Wine World Builds Empire by Staking Out Choice Grapes
As the sun was rising, Mike Moone sipped a cup of coffee under the spreading oak, sat back and said, “This is a lot of fun.”
He was referring to spending money. Millions, including some $50 million in the past two years on a handful of wineries and thousands of acres of vineyard land all over the state.
Moone is president of Wine World Inc., the division of Nestle SA of Switzerland that is one of the most successful premium wine businesses in the world. From the date of the purchase in 1970 of Beringer Vineyards, Wine World has grown rapidly and today boasts sales approaching $100 million annually.
That first purchase of the decaying Beringer property has since led to the purchase of about a dozen other properties. And the company will take another big step this Friday when it closes a deal to buy Estrella River Winery in Paso Robles. Moone said value of the transaction was $13 million.
Of $50 million spent by Wine World since 1986, nothing came from the parent company.
“We’ve earned all this money,” Moone said. “We’ve reinvested profits we earned internally.” He said he doesn’t ask Nestle for permission to spend. “I tell them what we want to do, and they haven’t said no yet. They’re quality oriented.”
The Estrella deal, approved last month by a bankruptcy court, gives Moone another premium property to team with his wineries here (Beringer) and at Geyserville in northern Sonoma County (Chateau Souverain). The company also is acquiring another Sonoma County facility in which to crush grapes.
Moone said the Estrella River name will be retained by Cliff Giacobine, the former owner. Wine World will instead use the name Meridian under a deal with Meridian wine maker Chuck Ortman. Wine World has purchased the Meridian brand and has hired Ortman as wine maker for Estrella.
The acquisition also gives Wine World an additional 500 acres of prime vineyard land, meaning that the company now owns more than 4,000 acres of vineyard land in California coastal regions at a time premium grape prices are climbing and supplies of quality grapes are increasingly difficult to obtain.
Bought Other Vineyards
Two years ago, Moone went on his spending binge when he paid $9.6 million for Souverain, a faltering, financially strapped winery that had been owned by a partnership of growers. That winery went into bankruptcy to facilitate the sale.
Since then, Wine World has bought additional vineyard land in Santa Barbara and San Luis Obispo counties and expects to close a deal soon in which it will buy the old Italian Swiss Colony winery in Asti. Moone said that purchase will cost $6 million. Included are 550 acres of land.
With the Estrella River acquisition, Wine World now owns 750 acres of vineyard land in the Paso Robles area alone. A major replanting of the vineyards will begin next spring, Moone said.
In fact, replanting is the top priority for Wine World viticulturalist Bob Steinhauer, who oversees Wine World’s own plantings in five counties and who is responsible for watching over grapes the company has contracted to buy.
Moone, an avid golfer when he’s not cooking up another deal, is not prone to leisurely breakfasts under the oaks. But recently he relaxed to reflect on the money he’s spent.
“We think Cabernet has nuances of flavor and taste that are different from region to region,” he said. “It’s just like the differences in France, the way a St. Emilion is different from a Graves. And Chardonnays are different.
“So we wanted to have a winery in each area that speaks to its own quality and style. Each one will be given the opportunity to be the best in its area. We don’t know which winery will be the best in 50 years, but we want to be represented in all areas.
“Hey, France has been at it for 2,000 years. We’re just getting started.”
No More Brands Planned
Moone, who is thinking about changing the name Wine World to “the Beringer Cos.” because it better reflects the heritage of the company, said he has no further plans for winery acquisitions, although “we’ll be buying vineyards for sure. One key to quality is controlling the grapes, and that’s what we’re doing.”
But more brands are out: “We have a lot to do with what we’ve just put on our own table.”
He said the money spent on acquisitions in the past two years is in addition to $21 million spent in the past decade refurbishing Beringer. “It’s a project that costs us $3 million a year; I can’t stop it.”
Included in expenditures has been $2 million redoing an old home on the Beringer property in which the company will have a professional kitchen/classroom where cooking classes will be given by famed chef Madeleine Kamman. Beringer also hired Antonia Allegra, former food editor of the San Diego Tribune, to run the cooking school.
Beringer is the heart of the Wine World empire. It is one of the Napa Valley’s most attractive wineries, with its famed century-old Rhine House tasting room and ancient cellar-aging caves dug into the hillside. Beringer, for all its boutique image, is a 1.5-million case brand these days, half of it White Zinfandel.
Beringer’s reputation for quality wine soared soon after Nestle bought it, first under wine maker Myron Nightingale and today under his protege, Ed Sbragia. The winery’s Chardonnays and Cabernet Sauvignons are prized and priced lower than many competitors’.
Beringer makes some 140,000 cases of Chardonnay and 55,000 cases of Cabernet, figures that will double by 1995, “and the wines will get better,” Moone promises. But Moone said that with projected growth to well above 2 million cases by the end of the century, “Beringer has reached the limits of its growth.”
A Hired Gun
A key to the Estrella deal, he said, was having Ortman on board as wine maker. Ortman’s wine-making skill will make the transition from one brand to the other feasible.
Ortman has been a consultant to about a dozen wineries in California, a hired gun brought on board by wineries who want to limit the trial and error in wine making to merely trial. Over the years, Ortman has usually been brought in to face a range of problems.
His clients have included St. Clement, Shafer, Spring Mountain, St. Andrews, Keenan and Cain Cellars, all of whom today have impeccable reputations for quality wine.
Ortman developed Meridian as a brand three years ago, but today, at age 48 with a wife and daughter, it was time for him to settle down with a permanent job.
Moone, an El Segundo High and UCLA product (BA in business, 1962) and Palos Verdes resident, says he’s not interested in more brands for Wine World, but that his ears are always up.
“Well, we do kick a lot of tires,” he said.
