Taylor and Possibly Paul Masson on Block, Reports Say : Seagram May Sell Jug Wine Units

Seagram itself wasn’t talking Thursday, but the wine industry certainly was abuzz with reports that the Canadian liquor and wine producer is about to unload the jug wine business that it bought from Coca-Cola less than three years ago.

The reports all agree that Seagram Co., the world’s largest producer of distilled spirits and wine, will soon announce sale of all or part of its Taylor California Cellars and Taylor Wine Co. of New York State, and possibly Paul Masson winery in Santa Clara County.

Seagram’s premium wineries, Sterling in Napa Valley and Monterey Vineyard, adjacent to Taylor in Gonzalves, would not be included, according to the published reports.

While sale of low-margin jug wines have flattened out or dropped in recent years, many premium wineries have continued to show profits.

The reports--which a Seagram spokesman dismissed as “rumors” on which the company makes no comment--first surfaced last month in the Wine Investor, a Los Angeles-based newsletter known for its breezy and irreverent reporting style in covering the wine business. The story was picked up by the general press last week in an article carried by the Santa Rosa Press-Democrat, which circulates widely in the wine counties of Napa and Sonoma. It next appeared Thursday in the New York Times, owner of the Santa Rosa paper.

‘Well-Informed Sources’

Paul Gillette, publisher of the Wine Investor, based his reports, he said in an interview, on “well-informed sources at a high level” in Seagram. According to these sources and others within the wineries, he said, Seagram quickly soured on the potential of Taylor, whose jug wines Coca-Cola had heavily promoted. Seagram dropped the promotions, he said, and sales went down with them.

Paul Masson, whose product line runs from jug wines to the middle reaches of the premium market, might or might not be included in such a deal, Gillette said he was told by the sources at Seagram. “If they get a guy with deep pockets who wants Paul Masson, too, they’d let it go,” he said.

Profits from selling the jug wine operations would be used, Gillette said he was told, to buy Miller Brewing Co., which Philip Morris Cos. recently indicated that it intends to sell. The attraction, he said, lies in Miller’s popular brands and the clout they would give to Seagram in dealing with beer distributors that also handle its Seagram’s two rising brands in the hugely successful wine-cooler market.

Seagram, with subsidiaries and affiliates in 27 countries, makes and markets 190 brands of spirits and more than 150 brands of wines and brandies sold in more than 200 countries. For the first half of this year, Seagram reported that profits from the sale of spirits and wine dropped 14%.

Potential buyers, according to the reports, include Anheuser-Busch Cos. of St. Louis, which declined comment; “groups of investors, including some from Asia,” which Gillette guessed might be Suntory, and Canandaigua Wine Co. of New York.