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Gallo Buys Napa's William Hill Winery

Purchase marks third major investment by Gallo in Napa Valley

James Laube
Posted: July 30, 2007

E. & J. Gallo expanded its holdings in Napa Valley on Monday with the acquisition of William Hill from Beam Wine Estates. Gallo has also purchased the Canyon Road wine brand and related assets from Beam as part of the deal. Terms of the transaction, announced today and expected to close in the next few weeks, were not disclosed.

Modesto, Calif.-based Gallo, the nation's second-largest wine company, has been slowly building its portfolio of Napa Valley wineries. By purchasing Hill, a Cabernet Sauvignon and Chardonnay specialist with 145 acres in vines and production of 75,000 cases a year, Gallo now owns two large Napa properties. It acquired Louis M. Martini winery in 2002 from the founding Martini family. It also recently purchased 182 acres of vineyards in Napa's Chiles Valley appellation and has plans for a new line of wines called Ghost Pines, due later this year. Gallo also owns Bridlewood in the Santa Ynez Valley, in Santa Barbara County.

Most of Gallo's fine-wine focus in California has been in Sonoma County. Gallo owns both a winery and vast vineyard holdings there and produces, among other brands, Gallo of Sonoma, Frei Brothers, McMurray Ranch and Rancho Zabaco. "We're very firmly established in Sonoma County," said Roger Nabedian, vice president and general manager of Gallo's premium wine division. "But as we continue to grow our premium wine portfolio in all the premier winegrowing areas of the world, Napa is certainly [at] the top of the list."

The Hill acquisition "fits well with our plans," said Nabedian. "I think we've seen improvement in their products in the past few vintages, and we think over the long term the brand will be [considered] undervalued." Most of the Hill wines sell in the $20 to $40 range. The winery makes 30,000 cases of Chardonnay, 25,000 cases of Cabernet and 15,000 cases of Merlot annually.

Beam Wine Estates is a subsidiary of Fortune Brands Inc., a consumer products company that also owns spirits brands. The fine-wine company owns and imports wine brands from California, Australia and New Zealand, as well as Port and Sherry brands from Europe. William Hill was founded in 1976 by William Hill and was later sold to spirits giant Allied Domecq, which is now owned by Pernod-Ricard. Beam acquired William Hill in 2005.

Beam's California brands include Clos du Bois and Geyser Peak, in Sonoma County's Alexander Valley; Wild Horse, in the Central Coast; Gary Farrell from the Russian River Valley; Buena Vista in Carneros; Atlas Peak in Napa; Haywood and Canyon Road; as well as Jakes Fault Shiraz and XYZin Zinfandels.

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