11 Jun 2008

Constellation sells off Geyser Peak

As predicted here, Constellation Brands has sold several wine brands it acquired in its December 2007 purchase of Beam Wine Estates – and then some.

A new private company, Sonoma-based Eight Estates Fine Wines, LLC (doing business as Ascentia Wine Estates), picked up the California wine brands Geyser Peak, Buena Vista, Gary Farrell, Atlas Peak and XYZin from Constellation, which acquired them from Beam Wine Estates’ parent Fortune Brands. The purchase, announced 10 Jun, also includes Columbia Winery and Covey Run in Washington state and Ste Chapelle in Idaho. Constellation said these brands totalled approximately one million cases of wine sold in 2007. Ascentia's assets include 646 acres of vineyard in California and the Pacific Northwest.

According to Constellation, it will receive $209 million in cash, and could receive up to an additional $25 million in payments if certain objectives are achieved by the buyer. Constellation said it will “use the proceeds from the sale to reduce borrowings” [much needed in today's competitive marketplace – JR].

Ascentia is a partnership including Jim Debonis, the former chief operating officer of Beam Wine Estates and former head of production at Simi Winery in Sonoma; [yellowtail] and Duboeuf importers W J Deutsch & Sons, and GESD Capital Partners, a San Francisco private equity firm.

Constellation’s purchase of Beam Wine Estates was seen largely as a move to acquire Clos du Bois, producer of approximately 1.5 million cases of wine a year at its Alexander Valley (Sonoma County) winery. Constellation also kept the Wild Horse brand in Paso Robles, yet it was only a matter of time before it unloaded Geyser Peak, Buena Vista and Gary Farrell. XYZin is a small Zinfandel brand with the Geyser Peak portfolio, and Atlas Peak, in Napa Valley, will be without a home in November 2008, when its lease for the vineyards and the winemaking facility expires and owner Piero Antinori takes over.

"Ascentia Wine Estates offer the ideal product solutions for a number of growing needs in the market,” commented Peter Deutsch, CEO of W J Deutsch & Sons, who will distribute these brands. “Riesling is clearly becoming a white wine of choice for the consumer, and Deutsch will now represent 15 – 20% of the total US Riesling production through Columbia, Covey Run and Ste Chapelle. A 'sideways' glance at consumer trends shows us that Pinot Noir is a close second to Riesling in the growth category and Buena Vista and Gary Farrell offer a delectable half-a-dozen 90+ rated Pinots to choose from. Aromatic, flavourful Sauvignon Blanc’s appeal to an increasing number of sophisticated consumers is satisfied by Geyser Peak, one of the most award-winning Sauvignon Blancs in the USA." etc.