Diageo completes US wine exit with Chalone sale

Foley Family Wines has confirmed its purchase of the Chalone Estate Vineyard in California, completing Diageo’s exit from the wine category in the US.

Chalone Estate Vineyard is the sole winery in the Chalone American Viticultural Area (AVA)

Foley Family Wines is acquiring the Chalone Estate Vineyard and Gavilan brands as well as nearly 1,000 acres of land, including 240 acres vineyards in the Chalone appellation in Monterey County, California. Chalone Estate Vineyard is the sole winery in the Chalone American Viticultural Area (AVA) where its vineyards reach 1,800 feet and overlook the Salinas Valley.

“We have incredible wineries and vineyards stretching from Lincourt in Solvang, California up to Three Rivers in Walla Walla Washington”, said Bill Foley, owner Foley Family Wines. “Chalone Estate Vineyard, with its great wines and incredible history, gives our consumers and guests world class wine options along the entire coast.”

Diageo has been off-loading its wine brands since it agreed a £361 million sale of the majority of its wine division to Treasury Wine Estates, which included its Percy Fox brand in the UK and the Chateaux & Estate Wine business in the US, including brands such as Blossom Hill, Piat d’Or and Sterling Vineyards.

Chalone Estate Vineyard was left out of Diageo’s initial deal, with Treasury reportedly turning down the offer to buy it. This morning Foley Wine Estates confirmed its purchase of the estate for an undisclosed sum.

Diageo purchased the Californian winery for $260 million (£170m) in 2004, when current CEO Ivan Menezes led the company’s operations in North America. Its sales went from 30,000 cases to 200,000 cases just a matter of years, but in 2014 they stood at 166,000 cases, down 15%.

Its sale of Chalone means that Diageo no longer has any existing wine interests in the US, with Menezes open about the fact that “wine is no longer core” to Diageo’s strategy.

Foley Family Wines, Chalone’s new owners, was established by Bill Foley in 1996 with the acquisition Lincourt Vineyards in California’s Santa Ynez Valley. Since then, Foley Family Wines has grown to include an array of estates including Foley Estates (Santa Rita Hills, CA), Lincourt Vineyards (Solvang, CA), Merus (Napa Valley, CA), Foley Johnson (Napa Valley, CA), Kuleto (Napa Valley, CA) and Langtry Estate (Lake County, CA).