Concha y Toro buys Fetzer

Viña Concha y Toro has announced the purchase of Fetzer Vineyards from Brown-Forman for US$238 million.

The deal, which is expected to close in April, represents the Chilean wine company’s first foray outside of South America.

The acquisition of the Californian company, which will be the largest deal in Concha y Toro’s history, includes a portfolio of brands with attractive positioning in the American wine market: Fetzer, Bonterra, Five Rivers, Jekel, Sanctuary and Little Black Dress.

For fiscal 2010, the acquired brands represented volumes of 3.1 million cases and net sales of US$156 million; Concha y Toro will also acquire assets including vineyards, cellars and a bottling plant.

Fetzer is one of the top 10 wine brands by volume in the US market with sales of 2.2m cases annually.

Concha y Toro has made plenty of noise in recent years in extolling its environmental credentials, and to this end the Fetzer deal looks an extremely good fit for the Chilean company.

Fetzer is a pioneer in the development of sustainable practices and is widely recognised as an environmental leader in the Californian wine industry, a commitment that has been a hallmark of the brand for the last 20 years.

Bonterra, meanwhile, is regarded as the undisputed leader in the premium organic sector and pioneered the development of vineyards in this category since 1987, with sales of 300,000 cases annually.

They will slot in nicely alongside Concha y Toro’s other eco-friendly assets, including Cono Sur which became the first winery in the world to obtain carbon neutral delivery status for balancing the CO2 emissions of the shipping of its products in 2007

Following the 2010 purchase of “El Encanto” – 100 hectares in Jahuel, San Felipe, in Aconcagua Valley – Cono Sur became the first winery in America and third in the world to be certified ISO 14064-1 through the CEMARS (certified emissions measurement and reduction scheme) certification, positioning itself as a leader in environmental care.

Elsewhere, its Emiliana Organic Vineyards brand became the first winery in Chile to incorporate organic and biodynamic agriculture in its vineyards.

Eduardo Guilisasti, chief executive officer of Viña Concha y Toro, said: "The Fetzer acquisition is the largest transaction of this type in the company’s history. It represents a continuation of our business strategy, which has been carried out successfully over time and enabled us to enjoy steady growth.

"We believe that this transaction opens additional growth opportunities globally, as well as in the American market, with its main brands Fetzer and Bonterra. We further intend to incorporate the culture of excellence and commitment of the great team at Fetzer who have created exceptionally strong consumer brands."

In bidding farewell to Fetzer, Paul Varga, chief executive officer of Brown-Forman, said: "Fetzer and Bonterra have been wonderful brands for Brown-Forman over the years, but as our company has grown globally and our portfolio strategy has evolved, we believe refocusing our resources on what we deem to be our best opportunities for strong growth will provide superior shareholder returns over the long term.

"We are particularly pleased that such a prestigious wine company as Viña Concha y Toro will continue the legacy of success these brands have enjoyed over the last several decades."

Earlier this week Vina Concha y Toro posted a net profit of US$88.5m in 2010, representing a 7.4% drop on 2009.

Alan Lodge, 02.03.2011