Report: Fetzer, Sonoma-Cutrer up for sale

There may be two more wine businesses up for sale as some parts of the industry struggle with weak sales and pricing.

Brown-Forman Corp., the maker of Jack Daniel's whiskey, is putting its wine business on the block, The Wall Street Journal reported online late Monday, citing unnamed sources. The company, based in Louisville, Ky., has reportedly hired Rothschild to run the auction following several years of sluggish sales from its wine business, which includes Fetzer Vineyards in Hopland and Sonoma-Cutrer outside Windsor.

The portfolio of eight wine brands could fetch a few hundred million dollars, according to the report. A Brown-Forman spokesman declined to comment.

The paper also said that Constellation Brands Inc. is expected to sell the bulk of its non-U.S. wine business to an unknown buyer as soon as this week, citing people familiar with the matter. That deal is reportedly valued between $300 and $400 million.

Constellation Brands, based in Victor, N.Y., did not return calls seeking comment.

Brown-Forman's decision to exit the wine business could bring new owners to two high-profile wineries on the North Coast.

The Fetzer family founded the winery that bears their name in 1968 and built the company into Mendocino County's biggest winery. Annual sales exceeded 2 million cases by 1992, when the Fetzers sold their company to Brown-Forman for a reported $82 million.

Fetzer Vineyards made waves in the wine industry in 2002 when it announced that by 2010 it would buy only organic grapes grown without chemicals or synthetic fertilizers. The company later dropped the idea.

In 2006, Brown-Forman closed and later sold Fetzer's Valley Oaks center, Mendocino County's premier facility for food and wine events, fund-raisers and weddings.

Brown-Forman also owns Sonoma-Cutrer, a Windsor-based winery that built its reputation making higher-end chardonnay sold largely in restaurants. Other wine brands in its portfolio include Bonterra, Bel Arbor, Jekyl, Five Rivers, Sanctuary and Little Black Dress.

Brown-Forman has focused more on its spirits business, which includes Jack Daniel's, Southern Comfort and Finlandia. Its wine business made up just less than 10 percent of its total $3.2 billion in revenue in its last fiscal year. The company already sold its Italian wine brands, Bolla and Fontana Candida, in late 2008.

While the buyers are unknown, analysts speculate that private equity firms will be eyeing the offerings from both companies.

Constellation is the largest wine company in the world, drawing more than 90 percent of its revenue from moderately priced wines such as Clos du Bois and Blackstone. The company also sells liquors such Svedka vodka and Black Velvet Canadian whiskey and some imported beers.

The company bought Australian vintner BRL Hardy Ltd. in 2003 and acquired Robert Mondavi Corp. the following year for $1.3 billion. But it is facing tough times abroad.

Constellation began restructuring its Australian operations in 2008 to trim its debts and place greater emphasis on more profitable wines. It sold three wineries and 23 vineyards, ditched more than 30 percent of its product lines and cut 350 jobs.

Constellation Brands has shifted its focus toward higher-priced wines and spirits, selling off some of its lower-price brands after a two-decade acquisition spree. It also has consolidated divisions, cutting its work force to 6,000 people from 8,200 in 2008.

Shares of Constellation Brands fell 23 cents to close at $21.92. Shares of Brown-Forman rose 60 cents to close at $70.61.

Press Democrat Staff Writer Robert Digitale and the Associated Press contributed to this report.