Fetzer Reborn: Concha y Toro’s Big Plans for California

Most consumers didn’t realize it from the almost surreptitious announcement, but one of California’s main wine producers got a huge boost a few weeks ago when Fetzer, the iconic Mendocino County wine company, was sold to a Chilean few Americans know much about.

Concha y Toro, a large, 28 million-case winery in Chile with operations in Argentina as well, paid an estimated $240 million to acquire from Brown Forman of Kentucky the 3.2 million-case Fetzer and its affiliated brands.

Dennis Martin, Fetzer’s director of winemaking (image from the Fetzer web site)

And immediate plans, enthusiastically discussed in meeting a week ago at company headquarters in Chile, call for an expansion of Fetzer’s lines of wines, improvements in quality, and hiring of new employees to handle the expected larger volume of sales.

All this came out of an interview with Dennis Martin, wine maker for the last 26 years at Fetzer and one of the unknown stars of the industry, who flew to Chile for high-level talks with CyT executives.

Quality and marketing

“Their first priority is to renovate the Fetzer brand,” said Martin, who said that the first changes could be seen “within the next three months” in some changes in label design — which may be instituted in the midst of current-release wines.

It could mean, he said, some of Fetzer’s current releases of nine red wines and ten reds would be sold with their existing labels in some markets and with the new designs in others.

Martin got even more enthused when he said he was encouraged by CyT executives’ agreement that “it’s time to make some of the changes I’d like to see in the wine-making area,” which means upgraded equipment to improve wine quality, acquisition of better-quality grapes, and a stronger public image.

That last point could mean stronger marketing efforts to include a resumption of the food-with-wine concepts that were such a strong part of Fetzer image for years, more public access, and perhaps a tasting room (Fetzer’s Hopland tasting facility was severely truncated years ago when it sold its organic garden).

Concha y Toro’s historic home in Pirqué, Chile

Publicly traded Concha y Toro has a number of wine brands that have been extremely successful worldwide (the company distributes in 135 international markets). This is its first venture in California.

If Fetzer grows as indicated by Martin, the combined CyT portfolio could be in the 40 million-case range in just a few years. By contrast, E&J Gallo produces some 70 million cases of wine, just ahead of Constellation Brands and the Wine Group.

Concha y Toro is imported into the United States by large New York-based Banfi, which itself expanded its operations in the United States recently with the purchase of Pacific Rim, a Riesling-only producer in Washington.

Martin was asked if Concha y Toro also was interested in Riesling.

“That’s what I got from our meetings [in Chile],” he said. “We do have Jekel, and we make about 40,000 cases of [Jekel] Riesling and they really aim to do greater things with that brand, and beyond just Riesling.”

The Jekel brand, bought years ago by former owner Brown Forman, soon became a mostly Riesling brand, though Martin also makes some red wines for the Jekel brand.

A significant part of the Fetzer portfolio is the Bonterra line of wines from organic grapes. Martin envisions growth in this brand as well, which he assumes means that the new owners will acquire a lot more organic grapes than today.

The company owns about 900 acres of vineyard land in Mendocino County, and Martin assumes that he will be asked to find more sources, some of which could be in Monterey and Lake counties.

New directions

I have known Denny Martin for decades, and have rarely seen him more excited. He said the acquisition offers Fetzer a new lease on life, in particular since over the last several years, Brown-Forman seemed unsure how to proceed with its wine portfolio.

The former owner actually shut down numerous aspects of its wine division over the last few years, closing Jekel the winery in Monterey County, where it had been founded, and, moving production to Hopland, 75 miles north of San Francisco.

It also closed the fabulous organic fruit, herb, and vegetable garden that had been the iconic image of Fetzer for decades, then sold the portion of the property that housed it. And the company closed a small but quaint bed-and-breakfast facility adjacent to the tasting room. Also a tasting room on Highway 101 in Hopland was closed.

Martin was thrilled to report that not only volume at Fetzer, but quality too would be addressed by Concha y Toro. “They’re looking to make a statement,” he said.

Moreover, to reinforce the company’s commitment to this project, at least two high-level executives with the company who now are based at company headquarters some 12 miles outside of Santiago, plan to relocate to Santa Rosa, said Martin.

Santa Rosa is a city of about 160,000 that’s about half way between Fetzer’s operations in Mendocino and the San Francisco Airport.

Concha y Toro’s greatest impact on Chilean wines has been its Don Melchor Cabernet Sauvignon, which sells for about $65 a bottle and is widely respected in Europe and elsewhere. It also makes the highly successful Walnut Crest line of value wines.

Dan Berger has been writing about wine since 1976. He is the award-winning author of several books and his wine columns have been seen in numerous newspapers, including the Los Angeles Times, the San Diego Union, and the Santa Rosa Press Democrat.