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Wine industry patriarch still in full stride

Under Jess Jackson, Kendall-Jackson has grown from a small vineyard to one making 3.8 million cases yearly.

October 28, 2007|Jerry Hirsch | Times Staff Writer

When Jess Jackson coaxed his family into helping crush a load of grapes some 25 harvests ago, he had no clue he was about to create one of the nation's largest wine empires.

"I was attracted by the lifestyle. I wanted to get away from law and become a farmer," said Jackson, a former property rights attorney from San Francisco.

Since that modest first vintage of 16,000 cases in rural Lakeport, about 90 miles north of San Francisco, his winery has carved out a niche as the Starbucks of wine.

He is the Jackson of Kendall-Jackson Winery (Jane Kendall was his first wife), and the winery's $12 Vintner's Reserve Chardonnay is one of the top-selling wines in America.

Kendall-Jackson now produces about 2.3 million cases of the white wine, which according to Wine & Spirits magazine is perennially one of the top-selling Chardonnays at U.S. restaurants.

"In the past high quality was associated with low volumes, but his Chardonnay business proved you could make affordable, quality wine," said Bill Bishop, managing director of the San Francisco office of Bank of Montreal Capital Markets, an industry lender.

With the recent sales of family-controlled wineries such as the Mondavi family's Robert Mondavi Corp. and Warren Winiarski's Stag's Leap Wine Cellars, Jackson has become "one of the key patriarchs of the California wine industry," Bishop said.

It is a position that Jackson, 77, clearly enjoys. He likes to show off his vast holdings, including thousands of acres of vineyards spread across the hillsides and mountains of Sonoma County, by taking visitors on a tour in the company helicopter.

On these tours, Jackson likes to explain how most of his vineyards are located on mountains, ridges, hillsides and bench lands. These are all areas that drain well.

"The vines need to struggle to find nutrients. That way it concentrates on ripening the fruits. You don't want lots of water in the roots. That just creates more growth of leaves," Jackson said.

When he travels to wine events or Stonestreet Farm, his thoroughbred breeding farm in Lexington, Ky., Jackson typically goes by his Dassault Falcon business jet with wife and business partner Barbara Banke and a small entourage.

His wine business success has allowed Jackson to plunge into horse racing -- "because I like to compete," he says. He is part owner of Curlin, this year's Preakness Stakes winner.

Jackson also is unafraid to take on the wine establishment, whether it involves prices, trademarks or wine labels. He has been a vocal critic of wine distribution laws that in many states require vintages to pass through the hands of distributors, increasing consumer prices.

And he has tussled with the giant E.&J. Gallo Winery over trademark issues.

Jackson lost a legal battle over whether Gallo's Turning Leaf label too closely imitated the autumn-toned look and feel of his Kendall-Jackson brand.

He also unsuccessfully fought the wine establishment's move to lower to 85% from 95% the amount of wine that must come from a particular vintage in order for a vintage year to be placed on the label.

"I think there ought to be truth in labeling for the consumer. You can experiment, but put all the information on the label. How do you expect the consumer to understand their own palate if there is misinformation and hyperbole on the label?" Jackson said.

Jackson's entry into the wine business was happenstance.

In the mid-1970s he purchased an 80-acre pear and walnut orchard in Lakeport that he converted to a vineyard.

Now his company farms 14,000 acres of vineyards in California and owns 30,000 acres of land in prime wine regions, including Mendocino, Sonoma, Napa, Lake, Santa Barbara and Monterey counties. He is among the largest vineyard owners in the nation.

Kendall-Jackson now makes 3.8 million cases of wine. The other products that make up Jackson Family Wines -- higher-end specialty labels such as Freemark Abbey in Napa Valley, La Crema Winery in Sonoma County and Byron in Santa Barbara County -- total 1.5 million cases.

"The original business plan was to break even at 50,000 cases, but we kept growing," Jackson said.

By volume, the company is now California's eighth-largest wine producer, according to Jon Fredrikson, a Woodside, Calif., wine industry analyst. But more important, it is one of the most profitable, he said.

Kendall-Jackson's Vintner's Reserve Chardonnay is now the bestselling wine in U.S. food stores based on dollar volume, Fredrikson said.

The key to Jackson's success is following the same game plan successfully employed by other mass-market food and beverage companies such as McDonald's and Starbucks.

"They have a formula for where they get their fruit and how to balance the flavor characteristic for grapes from different California growing regions to produce a consistent wine," said Paul Dolan, who as the former president of Fetzer Vineyards was a longtime competitor.

That drive for consistency sometimes costs the company money.

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