Fetzer looks to showcase new vintages after 50 years as Mendocino County’s wine pioneer

HOPLAND - Fetzer Vineyards, now entering its 50th year in business, pioneered sustainable and organic viticulture practices that have become increasingly commonplace throughout today's industry.

In the process, it put Mendocino County on the map as a spot to grow premium wine grapes.

Its golden anniversary offers an opportunity for the Chilean-owned wine company to reconnect with the past - and to use its history as a centerpiece of its marketing strategy while it ramps up new brands tailored to the latest customer trends, from rosé to bourbon barrel-aged red blends.

“That is the backbone for our company on how we do things,” Giancarlo Bianchetti, chief executive officer for Fetzer, said of its sustainability efforts. “We were doing organic before it was cool.”

The effort comes as Fetzer - the 10th-largest wine company in the United States, producing 2.75 million cases last year, according to Wine Business Monthly - has largely refrained from the dealmaking that has driven consolidation in the industry. For example, Santa Rosa-based Jackson Family Wines has gone on a buying spree for brands and land in Oregon while E&J Gallo Winery of Modesto has dug deep into its pockets to buy brands and the 600-acre Stagecoach Vineyard in Napa Valley.

Fetzer will start looking for more acquisitions as well, Bianchetti said, both for brands and land, focusing within California. The company has 960 planted acres of vineyards, with 700 that are certified as organic - which eschews artificial chemical fertilizers, pesticides, fungicides and herbicides. The remaining 260 are biodynamic, where grapes are grown without chemicals in an attempt to have the vineyard's ecosystem be balanced and self-sustaining.

“Now is the moment to be more open,” he said. “You need to get bigger and better.”

The company was founded by Barney and Kathleen Fetzer, who grew their own grapes in Mendocino County's Redwood Valley and began making wine with their 11 children. It was a bold step at a time when the lumber industry was still booming in Mendocino County, long before there was a “Wine Country” or a multibillion-dollar industry built around the region's wine, food and tourism.

Brown-Forman Corp., the Kentucky-based owners of Jack Daniels whiskey and other spirits, bought the company from the Fetzer family in 1992 for a reported $82 million. But it found that integration did not go as well as planned, especially as it realized that winemaking couldn't deliver the returns that its Wall Street investors expected.

“We're still our own separate company (now). I don't think it was that as much with Brown-Forman,” said Bob Blue, vice president of winemaking and winery operations, who joined Fetzer in 1988.

To add insult to injury, Brown-Forman in 2006 closed the Fetzer Valley Oaks Food & Wine Center, a world-class culinary center that allowed customers to learn more about its wines as well as Fetzer's sustainable farming practices. “They never wanted to spend the money,” said one former employee of Brown-Forman, which still owns Sonoma-Cutrer Vineyards in Windsor. Fetzer still does not have a tasting room - a rarity in the local industry.

Chilean connection

Chilean vintner Vina Concha y Toro, which also was started by a winemaking family that dates back to 1883, bought Fetzer in 2011 for $238 million. The acquisition provided leverage for Vina Concha y Toro's imports into the U.S. market, the largest wine marketplace in the world.

The company, Chile's largest producer and exporter of wine, shared Fetzer's commitment to environmentally friendly farming practices. The Chileans decided to put the focus back on winemaking while also bringing back some well-known Fetzer labels, such as its Sundial chardonnay, that were dropped by Brown-Forman.

“We wanted to recover the quality of the wines, improve the quality of the wines and to over-deliver the wines that we are producing. That is what we have been doing the last six years,” Bianchetti said.

Today, the company employs about 300 people, with production centered in Hopland and marketing based in Healdsburg. Bianchetti also oversees the Vina Concha y Toro brands imported from Chile and Argentina into the United States, an operation that, combined with Fetzer, sells more than 5 million cases of wine in the U.S.

The recent Fetzer vintages have received good reviews from wine critics - the 2015 Sundial vintage was ranked as a best value by Wine Spectator magazine last year - proof that its efforts have started showing returns in the trade media as well as with consumers, Bianchetti said.

