Wine Talk

Snooth User: WineGent

Chateau Montelena SOLD! (Going, Going, GONE......)

Posted by WineGent, Jul 30, 2008.

Chateau Montelena was sold this week to the French Estate Chateau Cos d'Estornel. The price of this deal is unclear, but according to the Wine Spectator, Montelena fielded offers between $120 and $150 million for this Napa winery and vineyards.

Some of my colleagues reacted with disgust as I shared the news with them. For the US to be selling out to the was so....unpatriotic!

I disagree. This is not the first major winegrower to sell out to a European wine house. Last year Stags Leap Winery was sold for $185 million and Duckhorn for $250 million or more. This is the start of a trend.

Montelena and Stags Leap wines emerged well ahead of all other US winemakers in 1976. There was a competitive wine tasting in Paris, now referred to as "the Judgement of Paris" where French judges named Chateau Montelena's 1973 Chardonnay as superior to all of the hallowed French Burgundy producers. Everyone was shocked, the French unpleasantly so and the Americans ecstatic. This put American wines on the map.

This is such a compelling story that Hollywood took notice. In January, during the Sundance Film Festival, "Bottle Shock" was premiered telling the Montelena story. There have been some notions that "Bottle Shock" will increase Montana's profile in the same way that the movie "Sideways" did for Pinot Noir. Although not yet released in theatres, you can bet that Cos d'Estornel will be more then willing to fund its distribution.

The more important economic issue here has nothing to do with our domestic wine gems being sold. It has to do with America's addiction to borrowing. We have long been the worst savers in the world. Our economic growth and innovation has allowed us to stay on top for a very long time. The global economy though, is starting to catch up.

The dollar, long the benchmark currency in the world, is being supplanted by the Euro. The dollar and all assets valued in dollars are down right cheap. Lets just say that America is "On Sale". Just last week we saw Anheuser -Busch, parent company of the iconic American "Budweiser" brand, sold to the Belgian brewer Ambev. These deals are only the first of many American brands that will be sold.

We have to change our culture in the United States from spend to save. Our complaints regarding the price of oil, gold and other commodities are falling on deaf ears outside of the US. The dollar is no longer the currency of choice.

For my part, I am going to continue to find wines that provide superior value and quality. The wines are out there and the winemakers are looking to be discovered. I am going to pass on the big name wines for which we pay for reputation more then substance. I would encourage all of you to do the same


Reply by Mark Angelillo, Jul 31, 2008.

WineGent -- this is pretty interesting, thanks for sharing. We're moving ever closer to a truly global market, for brands as well as goods and services.

We've always been pushed to spend our money and struggle to continue to make more to raise our families. I agree that one of the best things we can do is encourage people to adopt healthy saving habits. It's a big shift for us and the retail stores are not going to make it easy!

Reply by John Andrews, Jul 31, 2008.

There was definitely a lot of buzz about this in NorCal wine country last weekend. Most people within the industry that I talked to agreed that this was a good purchase but that French Estate Chateau Cos d'Estornel will have some work ahead of them.

I do agree completely with your assessment of the sale. Of course whether it was debt induced or a cash grab sale we won't know for sure until details come out.

Reply by WineGent, Aug 2, 2008.

I think the details will remain foggy. Montelena has had a problem with BRET for the past few years, and some said that the wine was declining. I don't agree, but you have to wonder if this played a part in the sale.

Cash? Yeah....I am SURE that played a part.....LOL


Reply by Philip James, Nov 7, 2008.

I just read on the NY Times that the sale was cancelled:

Reply by dmcker, Sep 17, 2009.

So how have Stags Leap and Duckhorn been doing under their new ownership? Have to admit they have fallen off the radar screen these days, when just a few years ago they were front and center.

The post that started this thread also forgot to refer to the various other French investments in wineries in Napa (Domaine Chandon, Dominus, et al.) and elsewhere in California, etc.

Reply by John Andrews, Sep 18, 2009.

My last visits to both Duckhorn and Stags Leap have shown not much of a change. Very good wines but they were made under the previous management. I think the true test will be to see where they are in late 2010 and 2011.

Reply by dmcker, Sep 18, 2009.

If I were in, say, a UC business school and wanted to do a Master's thesis on something related to the wine industry, I would be sorely tempted to put together a survey of the whens, wheres, whys, hows and ongoing results of European investment in California wines. Direct startups of new wineries (like Dominus, Chandon and others), outright purchases as discussed above, and even additions to portfolios by giants like Diageo. How has Chalone fared since they were purchased, for example? My focus in the buyout portion would be largely on how the product changed, and how the marketplace reacted.

Perhaps it might also be a good idea for a very large article, or a series of smaller articles, in the mainstream press. Hard to imagine someone doing it critically enough in the wine industry press...

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