Constellation paid $60 million for Schrader

Wine giant Constellation Brands paid $60 million to snap up Napa Valley Cabernet specialist Schrader Cellars earlier this month, it has been revealed.

Schrader founder Fred Schrader (centre) inspects his Cabernet grapes

As reported by Wine Spectator, as part of the deal Constellation acquired Schrader’s existing contracts with distinguished vineyards, as well as its 2015 and 2016 vintages and part of the estate’s inventory.

The move on the part of Constellation, the world’s second-largest wine company, reflects its desire to move into the premium wine sphere and play at the top of it.

Schrader produces just 2,500 to 4,000 cases a year, depending on the vintage, and sells its routinely high scoring wines, such as its Old Sparky’ Cabernet from the To Kalon vineyard, for $200 a bottle.

The deal is interesting as Schrader has neither a winery nor vineyards – it buys all of its grapes from Andy Beckstoffer, who owns parcels some of Napa’s most historic sites like the To Kalon vineyard – yet it was deemed to be worth $60m, showing how valuable and inventory and a mailing list of loyal customers can be.

Schrader sells most of its wines via its mailing list of high net worth consumers, big name retailers and top restaurants – gold dust connections for Constellation.

According to Wine Spectator, it will be business as usual at Schrader following the deal as Constellation has no plans to up production or change its business model. Thomas Brown will continue as chief winemaker.

With Constellation already in charge of the majority of the To Kalon vineyard through its Robert Mondavi Winery, Schrader is set to benefit from the connection and could be offered a share of the To Kalon grape allocation allotted to Mondavi in order to make more wine, and thus, more money.

Mondavi’s chief winemaker Genevieve Janssens will decide which parcels of the To Kalon vineyard Cabernet will remain with Mondavi, and which might be merged with Schrader.

Schrader currently pays around $20,000 a tonne for grapes from the To Kalon vineyard. However, there is always the danger that as production rises, quality is compromised, which would damage the reputation of the Schrader brand.

Fred Schrader co-founded Colgin Cellars with his then wife Ann Colgin before launching Schrader in 1998.

The winery produces eight Cabernets – Schrader Cabernet Sauvignon, Schrader ‘CCS’, ‘Colesworthy’, ‘GIII’, ‘LPV’, ‘Old Sparky’, ‘RBS’ and ‘T6’.

“Constellation are committed to keeping this an elite brand and build on it. For me, it’s my legacy,” Schrader said at the time of the sale.