Korbel’s Innovative Twist Paying Off : Helps No. 2 Champagne Maker Cut Costs, Satisfy Soaring Demand
The peaceful facade of F. Korbel & Bros. champagne cellars can be as misleading as the currently languid waters of the Russian River, which every few years goes on a roiling rampage and floods the vineyards stretching north to the winery buildings.
But Korbel itself has been on something of a rampage: It has more than doubled its production during the past five years to keep up with demand for its premium bubbly. Further expansion is planned this summer.
Visitors touring the original 19th-Century plant and headquarters building rarely glimpse the more prosaic modern facility turning out champagne in such volume that, in terms of retail sales, Korbel now ranks second nationally only to Gallo’s low-priced, bulk-processed Andre brand. In 1985, shoppers spent $272.1 million on 5.68 million cases of Andre, which carries a full retail price of $3.99 a bottle, according to a study published by the Wine Investor, a Los Angeles-based newsletter. They spent a surprising $127.6 million on just 1.01 million cases of Korbel champagne, costing $10.50 a bottle.
“They must be in possession of a magic wand,” Paul Gillette, publisher of the Wine Investor, said of Korbel’s present owners. “They haven’t done anything wrong in the last 20 years.”
To Gary B. Heck, the 39-year-old president of Korbel, which his late father, Adolf, bought from Korbel kin in 1954, the “magic” has come from devising ways to produce a premium product ever more efficiently without violating the traditional French process--the meticulous and time-consuming methode champenoise .
“We’re the low-cost producer,” Heck said in an interview in his warmly paneled office overlooking river-bank vineyards. “Our balance sheet goes back to 25 cents an acre.”
That’s because Korbel still occupies the site of a sawmill established by Francis, Joseph and Anton Korbel, who came to this country in 1860 from their native Bohemia and soon began harvesting redwoods here to produce, of all things, cigar boxes. As they logged off the rich bottom lands, they began growing wine grapes among the stumps.
Innovation Plays Role
The Korbel brothers were not alone in that choice, given their location in Sonoma County, a ridge away to the west from the Napa Valley, already a wine-producing area. What distinguished the Korbels was their decision to make the nation’s first sparkling wine. Their inaugural shipment was dispatched in 1882 from Korbel Depot, still standing precisely 70.85 miles from San Francisco via North Western Pacific Railroad’s long-gone Russian River spur.
Thus, from the winery’s inception, innovation has played an important role in Korbel history--and in its ability to remain the low-cost producer of premium bubbly without violating the canons of methode champenoise, the most time-consuming and expensive of the three ways in which sparkling wines are made.
In the Charmat or bulk process used by Gallo and other low-end producers, the bubble-producing secondary fermentation takes place in pressurized tanks before bottling. In the so-called transfer process, used by Almaden in making its Le Domaine brand, the sparkling wine is removed from the bottle after secondary fermentation and sediments are filtered out mechanically before the liquid is rebottled.
The methode champenoise requires that secondary fermentation take place in the very bottle from which the finished product will be served. Korbel’s innovations have reduced labor costs by mechanizing tasks once done by hand.
Traditionally, for example, once yeast is injected into the still-wine blend, or cuvee, where it consumes sugar and produces tiny bubbles of carbon dioxide, the liquid never leaves the bottle, which is capped for extended aging.
Then, rather than filtering the liquid mechanically, the bottles are traditionally placed neck down and rotated periodically--a process called “riddling”--to keep particles from sticking to the sides of the bottle neck. When aging is complete, the neck is frozen and the resulting plug of sediment and champagne forced out by pressure from within the bottle after the temporary metal cap is removed. Finally, a dosage, a mixture of sugar and wine, is added to establish the sweetness in the finished champagne, and a traditional wired cork is forced into the neck.
When Adolf Heck stepped down at age 36 as president of Italian Swiss Colony (then the nation’s largest wine maker) to take over Korbel, he began 30 years of innovation within the strictures of this methode champenoise.
Heck sought to impart a new and lighter style to the sparkling wines, improved the cuvee and installed improved aging and fermentation equipment and better quality controls, said champagne master Robert M. Stashak. But Heck also devised cheaper ways of riddling, first devising a means of rotating entire bins of reposing bottles by moving a single lever.
“Then Dad, Bob (Stashak) and I decided to try riddling in the box ,” Gary Heck said.
