Aust’s winery venture in U.S.

Press, 11 July 1989, Page 20

Aust’s winery venture in U.S.

From

JOHN HUTCHISON

in San Francisco

AUSTRALIA is reported to be joining the lengthening list of foreign countries from which investors continue to buy into -the Californian wine industry. Penfolds is taking a half interest, estimated to be as much as SUS2S million, in a 109-year-old winery in the heart of the coastal winegrowing county of Sonoma, north of San Francsico. The winery is Geyser Peak, which draws on its own 425 hectares of prime-variety grapes and has contracts with other growers, to produce some 4.5 million litres of wine annually. Penfolds did not buy the vineyards. Geyser Peak was restored and expanded from its disused state in 1972 by a large American brewing company. It was a period when several large nonwinemaking corporations plunged ill-advisedly into the Californian industry with unsatisfactory results. A wealthy Sonoma County family bought the winery in 1982, invested millions in its development, and has been seeking additional capital to expand further. Foreign ’ investors have been moving in with mounting strength for more than a decade. Leading the trend have been the French, especially the great champagne houses including Piper Heidsieck, Moet-Hennes-sey, Deutz, Taittinger and Roederer. The Spanish, Swiss, Japanese, Germans, Italians and British have invested heavily in California’s wine properties, v Buyers from overseas, some from countries where wine sales have slumped and where land prices are very high, look upon the United States as a lucrative and growing market for up-scale vintages, and are apparently undismayed by land values which have climbed in some of the choicest of California’s vinelands to more than SUS9O,OOO a hectare. Building and eqipping even a medium-sized winery, capable of producing 100,000 to 200,000 cases per year from its own vineyards, can require an outlay in the neighbourhood of SUS2S million. Purchase price for the halfinterest in Geyser Peak was not publicised, but is thought to have been more than SUS2O million. A Penfolds executive suggested that his company plans further investment in the Californian industry. / •> “Penfolds wouldn’t be making this move into the U.S. for justthis winery alone,” said ’ Mr James L. Williams, marketing director. "As opportunities arise. we will be taking advantage of! them.” ■ ’; ; The infusion of Australian capital is expected to result in a substantial increase in Geyser. Peak’s production. '