Frescobaldi Buys Out Luce Venture from Constellation

Following last year's takeover of Robert Mondavi Corp. by Constellation Brands, the fate of Luce della Vite, a joint venture in Tuscany between Mondavi and Tuscan producer Marchesi de' Frescobaldi, has been decided.

Frescobaldi exercised its right of first option to purchase the 50 percent stake that Mondavi held in the Luce della Vite project. But Frescobaldi immediately sold the same stake to Mondavi Investment Partners, headed by former Mondavi Corp. chairman Michael Mondavi, for the same undisclosed amount. However, Frescobaldi retains the option to increase its stake by 15 percent, which it hopes to do in the near future.

This means Luce della Vite will remain a venture between the Frescobaldi and Mondavi families, as it has been since it was set up in 1995. In addition, Michael Mondavi, through his new Folio company, will handle U.S. importation and distribution for Luce della Vite wines, as well as for all Frescobaldi brand wines from Tuscany and Frescobaldi's Attems estate in northern Italy's Friuli region.

"We looked at the possibility of 100 percent ownership [of Luce della Vite]," said Lamberto Frescobaldi, who manages all the Marchesi de' Frescobaldi holdings. "But a lot of work has gone into building up the reputation that Luce and Lucente enjoy today. It's been a highly successful venture, and we don't want to upset what we see as a productive relationship."

The Luce della Vite partnership encompasses Luce, a super Tuscan blend of Sangiovese and Merlot that retails for around $75; the second wine, Lucente, which sells for around $25; and the inexpensive Danzante line of varietals (Sangiovese, Merlot and Pinot Grigio).

The Luce della Vite estate totals nearly 87 acres of vineyard land in Montalcino. Nearly 40 acres were purchased in 1995 when the partnership was formed. Another 47 acres with vineyard potential were acquired in 2001; 22 of those have been planted so far. As of the 2004 vintage, both Luce and Lucente will again be produced entirely on the Montalcino estate. For the 2001 to 2003 vintages, some of the grapes for Lucente were grown on the 770-acre I Poderi della Capitana estate in Tuscany's coastal region of Maremma. Mondavi and Frescobaldi jointly purchased Capitana in 1999 for the Luce della Vite venture, and Frescobaldi increased its stake in the estate to 75 percent in 2003. Lamberto Frescobaldi said his family is looking to gain full ownership in the near future and shift the estate's focus to wines that reflect the character of the Maremma.

At this point, all eyes are on Tenuta dell'Ornellaia, the nearly 200-acre Bolgheri estate purchased by Robert Mondavi Corp. from its founder, Ludovico Antinori in 2002. Mondavi then turned around and sold a 50 percent stake to Frescobaldi for $17.5 million later that year. The estate produces two of Italy's best-known wines, the Bordeaux-style blend, Ornellaia and the pure Merlot, Masseto.

As with Luce della Vite, Frescobaldi has the option to buy out Mondavi's stake in Ornellaia from Constellation or to continue the partnership. "We are talking about Ornellaia at the moment, and we hope to have a deal formatted by the summer of 2005," Frescobaldi said. "We want to do things step by step. We don't want to do anything that could harm the brand."

The fate of Mondavi's other remaining joint venture, the Opus One partnership in Napa Valley with the Rothschild family of Bordeaux's Château Mouton-Rothschild, is also yet to be decided. Mondavi's Chilean projects, Caliterra and Seña and Arboleda, were sold to its joint venture partner, the Chadwick family of Viña Errázuriz, last year.