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The Aroma of Consolidation
By Linda Murphy
Sep 14, 2010
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The current trend toward winery consolidation and cost-cutting in California smells like cabbage left in the refrigerator for two weeks too long. It stinks, and particularly now, as Northern California wine grapes are finally being harvested, two to three weeks later than usual following a very cool spring and, thus far, summer.

Iconic wineries such as Arrowood Vineyards & Winery in Sonoma County, Freemark Abbey Winery in Napa Valley and Rosenblum Cellars in Alameda (an island across the bay from San Francisco) have seen their winemaking programs relocated to facilities far away from their original homes, after the wineries and brands were purchased by large corporations.

While the new owners have kept open the on-site tasting rooms of Arrowood, Freemark Abbey and Rosenblum, they’ve moved production to larger facilities, severing the physical connection visitors have when they visit. They can still purchase wines, T-shirts and coasters at the retail rooms, yet there will be no more winery tours, opportunities to meet the winemakers, no barrel tastings, no experiencing the crushing of grapes, and no heady aromas of Chardonnay fermentation when they walk through the door.

A big part of the fun of visiting Arrowood, until now, was in knowing that Richard Arrowood made the wines at this Sonoma Valley winery since 1986. While guests might not always see Arrowod and his wife, Alis, they knew they were visiting a winery where the couple invested their talent and energy to produce stellar wines.

Richard retired this spring, and Arrowood Vineyards & Winery owner Jackson Family Wines, under the helm of Jess Jackson, announced soon thereafter that wine production would be moved to Oakville, at Jackson’s Cardinale facility in Napa Valley. The reason: to reduce operating and personnel costs in a tough economy.

Jackson had already moved Freemark Abbey production to Cardinale in 2009, keeping the tasting room open at the historic St. Helena location. It was no secret that the aging stone Freemark Abbey winery, built in the late 1800s and revitalized in 1967, was in need of major work again, so the relocation to Cardinale made economic sense, even though tradition will suffer.

Jackson’s decision in March 2010 to cease production at Matanzas Creek Winery in southern Sonoma County, and make the wines at his Stonestreet Winery in northern Sonoma, was another blow. Cost-cutting was also the impetus for that move, according to Jackson’s spokespeople. Matanzas Creek needed major improvements to its cellars and winemaking equipment, they said, and those upgrades won’t begin for at least another year, as the economy remains unsettled.

Just as it is doing with Arrowood and Freemark Abbey, Jackson Family Wines will continue to operate the Matanzas Creek retail room and allow guests to walk through the famous lavender gardens, and purchase lavender soap, lavender lotion and lavender salt in addition to the wines. Even if the wines remain the same stylistically, I find it a huge letdown to stop by Matanzas Creek, knowing that the wines won’t be made there any time soon.

At least Matanzas Creek’s production has been kept in Sonoma County, and Freemark Abbey’s in Napa Valley. But the Arrowood relocation is harder to take. One of the names most synonymous with Sonoma County winemaking is now banished to that other valley.

Give Jess Jackson huge credit for purchasing Arrowood and Freemark Abbey (as well as Byron Winery in Santa Barbara County) in 2006, when their previous owner was in bankruptcy. In effect, he saved these brands. Yet Jackson is not so flush these days, with the country’s financial turmoil and the resulting change in consumers buying lower-priced wines. And he’s not alone in drastically reducing costs. 

Drinks giant Diageo, which purchased Kent Rosenblum’s red-hot Zinfandel brand in 2008, recently announced that it has shut down the winery at Rosenblum’s funky former naval shipyard space in Alameda, and moved production to Beaulieu Vineyard in Napa Valley.

Rosenblum and his partners sold the winery of free will – and for a sweet $105 million, it’s been reported -- yet I can’t imagine that Kent, a veterinarian who started making wine as a hobby and then grew Rosenblum Cellars to eventually produce some 30 separate Zinfandels each vintage, could have known that the sale would result in production being moved to Napa. There was something cool about taking the ferry from San Francisco to Alameda, walking a block to Rosenblum Cellars and tasting the wines in a former Naval Air Station hangar. You can still take the ferry to Rosenblum, yet what you’ll find is a wine shop, and not a winery.

Diageo’s financial circumstances are such that it announced in late June that it would sell Beaulieu Vineyard and Sterling Vineyards to a Southern California real estate investment trust, for $269 million, and lease back the properties for 20 years. The goal: raise cash for Diageo, while allowing it to continue wine production at two of Napa Valley’s most accomplished, and visited, wineries. This, too, is disheartening, yet finding ways to keep brands alive is better than seeing them die.

In light of all this, I am happy to say that the 2007 purchase of Napa Valley’s Stag’s Leap Wine Cellars, by a partnership of Washington state’s Ste. Michelle Wine Estates and Tuscan wine king Piero Antinori, has done nothing to tarnish SLWC’s image, and in fact, has added more shine to the wines. In a time of such winemaking flux, it’s assuring to know that some producers benefit from a change of hands.
Nothing was wrong at Stag’s Leap Wine Cellars when Warren Winiarski sold it to Ste. Michelle/Antinori. His 1973 Cabernet Sauvignon stunned the world by “winning” the 1976 Judgment of Paris tasting against Bordeaux’s best, and since then, the winery has been among the most accomplished in America.

Yet the aging Winiarski did not have the solid support of his adult children in carrying on his winemaking legacy, so he sold the estate to those he believed would take the best care of it.

The just-released 2007 Cabernet Sauvignons – the first vintage produced under the new ownership -- have the signature SLWC structure, acidity and balance, making them ideal for cellaring, yet they also have a polish and refinement that some vintages lacked in the past. Winemaker Nicki Pruss, who joined Stag’s Leap Wine Cellars in 1998, has been given some cool tools by the new owners that don’t change the house style, bur rather improve upon it.

She now has better temperature and humidity control in barrel storage areas, a cutting-edge barrel-washing system (for super-cleanliness) and berry-sorting machinery that removes undesirable grapes prior to fermentation – all thanks to the financial means of a new owner that does things right.

So while the current trend toward consolidation and economization can turn reputable wineries into merely homogenous brands, some industry moves are positive. That seems to be the case with Stag’s Leap Wine Cellars. Winiarski did great things without a big-company budget; Ste. Michelle Wine Estates and Piero Antinori have the money to fine-tune the wines, and appear to have the wisdom to let them be the best they can be, naturally. Not by design.

Will Arrowood, Freemark Abbey and Rosenblum achieve similar positive results from consolidation? Only time, and tasting, will tell.