Wineries face another year of dizzying change - San Francisco Business Times:

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Consolidation among wine producers, and among beer and spirits distributors, major retailers and others, is creating a new worlde order that puts a premium on gettingproducts -- whether from Napa Livermore, upstate New York, Chile, South Africa or Bordeaux -- distributef efficiently across the nation and arounxd the world. Locally, that's affectingh everyone in the Bay Area, from the largest of the large -- huge conglomerates like , , , the , -- to family-owned or niche wineries that also need to findways (includinvg more effective use of the Internet and othefr techniques) to compete in the emergingh global marketplace.
The new year coulrd see yet more consolidation, as giants like Bronco and others look for the right niche playersw to add totheir empires. Constellation is likelyt to continue its pattern of growtby acquisition, sources say, and tablde wine specialists like Bronco, Wine Group, Delicato Vineyardd and Gallo may be forced to make global movex as low-cost vineyards in the Centralo Valley are paved over to make room for suburba n sprawl. Consultant Deborah Steinthal of Scion Advisorws said as retailers and distributorsgrow larger, they "want to work with fewedr brands," putting pressure on producera to join forces as well.
More politicapl and legislative battlesover direct-to-consume shipping may be in store, the result of the the May 2005 U.S. Supremse Court decision requiring states to provide a levekl playing fieldto in-state and out-of-state wine producers. Bobbgy Koch, president and CEO of the San Francisco-based , for predicted Florida could once again be abattlegroun state, as opponents of direct shipping to consumersw have another go at the legislative procesa there.
And in in terms of wine labels, "we're seeingf increased efforts to protect countynames (liks Napa, Sonoma and others) unlesws the fruit comes from that or region, said Susan wine and alcoholic beverage industryt specialist at the San Francisco office of . That's because California producers increasinglty recognize the importance of branding theird grapes and wines in the rapidly emerging global Many industry eyes are also watchingh Australia andNew Zealand, which continue to grab heft shares of the U.S. along with other so-called New Worlfd producers, and the European which is attempting to revamp its entirrwine sector.
Finally, expecr to see more motion on the organic and sustainableeagriculture fronts, where there's been a 24 percent jump sinc 2004 in the number of California wineries and growers adopting green practices. Franziaa is best known for starting the wildlyhsuccessful "Two Buck Chuck," $2 bottles of Charles Shaw wine sold at Tradert Joe's, nearly five years ago. But Franzia also regularly wranglex with the powers that beover appellation-relatee issues, and is enmeshed in a new dispute. Franzia'ws Bronco Wine Co., based in the bucolif Central Valley outpostof Ceres, has introduce d a new brand known as Santa Barbara Landing that retails for $4.
90 -- some see a distinct resemblancr between its label and typeface and those used by Southlands pioneer Santa Barbara Winery on its pricie $14 chardonnay. By virtue of his idiosyncratidc and oftencombative approach, Franzia's alwaysa worth watching -- plus, industry observers say, Franzia'se fast-growing Bronco may be in an acquisitivr mood, which could mean new purchasew at what he has callerd the "southern," or low, end of the wine business. Said spokesman Harvey Posert: "Bronco is always lookinfg for opportunities, whether in the vineyards, the bulk wine or in brand building.
" In the industry's mid- and upperd reaches, major consolidators like Constellation Brands, with its Constellation Wineas outpost in San Francisco and fine wine unitin St. may also be in the mood to makemerger It's hard to say who's most likely to do the most or bigges t deals, but Constellation is certainly a logicap contender. Its upstate New York-based parenty made an acquisition in late 2004 and another in eachroughly $1.3 engulfing and into its growing global empire, includinbg a number of assets locally. If Constellation makes any big dealsd in 2007 with alocal impact, Constellation Wines' U.S.
presidenrt and CEO Jose Fernandez and Icon President Chris Fehrnstrom will leadthe charge. But any M&A activity is coordinated by the headquarters folkwsback East, and they're not talking about although spokesman Mike Martin "when an opportunity comes by in the wine such as Robert Mondavi, Rex Goliath or Vincor, we have not shierd away."