Mergers, Acquisitions and Angst
I’ve never gotten overly concerned about the acquisitions and mergers in the wine industry that seem to have increased in pace over the past decade and that have inspired some deal of angst among others. I think the reason is that I’m not much of a nostalgian (word?). Also, I see new and interesting and committed wineries popping up like weeds across the country, a great number of which have quality and authenticity at their core.
However, for those of you who do see something of significance in these deals, it’s pretty imperative that you read Dan Berger’s "The Berger Merger Report" published at Appellation America. In a smooth, straightforward way, and with perspective, Dan outlines the impact that mergers can have on the wineries being acquire and uses the insights of some very knowledgeable folks to demonstrate how buyouts of respected wineries need not lead to a loss of quality or a loss of the authenticity that often define these brands.
Dan seems most concerned about the impact that a buyout of a smaller, terroir-driven winery by a larger, corporate winery. His concern is that a source of significance to to the idea of regional identity is too often lost when bean counters get their hand on such a brand. To help him explain this concern he relies on the thoughts of George Rose, a long time advisory and PR expert who has worked in the Wine Industry for a very long time and seen much that there is to see.
Dan’s article on mergers also relies on the thoughts of an anonymous "A Sonoma County wine marketing executive". Why anonymous? Probably because of this:
"Some people buy wine by number,” he said, “but The [Wine] Spectator
stopped being about wine years ago. To the readers of the Spectator,
and even to their editors, wine is nothing but window dressing. It’s
now a lifestyle magazine and the only people who read it are not very
wine knowledgeable. They buy not what they like; they buy what someone
This comment came in a discussion of how mid level marketing managers at larger wine concerns and corporations often give in to scores and attempt to have wine making techniques altered to achieve better scores from The Wine Spectator and, presumably, other wine publications.
I don’t think I can agree that Jim Laube believes wine amounts to mere window dressing.
Nevertheless, Berger’s article is another must read from Appellation America, particularly in light of Constellation’s recent acquisition of Fortune Brand’s fine wine portfolio.
We’re checking out some blog technology stuff. Hope all is well. Bill
Way to kick some ass Dan!
It’s true that Dan sees the dangers in all these mergers and acquisition (pretty soon Foster’s, Constellation, Wine Group and Gallo will own ALL the wineries on the West Coast) and who with a long memory could forget the shameful demise of Inglenook after Heublein took over… but Dan also points out a number of examples where quality actually improved after a winery was bought by a major corporation.
Having been thru 2 acquisitions, Kenwood & Chalone, I can tell you that wine qualitity did suffer tremendously.
Chalone never should have gone down-market.
I really wish Dan Berger wasn’t always so far behind the curve in his reporting. I wonder if his recent trip to Australia didn’t spur this latest contribution. Afterall, Australia is the land where the outcome of acquisitions and mergers has painfully obvious for years.
Dan’s right, generally when a nice winery is taken over by a biggie, quality plunges. The reason I don’t overly worry is because there are so many little wineries quietly starting up all over the place, from Santa Barbara to Mendocino. As far as I can tell, they’re being created by passionate young people who want to make great wine. So when I read about Winery “X” being bought by Corporation “Y”, I feel sorry for Winery “X”, but not for the future of fine little wineries in California.
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