Wente, Mexican Firm Team Up to Make Wine
In the first venture of its kind, California’s historic Wente Vineyards in the Livermore Valley is teaming with a well-known Mexican winery to produce an ultra-premium wine made from equal parts Alta and Baja California grapes.
The first Mexican-American wine, a Cabernet Sauvignon to be co-produced at partner Bodegas de Santo Tomas’ new $12-million winery in Ensenada, will be sold in Mexico as well as exported to the U.S. and other markets under the Duetto label.
The deal is a sign of growing interest in a largely untapped but potentially vast market. Mexico, with a population of 90 million, has not been a wine-drinking nation. But some California companies are trying to change that.
America’s oldest family-owned winery, Wente was founded in 1883 by C.H. Wente and is run by his great-grandchildren, who manage nearly 3,000 acres of vineyards in California’s Central Coast.
The company has long been aggressive in selling its wines in overseas markets, and it exports about half its annual production, now running at 400,000 cases. Wente’s biggest markets have included Switzerland, Canada, Russia, Lithuania and Ukraine.
Founded in 1888, Santo Tomas is Mexico’s second-oldest winery and was the first to produce Mexican wine commercially. It sprang up in Baja’s Valley of Santo Tomas on lands where missionary fathers, who had accompanied Spanish conquistadors to the New World, cultivated grapes for sacramental wines beginning in the late 1700s.
Described recently in a trade publication as “not exactly . . . a fine-wine-consuming nation,” Mexico is recovering from its deep recession and is reducing trade barriers under the North American Free Trade Agreement.
In anticipation of NAFTA’s passage, Wente two years ago became the first U.S. winery to establish a trade office in Mexico City. Wente is now the biggest importer of California table wines in Mexico. Imports of U.S. wine in Mexico plunged last year, primarily because of the steep devaluation of the peso. But they bounced back significantly in the first quarter of 1996.
“Wente is well-positioned to capitalize on Mexico’s appeal as a tourist destination and the growing popularity of wine, especially among Mexico’s younger adults,” John Schwartz, Wente’s vice president of international operations, said in a statement.
Like many other California wineries, including Robert Mondavi Winery in the Napa Valley and Fetzer Vineyards in Mendocino County, Wente is becoming increasingly global. Wente also produces wines under joint ventures in Israel, Chile and Tbilisi, Georgia.
NAFTA, the Wentes said, helped clear away many of the investment restrictions that would have made this sort of venture difficult to set up and less economically fruitful. “In many ways, Duetto is the child of NAFTA,” said Wente Chief Executive Eric Wente.
The Wentes’ embracing of the treaty is interesting given U.S. vintners’ initial sharp criticism that Mexico was phasing out its tariffs on U.S. wines too slowly.
Mexico’s wine industry has suffered from a reputation for so-so wines and competition from Spanish, Chilean and German imports. Imports have driven all but six of Mexico’s nearly 30 wineries out of business since the mid-1980s.
Although most of the sunny Baja peninsula is desert, chilly ocean currents result in cool summer nights--ideal for fine grapes. The region’s climate ranks with that of some premium wine districts in Northern California and France.
Other U.S. wineries are showing interest in the market. Chalone Wine Group in Napa has a distribution agreement with Mexican winery Monte Xanic (mahn-tay CHA-neek). That winery’s family owners also hold 15% of Chalone. In the U.S., Monte Xanic wines distributed by Chalone sell for $10 to $25 a bottle.
The 1996 vintage of Duetto Cabernet Sauvignon, scheduled for release in ‘98, is expected to retail in Mexico for $20 and in the U.S. for about $25. Production will be 5,000 cases. No other varieties are planned.
