John DeLucca, executive director of the San Francisco-based Wine Institute, said the growing foreign interest demonstrates how much California wines have developed over just the past two decades of proliferating wineries. "California now is to wine what Japan has become to automobiles--in the forefront of quality production," he said. Moreover, he added, foreign involvement contributes new resources and much needed marketing know-how.
"It's an international market," DeLucca said, "and the buzzword today is competitive . And to be competitive requires what is happening to us, which is increasing our knowledge of other countries."
And it's something of a two-way street, since California wineries are also trying to sell more wine abroad, said Richard L. Maher, president of Christian Brothers Sales Co. (and former president of Beringer under Nestle). "There's a lot of interest in California wine overseas," Maher said. "You're going to see a lot of brands doing things abroad."
Ferrer as Expansionist
Robert Mondavi Winery not only is involved with Mouton-Rothschild of France in a joint wine-making venture called Opus One but recently opened a London sales office and is considering opening another in Hong Kong, Maher said. His own company, Christian Brothers, sold 6,000 cases in Japan last year.
Reasons for buying into the industry vary, according to Fredrikson, president of Gomberg, Fredrikson & Associates in San Francisco. The French, for example, have nowhere to expand in the Champagne region, but Moet Hennessy demonstrated that Northern California offers a solution as well as a foothold in the United States--the world's largest market for sparkling wine, not to mention a base for expanding sales to the Pacific Basin.
On the other hand, the Ferrer family of Spain, owners of Freixenet, has followed an expansionist strategy since 1979, one that included buying up a French Champagne maker, in anticipation of Spain's 1986 entry into the European Common Market, acquisition of several troubled Spanish competitors, and the founding of new sparkling wine facilities in Mexico (Dona Dolores) and Sonoma (Gloria Ferrer).
The family's philosophy is to let each wine region develop its own brands and capitalize on its own wine-growing characteristics, said Pedro Ferrer, 30-year-old president of the Sonoma operation (and son of the winery's namesake). "Each branch has to stand on its own."
Sapporo Takes Its Time
The Japanese have taken a similarly strategic approach.
Suntory Ltd. decided in 1983 to expand into the wine business on a global basis. It first snapped up Chateau Lagrange, a well-located but financially anemic French winery in St. Emilion, near Bordeaux. Then, in 1984, it paid an undisclosed but assumed to be hefty price for picturesque Chateau St. Jean, a profitable, 10-year-old premium winery that nestles in the shadow of Mt. Hood--a miniature Mt. Fuji at the north end of Sonoma Valley. (Estimates, unconfirmed by Suntory, range up to $40 million, by far the most paid for a California winery.)
"We were looking for one of the best wineries in each of the (world's wine-producing) areas," said Yamamoto, who participated in the deal for Suntory. "It was the quality that attracted us. We wanted an outstanding winery in the United States, and we looked into 30 wineries--all in California."
"Suntory's interest seems to be in the quality of the wine rather than quantity," agreed Richard Arrowood, Chateau St. Jean's wine maker and first employee, hired at its founding in 1974. Arrowood showed off new wine-making equipment and a sprawling warehouse as evidence of Suntory's commitment. "They expect a return on their investment, but they are not looking for short-term gains."
Sapporo, the giant brewer, had a different motive for buying tiny St. Clement Vineyards, just over the hill in St. Helena. "We currently operate a 400,000-case winery in Okayama that produces medium-priced wines, but we haven't had the capability of producing world-class, premium varietal wines until now," Manekazu Takenishi, president of Sapporo U.S.A., said at the time of the purchase.
"Their approach," said St. Clement's wine maker, Dennis Johns, "is to take a small winery and keep it small and learn the business. They're the Tortoise in 'The Tortoise and the Hare.' They take their time, and they go straight forward, building on a strong foundation."