At Korbel now, once the cuvee is bottled and the yeast injected, the capped bottles are placed in their eventual packing cases. Here, they age upright--which also reduces contact with the yeast (in support of Heck’s light style)--until time to begin riddling.
At this time, forklift trucks gingerly turn whole pallets of the packing cases upside down so that the yeast settles in the neck of the bottles for eventual disgorging.
“Doing all that with the bottles in their cartons allows us to handle the product automatically,” said Stashak, 36, a 1973 graduate of the University of California’s highly regarded department of enology in Davis. “It’s what we call our hands- off style of champagne making,” he quipped.
The technique and equipment used in the automated riddling process are patented, Heck said, though he acknowledged that a number of French Champagne houses now use a variation of it called a “gyro-pallet.” (In this system, an entire pallet of unboxed bottles is periodically tilted mechanically to accomplish what traditionally was done by hand by a remueur, the worker with the tedious job of giving each reclining bottle its daily quarter-twist.)
“That’s why we’re at the price we’re at,” Heck said of his father’s innovations. “And we make as much profit (per bottle) as our competitors do--and at a better price.”
(Korbel Brut’s full retail price of $10.50 compares to $14.50 for Napa Valley’s Domaine Chandon, $14.99 for Piper Sonoma, both French-owned, and $11.29 for Napa Valley’s Hans Kornell, according to the Wine Investor survey. All are Korbel’s direct competitors as premium domestic methode champenoise sparklers.)
Production statistics tell the Korbel story:
According to state Board of Equalization figures, Korbel shipped 475,000 cases in 1981 but more than a million cases in 1985--a 113% increase. This made Korbel the nation’s third-largest producer of all sparkling wines--foreign and domestic--sold in this country after Gallo’s Andre ($3.99 retail) and New York-based Canandaigua’s J. Roget brand ($3.49 retail).
From 1981 to 1985, Korbel’s market share increased to 5.27% from 3.29%, while Gallo’s slipped to 29.57% from 36.19%.
Brut Is Most Popular
Sales of Korbel Brut account for more than half of the cases sold, followed by Extra Dry and Rose (which is made entirely from the juice of Pinot noir grapes that remains in contact with the skins just long enough to impart a delicate color). Korbel’s top-of-the-line sparklers are limited releases, each bottle numbered serially, as in France: the bone-dry Natural, a blend of Chardonnay and Pinot noir; Blanc de Blancs, 100% Chardonnay, and Blanc de Noirs, 100% Pinot noir (but with minimal skin contact and less sweetness added in the dosage ).
‘At the Red Line’
The length of aging, which ranges from 18 to 48 months, is dictated by the particular attributes of the grapes used and the particular finish being sought, Stashak said.
Heck said the company shipped more than 1.1 million cases of sparkling wine last year, approaching present production capacity. “We’re at the red line now,” he said. And the company expects to produce 1.25 million cases this year, he added.
Expansion has been almost continuous since 1965, when Korbel was added to the product list of the Jack Daniel distribution network, a unit of Brown-Foreman, which at the time was seeking to make up for lagging sales of spirits. Until then, said publisher Gillette, Korbel was sold mainly in California and a few major Eastern markets. With the Jack Daniel connection, Korbel products became almost as ubiquitous as Gallo’s.
From there, Heck said, “we rode the coattails of the white-wine boom.”
“But, white wine is boring!” he asserted. “Aside from coffee, tea and milk, every other popular beverage in this country has bubbles in it. This country drinks bubbles.”
Expansion was postponed while high interest rates prevailed in the later 1970s, Heck said. This created a shortage of premium domestic sparkling wine and, he thinks, induced the French to set up California operations.
“We were sold out every year,” he recalled. “Our customers were on allocation for seven years. We created a void in the marketplace with our inadequate supply,” which attracted the French.
Heck does not intend to let the company fall into that position again: A new aging facility will be erected this summer in time for the year’s crush, boosting capacity to 2 million cases.
“Champagne sales continue strong, up 18% so far over last year,” he said.
As for Korbel brandy, which is distilled in the San Joaquin Valley town of Reedley but blended by Stashak and bottled in Guerneville, Heck said that sales are holding their own. Korbel ranks third in sales nationally, behind Gallo’s E&J; brand and the slipping Christian Brothers brandy, he said.
Korbel shipped 308,000 nine-liter cases last year, down slightly from 1985, he said. “But it’s a good business for us. We make money on it.”
