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Tuesday, January 29, 2008

Comings and Goings in California Wine Country

A couple of announcements of acquisitions of California wineries crossed my desk in the last few days that are worth noting. For one, they involve hundreds of millions of dollars change hands. And, these moves indicate some major players are going to focus more attention on mid- and upper-range California brands.

On Monday, Diageo boosted its stake in the U.S. wine market with a $105 million acquisition of Rosenblum Cellars. Diageo is best know for brands like Guinness Stout and Johnnie Walker Scotch, but has significant holdings in California that including Sterling, Chalone and Beaulieu vineyards.

Rosenblum Cellars produces more than three dozen wines in Californian and is best know for its zinfandel and other red wines. Dr. Kent Rosenblum will stay on as a winemaker and adviser.

Last week, Constellation Brands, which is based in Upstate New York, announced it was selling off its Almaden and Inglenook brands to the Wine Group of San Francisco for $134 million. The Wine Group already moves 40 million cases annually of brands such as Franzia, Corbett Canyon, Mogen David, Glen Ellen and Concannon Vineyards.

Constellation sells more than 100 brands and late last year purchased Clos du Bois, Geyser Peak and other labels when it bought Fortune Brands wine business for $885 million.

The deals mean that Diageo and Constellation will be more focused on growing premium wine brands. The battle for retail shelf space and slots on wine lists will certainly heat up in 2008.

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