SONOMA, Calif. — The first winery that visitors encounter on approaching Sonoma and Napa valleys on Highway 121 from San Francisco flies four flags at its entrance. The flags represent the United States, California, Catalonia and Spain.
The buildings with their graceful arches and generous balcony overlooking the Carneros wine district are the $11-million home of Gloria Ferrer, a premium sparkling wine produced by a Spanish family firm, Freixenet, the world's leading producer of French-styled bubbly.
A mile or two farther along Highway 121, Taittinger, the French Champagne maker, is building Domaine Carneros, joining half a dozen compatriot firms that have developed sparkling wine facilities in Sonoma, Napa and even Mendocino County in the 15 years since Moet Hennessy created Domaine Chandon in Napa Valley.
Heading north onto Highway 29, which runs along the valley's west side, the motorist can seek out Swiss-owned Hess Collection, which is renovating an 85-year-old winery on Mt. La Salle, once the home of Christian Brothers.
Most wine country tourists may not realize it, but a growing number of California's premium wineries are now foreign owned. By The Times' count, more than 35 wineries, most of them prestigious producers, are today owned, all or in part, by interests based in France, West Germany, Spain, Britain, Switzerland--even Japan and Thailand.
More deals are in the works.
For California, historically driven by production, the new owners bring with them an emphasis on sales and skills in market development and product distribution. Many observers consider those skills to be essential for growth in the potentially huge market in the United States, where wine consumption remains modest for a wine-producing nation. The upshot, they say, is likely to be a strengthened industry with stronger sales and distribution programs at home and abroad.
The most recent investments may be aided by favorable exchange rates, but acquisitions have also taken place--as in the 1984 purchase of Sonoma Valley's Chateau St. Jean by Japan's Suntory--in times of a strong dollar. In short, foreign investors are moved more by global marketing strategies, their vision more long term than opportunistic.
"We didn't come to the U.S. wine market just to get our feet wet," said Hiro Yamamoto of Suntory, who helped the beverage firm acquire Chateau St. Jean and who next month will become the winery's chief financial officer. "We wanted to do business here."
Daniel J. Parks, a Sonoma lawyer specializing in wine country investments, said Suntory's perspective is typical of the foreign interests he has dealt with. "They view the United States as the ultimate in a stable, long-term market," Parks explained. "They look at investment in a very different way--to invest in something here that is going to mean something in maybe 20 years. The idea of investing and selling out in three years just doesn't occur to them."
The attraction is "more fundamental than exchange rates," agreed Jean-Michel Valette, who follows the industry for Hambrecht & Quist, an active matchmaker in some of the deals.
"Now that the industry has proven that the highest-quality wine can be made consistently in America, the critical element becomes \o7 marketing\f7 ," Valette said. "And it so happens that a large number of the corporations in this world that have significant marketing experience are foreign. I think you'll see most of the major beverage makers with a foothold in the U.S. wine industry. After all, it's a major beverage industry."
He estimated that U.S. wine sales topped $2.8 billion last year.
Foreign-owned wineries range from the tiny to the substantial and from start-up operations to the venerable Beringer Vineyards, which was founded by one of Napa's original half a dozen wine families and owned since the early 1970s by Nestle, the Swiss food and beverage giant.
Although foreign interests are involved in only a small fraction of California's more than 700 wineries, the current soft dollar only quickens the pace of investment. Sapporo, the giant Japanese brewer, last summer bought tiny but classy St. Clement Vineyards and its landmark Victorian mansion near St. Helena, in Napa Valley, as a way to learn the California wine business from inside. At about the same time, Sanraku, a Japanese soft-drink firm, bought Markham Vineyard, just across Highway 29.
Industry consultant Jon Fredrikson predicted that Japanese interests will add "two or three" more wineries this year. "There's enough of them looking."
According to Napa Valley land broker Ren Harris, "Activity is at a fever pitch. There is something cooking--offers or active interest--on virtually everything we have listed, which represents about $27-million worth of property."
Something less than half the shoppers are foreign, Harris said.