Sonoma," said Sebastiani CEO Don Sebastiani. "It's taken us a while culturally to adjust to the idea that we live in one of the choicest appellations -- and collection of subappellations -- in the New World."
By purchasing Sebastiani's six brands, which total 7.8 million cases annually, The Wine Group, based in San Francisco, becomes the second-largest producer by volume in the United States. Its 35 million cases are behind only E. & J. Gallo of Modesto, which sold 52 million cases in 1999, according to data from the 2000 edition of Impact's Annual Wine Study.
The Wine Group, which produces Franzia boxed wines and the Corbett Canyon and Foxhorn brands, mostly from Central Valley grapes, bought Turner Road Vintners and Humphrey & Brown International Wine Marketers, the two divisions that comprise the bulk-wine operations of Sebastiani Vineyards. The company obtained the rights to six Sebastiani brands, Farallon, Heritage, La Terre, Nathanson Creek, Talus and Vendange. Also included in the purchase are two Central Valley wineries, a distribution center and a sales and marketing staff of 85. "Next to no" vineyards were sold, according to James Knapp, Sebastiani vice president of public affairs.
"The Sebastiani family and their organization have done a tremendous job of building strong brands and state-of-the-art wineries," said Art Ciocca, chairman and CEO of The Wine Group.
This announcement comes just two days after Foster's Brewing Group in Australia purchased Beringer Wine Estates in California's Napa Valley for $1.5 billion, becoming the world's largest premium wine company. In another deal this week, Canadian company Vincor International agreed to purchase The R.H. Phillips Vineyard for $95 million. R.H. Phillips is based 30 miles northeast of Napa Valley, in California's Dunnigan Hills appellation.
Turner Road Vintners has long attracted potential purchasers, and Don Sebastiani felt that today's market conditions justified the move. "This has everything to do with the fact that the high-volume wine business is speeding up," he said. "The fast lane is getting faster. This is about us asking how we can best apply our resources."
Sebastiani will now concentrate on its 150,000-case annual production of Sonoma County wines. Sebastiani retains control of 600 acres in Sonoma County, of which slightly more than 300 acres are planted to vines, mostly Chardonnay, Merlot and Cabernet Sauvignon. The winery's most successful bottlings are its Dutton Ranch Chardonnay and Cherryblock Old Vines Cabernet Sauvignon.
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