Diageo Shutters Rosenblum Winery, Moves Production to Napa

Zinfandel specialist losing its longtime Bay Area home in corporate cost-cutting
May 19, 2010

Rosenblum Cellars' winemaking facility in San Francisco's East Bay is closing, the first casualty of belt-tightening by international drinks giant Diageo.

Diageo will relocate Rosenblum's production to Beaulieu Vineyards in Napa Valley, a company spokeswoman said, but Rosenblum's existing tasting room in Alameda will remain open. Diageo will also close a satellite tasting room just off Healdsburg Plaza in Sonoma County.

Diageo announced May 12 that it is restructuring its U.S. wine business, Diageo Chateau & Estate wines. The changes include the layoffs of 93 employees, mostly from various winery visitors' centers, according to spokeswoman Zsoka McDonald.

"We are focused on creating an efficient, entrepreneurial wine business, focusing on core strategic brands like Beaulieu, Sterling, Chalone, Acacia, Rosenblum and Provenance," McDonald said. "We are looking at all options to get the most out of our non-core assets, including selling some of them."

The company declined to comment on specific brands or facilities potentially for sale, but its U.S. wine division also includes labels such as Sagelands, Echelon, Canoe Ridge, Jade Mountain and Dynamite, as well as a partnership with Edna Valley Vineyard.

Kent Rosenblum, who along with investors sold the winery to Diageo in 2008, said he was disappointed by the decision to close the facility. "I think this is what happens when you let bean-counters run a company," he told Wine Spectator. "I'm trying to stay positive, though. Maybe it can be done elsewhere."

Winemaker John Kane remains on board, and Rosenblum says he will continue to consult in winemaking and help promote the brand, according to contract. "The third anniversary is next February, and I think we'll all have to sit down and see what everyone wants to do," he said.

Founded in Oakland in 1978, Rosenblum moved into its Alameda facility in 1987. While the winery produces a diverse portfolio of wines, it is considered a leading producer of Zinfandel and Rhône varietals in California. Over the years it cultivated a devoted group of customers, who traditionally flocked to its quarterly parties at the winery. "The open houses were truly nuts," said former Rosenblum winemaker Jeff Cohn.

"The winery is really important to the Rosenblum fan base," Cohn said. "They really thought of themselves as part of the winery. They may follow it to the new place, but they won't feel part of the family. I was shocked they were closing it so soon."

Coincidentally, Rosenblum's next open house in Alameda is Saturday, though the crowds have generally been smaller in recent years. "It's important to Diageo Chateau & Estate that the traditions and spirit that has made Rosenblum Cellars such an important part of the Alameda community and with Zinfandel consumers continue," McDonald said.

London-based Diageo, which owns liquor brands such as Smirnoff, José Cuervo and Tanqueray, has struggled in the global economic downturn but recently reported that third-quarter 2009 sales rose 12 percent. Many wine and beverage companies, such as Constellation and Fosters, have gone through recent cost-cutting.

That was already happening at Rosenblum before the latest announcement. Diageo has been trimming the winery's formidable list of single-vineyard-designated wines, most notably eliminating highly regarded Zinfandels from Monte Rosso and from St. Peter's Church, both in Sonoma.

Rosenblum said his daughter Shauna Rosenblum, also a winemaker, has retained a share of those grapes for her new winery project Rockwall, which he consults with. Of Rockwall, Rosenblum said, "That's what I'll be focusing on a great deal now."

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