French wine and spirits giant Pernod Ricard, whose brands include Absolut vodka and Beefeater gin, has agreed to purchase Kenwood Vineyards from Guerneville sparkling winemaker F. Korbel & Bros.
Pernod Ricard USA, the largest subsidiary of the Paris-based conglomerate, announced a deal Thursday to purchase the iconic Sonoma Valley winery for an undisclosed sum. The sale is expected to close by June 30.
Kenwood is the first California still winery purchased by Pernod Ricard, which also owns Napa Valley sparkling wine producer Mumm Napa. The acquisition will give the world's second-largest wine and spirits producer its first property in Sonoma County as it works to expand its presence in the lucrative U.S. beverage market.
Pernod Ricard has the resources "to make things happen at Kenwood," said Eileen Fredrikson, a partner in Gomberg, Fredrikson and Associates, a Woodside wine industry consulting firm.
"Kenwood is a classic brand with wonderful properties," Fredrikson said. The purchase is "very much in keeping with (Pernod Ricard's) strategic moves."
The sale was estimated by Reuters at less than $100 million. The news service quoted Pernod Ricard Chief Financial Officer Gilles Bogaert as saying the company is open to other "tactical acquisitions of premium brands such as Kenwood."
Founded in 1970, Kenwood Vineyards became one of the most visible wineries in the Sonoma Valley. Founders John Sheela and his brothers-in-law, Mike and Marty Lee, converted the old Pagani Brothers jug wine facility off Highway 12 into a modern winery focusing on award-winning varietals, a transformation that mirrored the evolution of the county's premium wine industry in the '70s and '80s.
Korbel acquired a 50 percent stake in the winery in 1996 and bought out the founders three years later. Under Korbel owner Gary Heck's management, Kenwood nearly doubled in size, growing from less than 300,000 cases in 1999 to more than 500,000 cases.
Created in 1975 by the merger of two businesses, Pernod Ricard owns such widely known brands as Martell Cognac, Chivas Regal Scotch whisky, G.M. Mumm champagne and Kahl?a liqueur. Its premium wines include Jacob's Creek in Australia, Brancott Estate in New Zealand, Campo Viejo in Spain and Graffigna in Argentina.
The company's other wine holdings include Dead Bolt, a new brand that is produced in Hopland from California grapes.
Kenwood will become part of Pernod Ricard Winemakers, which employs more than 2,000 workers on five continents.
Bryan Fry, president and CEO of Pernod Ricard USA, said the Kenwood purchase will benefit the company's wine and champagne division.
"We are dedicated to significantly expanding our U.S. business, and the acquisition of a prominent California winery is a great step in that direction," Fry said in a statement. "Consumer trends favoring premium California wines — combined with our powerful route to consumers and our overall commitment to the wine and champagne business — position us well for strong, sustainable performance with Kenwood and the rest of our premium portfolio."
The sale will end Korbel's ownership of still wineries.
The company in 2012 sold two of its other three Sonoma Valley-based wine brands, Valley of the Moon Winery and Lake Sonoma Winery, to West Coast Wine Partners. That year Korbel also had an agreement to sell Kenwood to New York-based Banfi Vintners, but the deal fell through.
"We want to focus on Korbel champagne and Korbel brandy," Heck said Thursday.
Korbel's efforts this year will include celebrating the 125th anniversary of its brandy and promoting its newer line of sweet sparkling wines.
Heck called Pernod Ricard "a global leader" in the wine and spirits industry
"I think they can take Kenwood to the next level," he said.
Pernod Ricard on Thursday reported sales of $2.2 billion in the quarter ending March 31, according to Bloomberg News. Organic sales were unchanged from a year earlier.
Reuters places the company second in the spirits and wine industry behind Britain's Diageo.
Also Thursday, Pernod Ricard announced it was expanding business with the nation's largest spirits and wine distributor, Southern Wine & Spirits. Southern will represent Pernod Ricard in 33 states, including California.
Robert Nicholson, principal at International Wine Associates, a Healdsburg wine industry mergers and acquisitions firm, called the Kenwood sale good news for the local wine industry. His firm wasn't involved in the transaction.
"It'll mean Sonoma County wines will get further distributed around the world," Nicholson said.