E&J Gallo buys Talbott Vineyards in Monterey County

E&J Gallo is continuing its expansion into the premium wine category, especially the strong pinot noir market, announcing a deal Wednesday to buy a Monterey County winery and 525 acres of highly regarded vineyards.

Gallo bought the Talbott Vineyards operations, including the Salinas winery, brand and its Sleepy Hollow vineyards in the Santa Lucia Highlands, which feature chardonnay and pinot noir grapes. The Modesto wine giant also will lease the 17-acre Diamond T Vineyard in Carmel Valley and continue to operate Talbott’s tasting room there.

The sale is scheduled to close Sept. 4. Financial terms were not disclosed. International Wine Associates of Healdsburg represented the seller.

“As this region’s unique characteristics become more widely known, we see a great future for Talbott Vineyards as part of our fine wine portfolio. We look forward to continuing to deliver credible and award-winning wines,” Roger Nabedian, senior vice president and general manager of Gallo’s premium wine division, said in a statement.

Founded in 1982 by Robb Talbott, whose father Robert Talbott launched a high-end clothing company that bears his name, Talbott now produces 100,000 cases annually.

The purchase is the latest initiative by the world’s largest wine company to expand its presence in the premium market. In Sonoma County, it acquired J Vineyards and Winery from Judy Jordan in March and the historic Asti winery - one of the largest production facilities in the county - along with the Souverain brand from Treasury Wine Estates in July.

It follows on the heels of Constellation Brands’ $315 million deal in July to purchase the Napa Valley-based Meiomi wine brand from Joe Wagner, which went from 60,000 cases in 2010 to almost 600,000 cases in 2014, riding a wave of popularity with pinot noir that sees no end in sight.

Wineries are targeting the higher end of the market as the segment continues to grow. Wine shipments at the $10 to $14 a bottle range increased 12 percent in 2014, while those at the super-premium range of $14 to $20 a bottle increased by 10 percent, according to Gomberg, Fredrikson & Associates.

The moves by Gallo and Constellation will give Santa Rosa-based Jackson Family Wines increased competition in the premium category.

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