Altria, parent company of Marlboro, is the new owner of Chateau Ste. Michelle and its sister wineries. It purchased UST, the holding company for a variety of smokeless tobacco products and Ste. Michelle Wine Estates for a cool $10.4 billion.
What, you didn't know Ste. Michelle was owned by the makers of Copenhagen and Skoal? Indeed. The story goes back some 35 years when Wally Opdycke, a savvy local financier who'd run Safeco's investment portfolio, owned Hazeltime Labs, bought and sold K-2 skis, rounded up a few friends and bought the moribund American Wine Growers. Opdycke dropped its Nawico brand and launched Ste. Michelle (named by his daughter). In search of additional capital, he wound up in Stamford, Conn., in the offices of U.S. Tobacco, an outfit with $100 million in sales and ungodly profits. Opdycke's pitch: plant some of that cash in a long-term investment, the vineyards of Washington State.
So UST bought the fledgling winery, and over the years invested more than $100 million (vineyards, production facilities, a national sales force) on a scale far beyond the financial capacity or marketing acumen of any other company in the Northwest. Opdycke bowed out three decades ago, and UST has reaped the benefits of its hands-off approach. Ste. Michelle is the region's preeminent winery, the group sells a total of five million cases a year and took in $350 million in 2007. They've formed amazingly successful new brands (Columbia Crest, Domaine Ste. Michelle); they own well over 4,000 acres of vineyards, they've purchased iconic properties (Erath in Oregon, Stag's Leap in California) and formed partnerships with industry legends like Germany's Loosen and Italy's Antinori.
But Altria is a tobacco conglomerate, not a wine producer. They've bought a herd with a bum steer, and there's little doubt they'll cut it loose as quickly as possible. "Certainly every option is on the table for the new owners, from growing the wine segment to spinning it off," says wine maker Bob Betz, who spent over 20 years as Ste. Michelle chief of PR.
It's a valuable misfit, though, worth close to $1 billion, according to industry estimates. One scenario: a bidding war between Diageo (Sagelands, Canoe Ridge) and Constellation Brands (Hogue). What makes this likely, says Bob Stevens of Alaska Distributors: Constellation might be selling off its stake in Corona's beer distribution business, which would leave them with a pile of money.
Waiting it out, meanwhile, is the winery's staff. Says Keith Love, VP for Communications & Corporate Affairs, "It is business as usual at Ste. Michelle Wine Estates."
For now, the winery is focusing on the harvest, which begins this month, and on the release of its 2005 and 2006 vintages. As for the future, says Love, "We expect to be a stand-alone subsidiary...as we have been."
Posted by Ronald Holden at September 11, 2008 3:30 PM | TrackBack
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