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Gallo Going to Washington?

by Cyril Penn
May 08, 2012

While chatting with some leading figures in the Washington wine industry yesterday I learned that E&J Gallo is expected to purchase Columbia Winery and Covey Run from Ascentia Wine Estates.

E&J Gallo in Washington?

An E&J Gallo spokeswoman offered the following statement: “As you know, we regularly explore a variety of opportunities.”

Ascentia was created in 2008 with the purchase of Atlas Peak, Buena Vista, Gary Farrell, Geyser Peak Winery, Columbia Winery, Covey Run and Ste. Chapelle from Constellation Brands, reportedly for $209 million. That was for the brands. The real estate is owned and leased back to Acentia by VinReit. Timing wasn’t great – the wineries were already in limbo and the deal happened right as the recession hit.

Ascentia struggled. There was a lawsuit when marketer and investor W.J. Deutsch didn't get paid; Michael Kenton came in as as chief executive to replace Jim DeBonis, but then was abruptly out and DeBonis was chief executive again. Buena Vista sold to Boisset; Gary Farrell sold to VinCraft. Atlas Peak didn’t make much wine. Ascentia retained Fineman Public Relations, a specialist in crisis management, then went with Glodow Nead but isn't with them anymore. Some suppliers only deliver to Ascentia on a COD basis.

If Ascentia sells its Washington properties, it won’t be much of a surprise. A sale to E&J Gallo, though, could have interesting results pretty quickly. Each of the wineries in question porobably produces little more than 100,000 cases of wine a year, if that. Gallo would have the ability to expand the brands significantly. Bringing production closer to a million cases wouldn’t be outside the realm of possibility but would change the dynamics of the Washington wine and grape market, where St. Michelle dominates and the other players are small.


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