Seagram Will Sell Some Wine Units to Former Officers : $200-Million Deal Includes Paul Masson, Taylor California
Two former Seagram Co. executives with long experience in the wine business agreed Tuesday to buy most of Seagram’s U.S. wine operations--including Paul Masson and Taylor California Cellars--for $200 million in cash. The deal, rumored for weeks, is expected to close in April.
The buyers, whose firm is known as Vintners International, also will acquire Seagram’s Taylor New York, Great Western and Gold Seal Wines operations in upstate New York.
Heading Vintners International are Paul M. Schlem, who came to Seagram as president of Gold Seal when the Montreal company acquired his firm in 1979, and Michael P. H. Cliff, former president of Seagram Wine Co., which will be dissolved once the transaction is completed.
The deal would mark another in a series of ownership changes among major California wine properties. In January, for example, Heublein acquired Almaden Vineyards from National Distillers & Chemical. Then, just 10 days later, Heublein itself was acquired by Grand Metropolitan, a British beverage giant.
Focus on 2 Markets
In a statement issued in New York, Edgar M. Bronfman, Seagram’s chairman and chief executive, said his company is not abandoning the wine business but that “the market for our medium-priced table wines has not developed as we expected.”
“We will continue to focus on premium wines, and at the same time, we have been making a major commitment in wine coolers, which is currently the most rapidly growing segment in the beverage-alcohol business,” Bronfman said.
Seagram’s remaining wine properties--the prestigious and prosperous Sterling Vineyards in Napa Valley and Monterey Vineyard next to Taylor California in Gonzales--will be placed under Seagram Vintners, which is headed by Abdallah Simon and Samuel Bronfman II, Edgar’s son. Seagram Vintners also imports fine wines.
Speaking for the new owners, Cliff said in an interview that “it is a little early” to discuss what they will do with the well-known Paul Masson label and Taylor California Cellar, a maker of jug wines. Taylor’s sales have particularly deteriorated, along with the rest of the lower end of the wine market, since Seagram bought the wineries from Coca-Cola in late 1983.
‘Worthless Brands’
Cliff, noting that he and Schlem have “about 60 years between us” in the wine business, said: “We’re intending to focus on the mid-price and premium end of the market.” If so, that could well mean a repositioning of Taylor California Cellar, according to Paul Gillette, publisher of the Wine Investor newsletter.
“California Taylor, as a brand, is worthless,” because of its poor sales recently, Gillette said. “Paul Masson is not much better. Within Seagram they refer to them as ‘Chernobyl West.’ ”
But, he added, California Taylor is endowed with world-class wine-making equipment.
“My thinking is that the new owners believe that they have taken over these assets at a significant discount and that they are going to try to overcome the deterioration of the Seagram brands,” Gillette said.
Seagram, which announced the deal after the stock market closed in New York, is selling the wine operations through its U.S. subsidiary, Joseph E. Seagram & Sons. Since 1983, when Seagram bought Wine Spectrum from Coca-Cola, it has been second only to the privately owned E & J Gallo Winery in size among U.S. wine producers. It has owned Paul Masson since 1955.
Vintners International has set up executive headquarters in New York, but expects to establish its major operating offices in Gonzales, Calif., and Hammondsport, N.Y., a spokesman said.
