Constellation Pouring $20 Million Into Boosting California Wine Capacity

Constellation Brands has announced a major investment across its California wine business to boost capacity amid rising demand. The $20 million outlay will see the company expand its growing, crushing, fermenting, storing and bottling capacities across multiple wineries.

Included in the investment is the purchase or lease of 750 acres of additional land in the Lodi Delta area of San Joaquin County to plant Pinot Noir, Chardonnay and some Cabernet Sauvignon for brands like Mark West, Woodbridge by Robert Mondavi, Robert Mondavi Private Selection and Clos du Bois. Constellation is also investing in a tank expansion project at its Gonzales winery in Monterey County that will increase its Central Coast crushing capacity from 70,000 tons to 80,000 tons.

In addition, Constellation’s Turner Road Vintners winery in San Joaquin County is adding 7,000 tons of crushing capacity and 1.5 million gallons of storage capacity, and installing a new Tetra Pak bottling line for the Vendange brand. Meanwhile, Clos du Bois winery in Sonoma County is installing over 1 million gallons of stainless steel tanks, Mission Bell Winery in Madera County is adding a bag-in-box bottling line to increase capacity by 50 percent to meet growing demand for Black Box, and Woodbridge in San Joaquin County is converting one bottling line to expand production in the 187-ml.

Most of the upgrades are expected to be completed by the end of this year. The news comes as California vintners are scrambling for additional tank space to accommodate wine from 2012’s bumper crop and 2013’s expected strong vintage.

Philippe Cottin, Former CEO of Mouton-Rothschild, Dies At 81

A leading figure in Bordeaux, Philippe Cottin, former CEO of Château Mouton-Rothschild and patriarch of négociant Dubos Frères & Cie, passed away on September 10 in Bordeaux, Wine Spectator reports. He was 81.

Born in Lyon, Cottin came to Bordeaux in 1959 as a young man looking for his first job after a tour of duty in the Algerian War. Baron Philippe de Rothschild hired him as commercial director for Mouton Cadet, and he soon rose through the ranks to become co-CEO of Philippe de Rothschild SA, including first-growth Château Mouton-Rothschild. He remained at the helm until 1995.

South Africa’s Mulderbosch Vineyards Refocuses After Acquisition, New Investment

In 2011, South African winemaker Mulderbosch Vineyards was acquired by Terroir Capital, an investment group led by former Screaming Eagle co-owner Charles Banks. That deal has since brought a new round of investments in Mulderbosch, aimed at reaffirming its role as one of South Africa’s premier wineries.

Located in the Stellenbosch Hills area about 25 miles from Cape Town, Mulderbosch Vineyards has seen recent changes that include a renovation of its facilities, a move to bring the brand under Terroir Capital’s wing in the U.S. market and the hiring of a new winemaker, Adam Mason, formerly of Klein Constantia.

Mason recently told SND that Mulderbosch has been focusing its U.S. efforts around its core Chenin Blanc ($13-$14 a 750-ml.), Sauvignon Blanc ($17) and Rosé of Cabernet Sauvignon ($10), as well as Bordeaux blend Faithful Hound ($25). Driven by the rosé, Mulderbosch’s U.S. volume is expected to rise by more than 25% to above 40,000 cases this year, representing about a quarter of the winery’s production (the U.S. is Mulderbosch’s second-largest market after Sweden, with South Africa ranking third).

“The rosé has been very successful. It’s a great value, and a little different from other rosés out there in that it’s made from Cabernet,” says Mason, adding that Mulderbosch has benefited from less fragmented distribution and better pricing leverage in the U.S. since being relaunched in all 50 states by Terroir Capital.

Looking ahead, Mulderbosch plans to bolster its upscale presence with three single-vineyard Stellenbosch Chenin Blancs, each from a distinct terroir. Mason believes that those wines, slated to be released next summer or fall, will help show South Africa’s quality and diversity of styles within its signature varietal. Mulderbosch has yet to decide on price-positioning for the higher-end Chenin Blancs. “We have to be realistic, but I’d think they’ll be priced upwards of $25 a bottle,” Mason says.

Longer-term, Banks told SND last year that the goal is to grow Mulderbosch to 150,000 cases in the U.S. market within five years. If South African wine’s recent performance in the market is any indication, things seem to be headed in the right direction. Year-to-date through June, South Africa’s bottled wine exports to the U.S. were up 11% to 447,000 cases (bulk shipments fell by nearly a third to 626,000 cases).

New Zealand Wine Shipments To U.S. Jump Double-Digits

The U.S. market drove growth for New Zealand wine exports during the 12 months through June. New Zealand’s shipments to the U.S. were up 13% to NZ$283.7 million ($220m) during the period, while global Kiwi exports increased 3% to NZ$1.21 billion ($944m), according to the New Zealand Winegrowers trade group.

Impact “Hot Brands” like Constellation’s Kim Crawford and Nobilo and Oyster Bay’s flagship label have been among those driving the New Zealand category, whose bottled exports to the U.S. rose 9% to 2.8 million cases in calendar 2012, according to Impact Databank. That total represents a near-doubling of the segment since 2005. Kim Crawford leads the market with a 20% volume share, while Oyster Bay (14%), Nobilo (13%), Constellation’s Monkey Bay (6%), Pernod Ricard’s Brancott (6%) and Treasury Wine’s Matua Valley (5%) round out the top six.

