New Buyer Found for Old Italian Swiss Colony Winery

The old Italian Swiss Colony winery, which once was California’s leading wine maker before faltering and passing through a parade of owners, found a new buyer Thursday in Erly Industries of Los Angeles.

Erly said it would merge San Francisco-based ISC Wines of California, as the winery currently is known, with Erly’s Sierra Wine Co. The new operation, yet to be named, is expected to have annual sales of $80 million.

Financially troubled ISC has been managed by Erly since May, 1986, but the Los Angeles wine and rice marketer previously held no stake in the company. To buy ISC from Allied Growers, a group of grape growers that bought the winery a few years ago, Erly is assuming Allied’s debt of $30 million and will pay another $5 million in cash.

ISC’s brands include, among others, Colony (formerly Italian Swiss Colony) jug wines, Lejon brandy and vermouth, Jacques Bonet sparkling wine and Petri jug wines. Erly’s wines are sold under other companies’ labels.

Under Erly’s ownership, the unit will try to become more of a presence in the medium- to premium-price market.

‘Where the Action Is’

“This is where the action is now,” said Paul Gillette, publisher of the Wine Investor and other beverage periodicals. “And they now are better equipped to sell higher-quality wines than they ever have been.

“Their principal challenge is mastering the system of distribution, he added. “It’s going to be quite a task.”

Gerald D. Murphy, Erly’s chief executive, said in a news release that Bill McFarland, brought in by Erly as ISC president and chief operating officer in May, 1986, will head the merged wine543387501of ISC’s 100 employees will be retained, along with wineries at Asti in Sonoma County and at Sanger, Tulare and Delano in the San Joaquin Valley. A plant at Escalon will be leased to Heublein, a former owner of ISC.

Under Erly’s management, ISC developed several new brand names that will be used to market premium wines. The labels include North Coast Cellars, which will be used on lower-priced varietals, and Sbarboro, for top-of-the-line bottlings. Two new sparkling wines, Royal Knight’s and Robert Ranneau, will be aimed at a more upscale market than its current brand, Jacques Bonet.

‘History of Failures’

Gillette said ISC has had “an extremely unfortunate history of failures” since the post-World War II days when Louis Petri, a grape grower, built Italian Swiss Colony into a national brand, shipping wine by tanker from California to New York, where it was bottled and sold. In those days, Italian Swiss Colony products were heavily promoted as the work of “the little, old wine maker” in Asti, Calif.

The company later became a part of United Vintners, organized by Petri and other growers, and eventually was bought by Heublein Wines in 1969. Heublein immediately found itself embroiled in antitrust litigation brought by the Federal Trade Commission. But once Heublein won the case, it sought a buyer for the unprofitable jug-wine venture and ultimately sold it to Allied.

Erly, whose stock is traded over the counter, earned $4 million last year on revenue of $123 million.

Its founders in the early 1960s bought three obscure olive companies, consolidated them under the name Early California, which it sold in 1985. It owns Comet Rice, the state’s third-largest rice marketer.