Christian Brothers, a 107-year-old Napa Valley winery owned by a Catholic teaching order, was acquired Tuesday by the Heublein division of Grand Metropolitan PLC of Great Britain in the largest winery sale in U.S. history.
Both sides declined to disclose the price, but sources said it may approach $150 million. It dwarfs the previous top price paid for a U.S. winery of $40 million that Suntory of Japan plunked down for Chateau St. Jean in Sonoma County five years ago.
Heublein, based in Farmington, Conn., is acquiring all physical holdings of Christian Brothers, including the historic Greystone Cellars and 1,200 acres of prime Napa Valley vineyards, as well as all trademarks and brands. Heublein already owns historic Napa Valley wineries Inglenook Vineyards and Beaulieu Vineyard, as well as Almaden of Madera.
Brother David Brennan, president of Christian Brothers, in a prepared statement, said, "The decision to sell . . . was a difficult one, but this action allows the Brothers to give the highest priority to their educational works."
More than 11,000 Christian Brothers teach in more than 1,600 schools in 80 countries, and the schools are supported by the sale of wines and brandy. Cathedral High School in Los Angeles is among those high schools supported by proceeds from the winery.
In an interview, Richard L. Maher, president of Christian Brothers Sales Co. and a longtime wine industry executive, said that Christian Brothers found it increasingly difficult to operate the schools and a winery business. In recent years, Christian Brothers' profitability has been hit hard by a nationwide slump in sales of distilled spirits, although the company is still profitable.
Of the company's $100 million in revenue in 1988, nearly 70% came from brandy sales. Christian Brothers ranks second to Gallo in U.S. brandy sales. But for most of the 1980s, brandy sales for the company and nationally have slumped badly as Americans have reduced their consumption of spirits.
Meanwhile, wine maker Tom Eddy helped revive the wine fortunes with a string of top-quality wines.
Still, consolidation in the wholesale and retail market for alcoholic beverages in the past few years has resulted in giant corporations that have used marketing muscle and extensive financial resources to outbid small wineries for labor and materials, making it increasingly difficult to compete, Maher said.
"Also, consolidation at the producer level has made competition tougher," said Maher, referring to the recent acquisition of Souverain by Nestle-owned Beringer and the acquisition of Raymond Vineyards in the Napa Valley by Kirin Brewing of Japan.
The Brothers will retain the Mont La Salle property in Napa Valley on which they have a retreat. It is the first property the order acquired when it moved to the Napa Valley in 1932 from Martinez, Calif.
Rumors Had Been Denied
In the past six weeks, Maher has denied rumors that the company was a takeover target of at least three major companies. Tuesday, he said he had been under a non-disclosure agreement.
The other rumored suitors besides Heublein were Suntory and Hiram Walker-Allied Vintners Inc., a division of British drinks company Allied-Lyons PLC. A year ago, Hiram Walker acquired Clos du Bois of Sonoma County for an estimated $38 million.
Heublein is the No. 2 wine producer in the United States, having shipped 17.5 million cases last year, compared to Gallo's 68.5 million. Christian Brothers shipped nearly 1-million.
Heublein, which sells such spirits as Smirnoff vodka, Black Velvet Canadian whiskey and Cuervo tequila, does not have a brandy line. It has 12% of the U.S. spirits market and 13% of the table wine market.
The Christian Brothers is a worldwide congregation of Catholic teachers. The official name of the order, which was founded in 1680 by St. Jean Baptiste de La Salle in France, is Brothers of the Christian Order.
After coming to California in 1868, the Brothers began making wine for their own table and for sacramental use in 1882 in Martinez.
In 1932, during Prohibition, the Brothers moved to the Mont La Salle property in the Napa Valley and continued making wine for sacramental use as well as medicinal use.
Brother Timothy, christened Anthony Diener in 1910, became wine master in 1935 and headed a wine-making team for 50 years that generated well-regarded wines from classic grape varieties. In the 1950s, the Brothers acquired Greystone Cellars north of St. Helena and it became their home for wine making until a decade later, when a huge production facility was opened south of St. Helena.
Today, varietal wine is made at the Napa Valley facility, generic wine and brandy are made at Reedley in the San Joaquin Valley. Greystone is used for tours and tasting. It also houses Brother Timothy's world famous corkscrew collection.
"It's really a sad day for the Napa Valley," said a longtime Napa Valley wine executive.
Referring to the fact that Heublein also owns Inglenook and Beaulieu, he said, "Another of the great legacies of California's wine-making tradition is owned by a faceless corporate giant that has already destroyed the identities of two historical brands."
CHRISTIAN BROS. WINERY
Corporate name is Mont La Salle Vineyards
Founded in 1882 in Martinez, Calif. Moved to Napa Valley in 1932
Facilities: St. Helena (varietal wine making); Greystone (barrel aging, winery tours, museum); Reedley (wine making and brandy production)
Wine shipments: 900,000 cases
Brandy shipments: 1.2 million cases
Altar wine shipments: 80,000 cases
Revenue: $100 million
Winery capacity: 40 million gallons
(Figures are for 1988)