Gallo continues premium drive with Pahlmeyer purchase

Californian wine giant E&J Gallo has acquired Napa Valley’s acclaimed Pahlmeyer Winery, including its two brands Pahlmeyer and Jayson by Pahlmeyer, boosting its premium portfolio which includes Orin Swift, J Vineyards and Talbott.

Cleo and Jason Pahlmeyer

Gallo has said that the purchase of the Napa producer, which makes Bordeaux-style red blends as well as a Chardonnay, rosé, Pinot Noir, Sauvignon Blanc, Cabernet Sauvignon and Merlot, would be incorporated into its “luxury portfolio”.

Pahlmeyer’s flagship Proprietary Red blend was first released in 1986, a Bordeaux-inspired blend of Cabernet Sauvignon, Merlot, Cabernet Franc, Petit Verdot and Malbec. The 30th vintage of this wine was launched earlier this year.

The deal includes both the Pahlmeyer and Jayson by Pahlmeyer wine brands, which range in price from US$30 to $350. As part of the agreement, Gallo will also lease Atlas Peak vineyard Waters Ranch, and will operate the Jayson tasting room which opened in August 2018.

The winery’s other brand, Wayfarer, is not included in the deal, nor is the Wayfarer Vineyard, which will both continue to be run by Cleo Pahlmeyer, daughter of the winery’s founder Jayson Pahlmeyer.

Jason Pahlmeyer, a former attorney, partnered with the owner of a 55-acre estate in south east Napa to found his eponymous wine project. After working with the University of Bordeaux to assess soil samples, Pahlmeyer planted his first vines sourced from France in 1981.

Commenting on the deal, he said: “I am thrilled to transition ownership of Pahlmeyer Winery to the Gallo Family. The two companies share similar principles and, with Gallo’s long-standing commitment to quality, I am confident they will take Pahlmeyer to even greater heights in the future.”

Cleo Pahlmeyer added: “We are happy to have found a buyer who shares my family’s vision for Pahlmeyer. We are equally dedicated to making world class wines and I am thrilled to begin working with the Gallo team.”

Roger Nabedian, senior vice president and general manager of Gallo’s premium wine division, said: “Jayson Pahlmeyer’s passion for wine is evident in everything he’s done. We are thrilled to continue working with both Jayson and his daughter Cleo as we incorporate the esteemed Pahlmeyer brands into our luxury portfolio. Pahlmeyer compliments our portfolio nicely, allowing Gallo to continue competing in luxury wine and fueling strategic growth for the company.

Pahlmeyer also sources its fruit from the nearby 1,300 acre Stagecoach Vineyard, which Gallo purchased in 2017. 

The Stagecoach link was likewise shared with Orin Swift Cellars, founded by winemaker Dave Phinney in 1998 and which was bought by Gallo in June 2016. 

Other Gallo purchases have included Ranch Winery (2015), Talbott Vineyards in California’s Santa Lucia Highlands and sparkling wine specialist J Vineyards & Winery (both in 2014), as well as two vineyard sites in the Napa Valley – Cypress Ranch and part of the Palisades Vineyard near Calistoga.

Scott Kozel, Gallo’s vice president of winemaking, told the drinks business last year that there was still much to do on the premium side of the business. 

“Previously we have acquired [wineries or brands, or vineyards] and said it’s just part of Gallo,” he said at the time. “Over the years we have learned that we want the brand and the winery to have a personality of its own, and for each team to make their own decisions.”

“There’s certainly more work to be done. It’s a challenge to tell each story to consumers. They are great stories and they are all different. That’s what I’m excited about. Louis Martini has a very different perspective to J [Vineyard] or Talbott. Different approaches, vineyards and grape sources. There are so many great stories to tell, but we have made great progress, no question,” he added.

However while the wine giant has moved beyond high volume sub $10 wines, it is also in the midst of a $1.7 billion deal to purchase around 30 sub $11 a bottle wine brands from Constellation Brands. The deal, which was announced in April this year, was delayed after both companies received requests for additional information by US Federal Trade Commission due to the scale of the arrangement.