E & J Gallo buying J Vineyards & Winery in Healdsburg

E. & J. Gallo Winery announced Tuesday its purchase of Healdsburg-based J Vineyards & Winery, which was founded almost 30 years ago by Judy Jordan and made its name through its high-end sparkling wine.

The sale is another example of increasing consolidation within the U.S. wine industry as Gallo, the nation’s biggest wine producer, picked up another specialty brand, this time in the premium market where bottles are priced at $25 and above.

It also closes a chapter in the amazing winemaking career of Jordan, who at the age of 25 broke away from her father, Jordan Winery founder Tom Jordan. She launched her own sparkling wine house that picked up accolades, while also navigating the difficult financial pressures of the economic downturn to acquire and hold onto 10 vineyards.

“She made some great decisions, she brought on some great people and asked the right questions,” said Rob McMillan, founder of Silicon Valley Bank’s wine division. “She’s a real pro.”

The acquisition includes the Healdsburg winery and more than 300 acres spread over nine vineyards within the Sonoma Coast and Russian River Valley American Viticultural Areas.

Terms of the deal were not disclosed, though industry analysts noted the land cost could fetch between $25 million to $30 million at current market rates, and speculation in Wine Country put the overall deal at as much as $90 million. The sale is scheduled to close Friday.

“I am proud to announce today that I have found the perfect fit to take this beautiful company to even greater heights,” Jordan said in a statement. “E. & J. Gallo is also privately owned and shares similar core values as both companies are dedicated to a balance of quality, community and financial sustainability. I look forward to my new chapter of building a mentorship platform as I honor and salute the outstanding new stewards of J Vineyards & Winery.”

Jordan, a 53-year-old mother of two, began her business out of an old prune-processing barn, which in 1995 flooded under 5 feet of water.

Yet the winery made a name for itself under its sparkling brand that hit shelves in 1991, focusing on the premium market. In 1997, she bought the former Piper Sonoma facility just south of Healdsburg, where the J company offices are still located.

“I do believe things go in phases,” she said in a 2011 interview with The Press Democrat. “That’s the great opportunity in life, to re-invent and re-engineer yourself to be relevant for new times. It’s very important to stay relevant and avant-garde.”

Jordan made some key decisions along the way besides her land acquisitions, even conceding she was once “mortgaged up the wazooo.”

She was one of the first in Sonoma County to have J’s tasting room devote a portion to food-and-wine pairing, as its Bubble Room, which now offers tastings at $75 a person, became increasingly popular.

She also branched out beyond sparkling wine and focused on pinot noir, chardonnay and pinot gris. Its pinot gris, a genetic cousin to pinot noir, was well received in the wine world and helped J stand out again in the competitive wine marketplace. She also made some key personnel decisions during her tenure, bringing in public relations veteran George Rose from Kendall-Jackson to handle communications and then recruiting winemaker Melissa Stackhouse from La Crema. Also, Kathryn Lindstrom left Opus One winery to become J’s chief operating officer.

While Judy made a name for herself at J, her brother, John, took over Jordan Winery and became chief executive officer in 2005. The two wineries are operated independently, even though their wine bottles both featured a capital J in their logo, sometimes sparking confusion.

“I am proud of Judy and the company she has built over the last three decades,” John Jordan said. He noted that he “has no plans to join her in early retirement.”

Besides being the largest U.S. wine producer, Modesto-based Gallo is one of the largest vineyard owners in Sonoma County with close to 3,500 acres of land.

Independent analysts said the sale will help Gallo cover an even greater swath of the wine world with its portfolio of nine wineries in California and Washington. For example, it gives Gallo more of play in the premium sparkling market, complementing its more affordable André label, while also giving it a market share in pinot gris, a grape that has been especially strong in the Oregon market.

“I think it’s a great deal for Gallo,” said Robert Nicholson, principal at International Wine Associates in Healdsburg. “J did a very good job in positioning themselves in the market with their brands.”

Analysts are looking to see how much Gallo will boost production for J winery given its vast resources as it domestically produces an estimated 80 million cases annually. In contrast, J winery produces more than 80,000 cases annually, according to a North Bay Business Journal ranking. Yet, it has an annual production capacity cap of 500,000 cases under Sonoma County regulations.

Roger Nabedian, senior vice president of Gallo’s premium wine division said in a statement that “J Vineyards & Winery is well known for their award-winning sparkling wines, and we look forward to carrying on the winery’s reputation of making elegant, luxurious wines.”

Gallo is interviewing J employees who have expressed an interest in working for the company, said spokeswoman Natalie Hoch Henderson. J Vineyards’ website on Tuesday said that the winery has about 75 employees between production and administration.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.