One incredibly bright spot is Bonterra, the organic label started by the Fetzers in 1987 before the category was common in supermarket shelves and more limited to natural health stores. The brand - priced in the $10 to $15 a bottle range coveted by large vintners - has increased from 315,000 cases in 2012 to 550,000 last year.

“That shows the decision made 30 or 40 years ago has started to pay off,” Bianchetti said.

Campaign for quality

The company has brought in consulting winemakers to help its campaign for quality. For instance, Sebastopol winemaker Paul Hobbs has offered advice on its top-tier wines. Fetzer can source Burgundian grapes from areas like its well-regarded McNab Ranch. Hobbs has been impressed with Fetzer's commitment.

“I could see that they were very serious on some of their high-end stuff,” Hobbs said. “They've got a gifted team.”

The Fetzer brand had five straight quarters of sales growth up until the last quarter, when it experienced a 7.1 percent decline. The growth has been boosted by some of its newer brands such as 1000 Stories, its bourbon barrel-aged brand that features a buffalo on its label. The wine is first aged in traditional wine barrels and finished in bourbon barrels, which gives it a vanilla and charred herb profile as well as producing a higher alcohol content. Its zinfandel selection has a 15.5 percent alcohol content.

Bianchetti noted that 1000 Stories now sells 120,000 cases and was buoyed by the appeal of Americana used in its marketing campaign. It has drawn eager consumers, including millennials who were already accustomed to bourbon barrel-aged stouts that are commonplace in the craft beer industry.

“We truly think the proposition for the consumer was solid,” he said.

Last year, Fetzer released Adorada, a brand with a wax-draped packaging that was designed to resemble a perfume bottle. It offered two bottlings, a 2016 rosé and a 2016 pinot gris, that were targeted to appeal to the smell and romance of wine, Bianchetti said.

“We don't want to do more labels,” he said. “We want to present brands to our consumers.”

Bucking tradition

The new brands are not hidebound to the tradition of Fetzer or even Bonterra and allow for more experimentation. Bianchetti notes Starbucks' continued success by bringing new styles and coffees on an annual basis. Such a strategy can apply to wine, he says, because he believes the product is not a mature category in the United States.

“I don't want to have a collection of labels. ... It is too challenging to develop,” he said. “I truly believe to entice consumers in the trade, you need to have something unique.”

The recent moves could come as a surprise to some within the industry, but Blue said it shouldn't. The company's history is full of taking bold steps, whether its the embrace of organic farming 30 years ago or its decision to allow cover crops between rows of vines in the early 1990s to manage soil erosion and enrich the dirt.

“What is good is that we are back into innovation,” he said.

The company has worked with its more than 50 contract growers to transition to organic farming. The issue has taken on more prominence in agriculture as evident in the heated debate over glyphosate, the active ingredient in the herbicide Roundup. The World Health Organization's cancer research program found glyphosate was probably carcinogenic to humans, while the Environmental Protection Agency found late last year it is not likely to cause cancer at typical levels of exposure.

“It's not like we are asking them to switch from zinfandel to cab. We are asking them to switch the whole practice on the way they farm,” said John Kane, director of winemaking and winery operations. “People have more choices today than just buying Roundup and knocking weeds down.”

The focus on sustainability reached an apex more than two years ago when Fetzer was certified as a B Corporation, meaning that it achieved high standards not only on its on its environmental commitment, but also on how it treated its workers, its overall relationship with the local community and its business governance structure.

Fetzer believes that becoming a B Corporation will help it stand out in the wine marketplace where there are an increasing number of certifications - from the Lodi Rules to Fish Friendly Farming.

Other companies with such certifications, such as Patagonia and Ben & Jerry's, have become beloved by consumers for their efforts beyond seeking profit, Bianchetti noted. The focus is on the long term, Bianchetti said, and not to chase short-term profits.

“I see the Benefit Corporation approach as the Fetzers saw the organic category 30 years ago,” he said. “That will set us apart for the rest of the people who are talking about these kinds of things.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.