Uninformed and Irresponsible Speculation
Diageo has sold most of its Napa Valley assets and will lease them back from a real estate investment trust. Wine operations will not be affected.
“We know that to remain competitive in this environment we need to rethink our whole wine business to be more nimble and entrepreneurial,” said Zsoka McDonald, a company spokeswoman. “This is about ensuring the long-term strength of our North America wine business and the health of our core wine brands.”
The real estate and winery bubble has burst, and there are persistent rumors of excellent properties on sale at low, low prices. It is, as they say, a buyer’s market.
The lease-back deal frees-up $290 million in cash, which Diageo can use to acquire new properties and brands, if it wants.
I’m guessing Diageo wants.
June 25th, 2010 at 1:27 PM
This happened before in the 70′s. Huge multi-nationals got into the small winery business in a big way, pushing them to become big wineries. Consolidation ensued. Brands lost their cachet and by the 80′s those corporations had divested, leaving worthless brand names in their wake. When was the last time anybody associated BV with quality (either one, Beaulieu or Buena Vista)? While Southern Wine & Spirits and Glazer struggle for the upper hand in their unholy union, small distributors across the country rejoice. With their personal relationships with family wineries they don’t have to worry that KJ, Sutter Home, Fetzer or the moribund Chateau Ste Michelle will be gone from their portfolio next week when the newest corporate deal comes down the pike, wreaking havoc with excess warehouse space and payroll. I know the people on the bottling line at Fetzer gotta eat, too, but I can’t see myself supporting their greedhead corporate masters.
June 25th, 2010 at 1:43 PM
I feel obligated to point out that the “greedhead corporate masters” of Fetzer live right here in Louisville, and I’m sure I’d think they were very nice if I ever met them, which I haven’t because they won’t let me into their country club. But still.