In 1994, one year shy of its 100th anniversary, Sonoma's Seghesio Winery was an old dog in desperate need of new tricks. Its low-end portfolio of wines, mostly mediocre Cabernet and Chardonnay made with purchased grapes and outdated equipment, generated feeble profits. And even though the family owned 400 acres of vines, nearly half its vineyards were decrepit or planted with bulk varieties such as Colombard and Chenin Blanc.

To top it off, the IRS delivered an apparent backbreaker: a $4-million bill for back taxes. Given the financial prospects, cousins Pete and Ted Seghesio wondered if there was any point in trying to secure a loan. "We were trapped in the past. But the IRS made us look at the winery. We didn't have a budget, we didn't have a business plan," says Pete, now 40 and the company CEO.

The self-scrutiny paid dividends, because the cousins realized that they had a hidden treasure -- 80 acres of pre-Prohibition Zinfandel, planted at their Home Ranch Vineyard in Alexander Valley. Estate winemaker Ted, now 51, had noticed eye-opening quality from those vines in the 1990 vintage. Pete, then the sales manager, discerned a strong potential market for the variety. They wanted to pare back volume and specialize in Zinfandel.

But it wasn't their call. While Pete and Ted handled daily operations, their parents had the votes and signed the checks. And their niche had always been bulk wine. Founded in 1895 by Edoardo Seghesio, an immigrant from Piedmont, Seghesio made the sort of red and white table wines favored by other immigrants of modest means. So for the older generation, production cuts were sacrilege.

Still, the IRS settlement loomed and something had to change. Ted, Pete and the board of directors -- their parents and uncle -- met at a lawyer's office, hoping neutral ground might keep emotions in check. It didn't, and the battle pitted young against old. Ed Seghesio, Ted's father, was the first to break generational ranks, siding with the "kids" because he reasoned that things couldn't get any worse. In tears, Rachel Ann, Pete's mother, also voted with the kids, and against her husband, Pete Sr., who left the room rather than participate in a vote he couldn't win.

The younger generation had its mandate to reinvent the winery. First, they hired a tax attorney to negotiate with the IRS, which accepted a total payment of $400,000 -- a significant sum, certainly, but feasible. In 15 months, they cut production to 35,000 cases, more than three-quarters of which was Zinfandel, with the balance mostly Russian River Pinot Noir and Alexander Valley Sangiovese. Most important was the decision to focus on their own vineyards. "So long as you rely on growers, it will never be fine wine," says Ted.

It's been a remarkable metamorphosis, and Seghesio is now a consistent source of some of California's finest Zinfandel. Moreover, the prices are reasonable, starting with the $15 Sonoma County bottling, which contains grapes from 20 different sites.

Four old-vine Zinfandel offerings, each costing about $30, are the stars of the lineup: The Home Ranch and San Lorenzo in Alexander Valley and the Cortina from Dry Creek are single-vineyard wines, whereas the Old Vine label is a blend of lots from those sites.

Much of the current success stems from improved farming of the older Zinfandel sites. In 1994, the Seghesios hired Phil Freeze, the highly regarded vineyard expert who oversaw planting of the Opus One property in Oakville. At first Freeze was hesitant, thinking that a longtime bulk producer couldn't change. "I said to them that I don't do what you do. And Pete said, 'That's the point; we don't want to do what we've done,'" Freeze recalls.

The Cortina Vineyard, planted with 25 acres of Zinfandel in 1960, was a case in point. Up through the 1990 vintage, it produced a huge crop (10 tons per acre) that was used for a white Zinfandel. But crops that big make poor wine, and by 1997 Freeze had reduced yields to 2 tons per acre. By planting a cover crop that offsets the soil and rootstock vigor, and changing pruning methods to obtain smaller, more flavorful grapes, he achieves the desired ripeness.

Seghesio Zinfandels are harmonious in style. While the pursuit of maximum ripeness has increased alcohol levels in recent vintages, the wines maintain balance and, more importantly, complexity, concentration and depth of flavor.

Production now approaches the expected ceiling of 85,000 cases. By 2005, as new vineyards come online, the wines will be made entirely with estate grapes. While Seghesio doggedly continues its efforts with Pinot Noir and Sangiovese, those wines have to date been less compelling than the Zinfandels, which represent about 80 percent of the output.

Even Pete and Ted's fathers, who were once so resistant to change, applaud the turnaround, but not without reservation. "When the old cronies ask them what the wines cost, they're embarrassed to say $15 or $30. They still wish it were $4," says Pete with a chuckle.