Kim Crawford (+24% to 557,000 cases), Oyster Bay (+29% to 391,000 cases), Nobilo (+20% to 354,000 cases), Monkey Bay (+4% to 178,000 cases), Brancott (+4% to 158,000 cases) and Matua Valley (+28% to 137,000 cases) all posted strong growth in the U.S. last year. Moreover, all have average retail prices over $10 a bottle.

Behind the category leaders, several up-and-coming brands are also driving competition in the New Zealand segment—among them E.&J. Gallo’s Starborough (+50% to 135,000 cases in 2012), Total Beverage Solution’s Kono (+49% to 70,000 cases) and Deutsch Family Wine & Spirits’ The Crossings (+25% to 50,000 cases). Terlato Wines is making a new push in the segment as well, with its new Loveblock project with Kim and Erica Crawford.

Sauvignon Blanc accounts for around 94% of the New Zealand wine imported to the U.S., notes Kate McManus, vice president of marketing, imports and innovation at Constellation. Pinot Noir also holds a few percentage points’ share, with other varietals remaining minuscule.

Steve Zanotti, owner of the Wine Exchange retail store in Orange, California, says New Zealand Sauvignon Blanc and Pinot Noir are both “accepted as options” by his customers. “To me, being an option is high praise. That label means it’s no longer a novelty,” he says, adding that the category has been a big seller in his store for several years. Wine Exchange carries 30 to 50 New Zealand wines depending on the time of year, among them around 15 Sauvignon Blancs and 10-15 Pinot Noirs.

“We see so much potential for Sauvignon Blanc and Pinot Noir, we’re going to be very focused on those varietals going forward,” says Sandra LeDrew, managing director, Treasury Wine Estates Americas, who adds that Matua Valley was recently repacked in a bid to keep the brand fresh as new competitors proliferate in the fast-growing segment.

•France is set to produce a historically short wine harvest for the second year in a row, according to a forecast by FranceAgriMer public agricultural service. The country’s 2013 wine production is expected to tally just 43.5 million hectoliters, the group says, down from a 10-year average of 45.4 million. While a slight increase from last year’s 41.4 million hectoliter harvest, this year’s projected figure would still represent one of the smallest harvests in four decades. FranceAgriMer added that early tests also revealed low sugar content across the vintage, which will likely result in lower alcohol levels. Cool temperatures, heavy rains and a series of severe hail storms during the growing season have been blamed for the projected shortfall.

•Bill Foley’s New Zealand wine business, Foley Family Wines Ltd., earned a net profit of NZ$1.7 million ($1.3m) on sales of NZ$30.9 million ($24m) in its first fiscal year, which ended June 30. The figures are based on 12 months of Foley Family Wine NZ’s results and 10 months of New Zealand Wine Co.’s results. Those two businesses were merged to form Foley Family Wines Ltd. soon after Foley acquired NZWC last year. Foley Family Wines Ltd. sold around 650,000 cases of wine last year. Its Clifford Bay label is rising quickly in the U.S. market.

Spanish Wines See Profile Rise In U.S.

Long overlooked in the U.S. market behind more developed import segments like Italy and France, the Spanish wine category has been coming into its own of late. Spain’s bottled imports to the U.S. rose 8% to 4.3 million cases last year, according to Impact Databank, and the strong progress has continued so far in 2013.

“Sales of table wines from Spain are up 20% so far this year, and we see that growth continuing,” says Vince Friend, president of CIV USA, the U.S. arm of Colección International del Vino. “It’s a go-to area now for retailers, rather than an afterthought.”

The vast majority of Spanish wines in the U.S. market retail at less than $20 a bottle, and many are priced lower than $10. But marketers note that within the sub-$20 price band there is considerable upward movement. “The $14.99 price point is the new $9.99,” says Patrick Mata, co-owner of Olé Imports, adding that consumers are becoming more knowledgeable about the differences among key Spanish wine regions like Rioja and Ribera del Duero. “Another exciting thing is seeing some grapes that haven’t been well known—such as Albariño, Tempranillo and Garnacha—slowly becoming mainstream. Restaurants now have these wines by the glass. Five or 10 years ago that was very rare.”

Last year, Spain’s leading brands underperformed the overall sector. Marqués de Cáceres, the largest Spanish brand in the U.S. market, was up 0.6% to 158,000 cases. Marqués de Riscal gained 5.7% to 129,000 cases and Campo Viejo advanced 3.8% to 109,000 cases.

“Reserva offerings are still showing strong growth in the U.S. among core Spanish wine drinkers,” says Jennifer Drapisch, brand manager for Campo Viejo at Pernod Ricard USA. “Still a value in comparison to other countries of origin, Spanish wine has seen an influx of new brands with lighter, more fruit-forward styles at lower price points.” In recent days, Pernod introduced Campo Viejo’s first 100% Garnacha wine in the U.S. market. According to the winery, the launch marks one of the first Garnacha offerings to come from a premium-quality Rioja estate.

Luis Burgueño, export manager for Marqués de Cáceres, says Spain’s “great value” moniker can be a double-edged sword. Noting retailers’ enthusiasm about sub-$15 Spanish wines, he explains that the category has been able to make significant volume headway in recent years, but that the luxury end remains underdeveloped. “Consumers see Spanish wines as great values, but the downside is that perception means every wine above $20 is a hard sell,” Burgueño says.

Still, some retailers say upscale Spanish wines are beginning to thrive in their stores. “There’s a good flock of wines moving at $15-$20, but a number of them are moving at the $20-$30 price points because people see these offerings as alternatives to more expensive Bordeaux and Napa wines,” says Chris Zitzman, associate director of sales and marketing at New Jersey’s Englewood Wine Merchants.