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Mondavi to Sell Its Luxury Wine Ventures

September 15, 2004|Jerry Hirsch | Times Staff Writer

Robert Mondavi Winery, Napa Valley's crown jewel, is on the block.

Its parent, Robert Mondavi Corp., said Tuesday that it planned to sell not only the winery in Oakville, Calif., but also its high-end wine ventures so it could focus on the relatively inexpensive Woodbridge brand and other lower-end wines.

The divestitures would mark a sea change for the business founded in 1966 by Robert Mondavi, who helped place Napa Valley in the atlas of the world's greatest wine regions. Robert Nicholson, an investment banker with International Wine Associates in Healdsburg, Calif., called the company's plans "a major development that will have worldwide repercussions."

In addition to its namesake vineyard, Mondavi has other wine interests. They include part ownership of the Ornellaia winery in Tuscany, Italy, and a 50% stake in the ultra-premium winery Opus One, the French wine house of Baron Philippe de Rothschild -- both of which are now up for sale.

In a message to employees, Mondavi Chief Executive Greg Evans said that high-end wines -- the fine Mondavi Cabernet Sauvignons retail for as much as $125 a bottle -- were better suited in the hands of a private company that wouldn't have to satisfy Wall Street's grinding pressure for ever greater sales and profit.

Evans said the proceeds of the sale would be reinvested in the company's Woodbridge-centered wine business. Mondavi's "lifestyle" wines are primarily from Central California and other less prestigious regions, selling under the Woodbridge and Robert Mondavi private selection labels.

These wines account for about 77% of company revenue. Mondavi posted a profit of $25.6 million on annual sales of $468 million for the fiscal year ended June 30.

Although it said it planned to "proceed as quickly and orderly as possible" to divest the luxury wineries and brands, it didn't give any hint as to when the deals might be completed or who the buyers might be. And Mondavi executives declined to say whether they had met with potential buyers.

Speculation centered on members of the Mondavi family. "One would think that the Mondavi family would want to gain ownership of the Napa Valley assets that they have built over the years," International Wine Associates' Nicholson said.

People familiar with the family said that any effort to gain control of the Oakville winery would probably come from patriarch Robert, his son Tim and his daughter Marcia Mondavi Boger. These people said it wasn't clear how Robert's other son, R. Michael, would fit into the picture. The family is known for its fractious relationships.

Another possible bidder would be Constellation Brands Inc., the world's largest wine firm that has been embroiled in a lengthy effort to gain control of Napa's Chalone Wine Group Ltd., a premium wine producer.

The Oakville winery has undergone a major renovation in recent years. The winery and its more than 1,500 acres of prime vineyard could be worth upward of $400 million.

In August, the firm announced a reorganization that would reduce the Mondavi family's voting control over the California winery to 40% from 85%.

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