Parent of Beringer Lands Paragon, Bids for Estrella

Wine World Inc., parent company of Beringer Vineyards in the Napa Valley, has agreed to buy Paragon Vineyards and has an offer pending on Estrella River Winery, both in San Luis Obispo County, the winery said Thursday.

It is the latest in a series of large investments in the California wine industry for Swiss-based Nestle SA, which owns Wine World.

Michael Moone, president of Wine World, a subsidiary of Nestle Enterprises Inc., said he has agreed to pay “in excess of $3 million” for Paragon Vineyards, a 300-acre vineyard planted in Pinot noir, Chardonnay and other varieties.

The seller, Jack Niven and his family, also are partners in Edna Valley Vineyards, which Moone said is unaffected by the purchase.

Moone said the Estrella River deal is extremely complex but has an approximate value of $10 million. He said Wine World had made an offer to acquire the winery and about 500 acres of land in Paso Robles and that the offer is being considered by the U.S. Bankruptcy Court. Estrella River has filed for protection under Chapter 11 of the U.S. Bankruptcy Code.

Quality Grapes Acquired

Paragon Vineyards has 150 acres of Chardonnay and 50 acres of Pinot noir. Moone said Wine World would graft the remaining acreage to Chardonnay.

He said half of Estrella River’s acreage is planted in Chardonnay, “and the balance will be grafted to Chardonnay (root stock).”

Wine World recently acquired the 700-acre Los Alamos Vineyard (of which 410 acres is planted in grapes, largely Chardonnay) in a $3-million deal. The grapes from that vineyard will be used for Beringer’s second label, Napa Ridge, a line of popularly priced varietal wines.

Moone said the Paragon purchase will add more quality grapes for the Napa Ridge brand.

He added that Estrella River will be renamed but that no new name has yet been chosen. Estrella River owner Cliff Giacobine will retain the Estrella River brand.

“This (Estrella River) deal sets the stage down there for a real good new winery in the Central Coast,” Moone said.

Wine World has spent about $50 million in acquisitions of wineries and vineyard land and in expansions over the past two years in California, Moone estimated.

He said Wine World would sell about 500,000 cases of wine under the Napa Ridge brand this year, 80% of it grown on Wine World’s own vineyards; 1 million cases of wine under the Beringer name and another 600,000 under the Los Hermanos brand.

Sales Near $100 Million

In addition, Wine World owns Chateau Souverain in Geyserville, Calif.,a 75,000-case winery acquired in 1985 for $9.6 million, and a one-third interest in Maison Deutz, a 30,000-case San Luis Obispo County sparkling wine producer. The other two-thirds is owned by Deutz of France.

Nestle Enterprises also owns Hills Bros. coffee, Stouffer Hotels, Nestle Foods, Libby’s Foods, Carnation Foods and other U.S. properties. Nestle SA’s stock is publicly traded in Switzerland.

Moone declined to give profit figures for Wine World but said “sales (of Wine World properties) are approaching $100 million, and we are profitable.”

Asked why Nestle was spending so much on the California wine business when sales of California wine have been relatively flat in the past two years, Moone said:

“We really do love the wine business, and we know it (the business), and our company goal is to get into every region of the state. That’s why we like the Estrella deal, because it gives us a new winery with no baggage.”