We don't often think of agricultural land as glamorous real estate. But when the land produces great wine, its status and value rocket. The great vineyards of Bordeaux and Burgundy are considered French national treasures. California's Napa Valley is moving rapidly in that direction.
But how all-American is Napa Valley? Asked who owns that precious Napa Valley vineyard land, most of us would think of well-known brands like Beaulieu, Beringer and Mondavi. Pushed to guess at a dark horse, we might think of Gallo.
In fact, the largest Napa Valley vineyard owners are foreign corporations.
A current Wine Business Monthly article reveals that nearly 25% of Napa County's approximately 40,000 acres of vineyards are owned or controlled by English, Australian, French, Japanese and Swiss companies. The two biggest names are Diageo--a U.K.-based giant that also owns Burger King--and the Australian beer brand Foster's.
Between them, Diageo (Beaulieu Vineyard, Sterling and Mumm Napa Valley) and Foster's (Beringer, St. Clement and Stags' Leap) by themselves own or control more than 10% of Napa vineyards.
This shouldn't be a shock. The situation is similar in Bordeaux, where many vineyards and leading chateaux are owned by banks, insurance companies and syndicates of foreign investors. Still, quelle surprise to find that what is widely seen as a bastion of American entrepreneurial success is largely fueled by offshore capital.
Think law of the jungle, small critters being gobbled up by larger ones. It's the oldest story in nature--and in business, too.
The international corporate presence has consolidated a lot of Napa Valley history in its patchwork acquisitions.
Diageo's holdings can be traced back to 1900, when an enterprising French immigrant named Georges de Latour and his wife, Fernande, purchased 25 acres of orchards, hayfields and vineyard in Rutherford. That ranch became the core of the Beaulieu Vineyard portfolio.
Andy Beckstoffer, another grower near the top of the list, with about 860 acres of vines, also has BV roots. Beckstoffer entered the Napa Valley community when spirits giant Heublein purchased BV in 1968. As a member of the Heublein acquisition team, Beckstoffer was charged with setting up a separate vineyard management company, which he ended up owning himself. Beckstoffer's holdings embrace some of the best sites in the valley, including several of the original De Latour vineyards.
Interestingly, the vineyard that began the tale is not part of the Diageo empire. BV-1, the original 1900 Georges de Latour home ranch, remains in the hands of Georges and Fernande's direct descendents.
The other big chunks of Diageo's Napa Valley holdings don't quite have that kind of history. But they do go back some 40 years, to the very beginning of Napa's modern-day wine culture.
Sterling Vineyards was founded in 1967 by English businessman Peter Newton and his wife, Su Wa. He was a high-powered executive and she had a PhD in economics, but both were avidly interested in architecture and landscape design.
They were also passionate about wine. That passion and their wide-ranging talents converged in one of the first large wineries built in the valley since Prohibition. Sterling remains one of the most impressive wineries in the world, and a Napa Valley landmark. A vision in white modeled after a Greek monastery, it crowns a high knoll at the center of the upper valley just south of Calistoga. Visitors arrive at the tasting room via aerial ski-lift gondola.
The Newtons sold their winery to Coca-Cola in the mid-'70s to start up Newton Winery in St. Helena. Newton still produces distinctive, and expensive, Cabernet, Merlot and Chardonnay in small amounts.
The Sterling brand eventually found a home with Seagram's fine-wine division, called Chateau & Estates. When C&E; was spun off last year, Diageo snapped it up, acquiring not only the landmark winery but also the famous Winery Lake and other notable vineyards.
Diageo's acquisition of Chateau & Estates also netted Mumm Napa Valley, a large vineyard-based sparkling-wine house with choice holdings in Carneros. It was founded in the 1980s by Mumm, which was then acquired by Seagram's.
The Foster's holdings have a similar pedigree. The Beringer brothers founded their estate just north of St. Helena in the late 19th century. Their descendants resisted the rising wave of corporate buyouts during the 1960s, but they finally sold out to Nestle in 1970. Eventually the winery and its vineyards were purchased by a Nestle spinoff called Wineworld, which morphed through several other syndicates until its sale to Australian wine giant Mildara Blass formed Beringer-Blass, which was then absorbed by Foster's.
Perhaps the most interesting revelation in the Wine Business Monthly story is that there's also a homegrown outfit at the top of the list--though only the most passionate wine lovers have probably heard of it. Laird Family Estate balances the corporate presence with extensive vineyards and high-profile custom crushing and soon will release its own vineyard-designated wines. Laird is a true family operation, owned by Gail and Ken Laird with their daughter Rebecca as general manager and son Justin as vineyard manager.
The Lairds arrived in the valley in 1970. They entered the wine business on a small scale, replanting a Calistoga prune orchard to grapes, which they sold to Robert Mondavi. Thirty years later, their grape empire includes more than 40 vineyards in choice nooks of the valley's wine-expressive terrain, offering grapes deemed worthy of vineyard-designated wines such as Nickel & Nickel "Suscol Ranch" Cabernet Sauvignon.
The Laird winery is a custom-crushing home to a score of small producers without wineries of their own. Some of the high-profile clients include Colgin, Lewis, Cornerstone and Aubert; the wines are produced under the direction of in-house winemaker Christina Benz (formerly of Murphy-Goode in Sonoma County).
The Lairds also walk the walk themselves, taking a tiny amount of their own fruit to produce Laird Estate Chardonnay, Cabernet Sauvignon and Merlot, including at least one single-vineyard wine for each variety. Made by Paul Hobbs (who also makes wine under his own label at the Laird facility), the wines amount to a mere 4,000 cases.
The Wine Business Monthly article listed the Lairds as the largest single vineyard owner in the valley. In fact, about 200 of Laird's acres are in Sonoma County. Even with that, its approximately 1,800 Napa County acres are comparable to the big corporate players' holdings.
One thing the Wine Business Monthly report didn't point out is that small growers still thrive in Napa Valley. According to Napa County Tax Assessor John Tuteur, more than half of the valley's 1,775 vineyard parcels are still owned by private individuals. "If I had to make a rough guess," says Tuteur, "I'd say there are about a thousand private individuals growing grapes in the valley."
As in Bordeaux, those small, independent growers generate a disproportionate amount of the valley's glamour. Historically they've sold their fruit to big wineries. Increasingly, they produce their own wine. And some of those wines command cult-like devotion and incredible prices.
New releases from such labels as Colgin, Diamond Creek and Screaming Eagle cost around $200 per bottle. At this year's Napa Valley Wine Auction, a 3-liter bottle of Colgin Cabernet Sauvignon from the tiny Herb Lamb Vineyard fetched $150,000; three bottles of Screaming Eagle Cabernet, from a small vineyard in Oakville, sold for $80,000 each.
Those numbers certainly reflect the charitable spirit of the Napa auction, which benefits several hospitals and community services. Even so, wines from the corporate sector just don't generate that kind of hype, or cash.
Which, of course, goes to the heart of fine wine: Contrary to the law of the jungle, bigger and better aren't necessarily synonymous.