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Thursday, April 24, 2014, 11:48 am

French drinks giant plans to buy Kenwood wine brand

Second effort to buy brand part of U.S. growth plan

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    Kenwood Vineyards wines

    GUERNEVILLE — Paris-based spirits and wine producer Pernod Ricard (NYSE: RI), which owns sparkling wine house Mumm Napa, on Thursday said it entered a deal to buy the Kenwood Vineyards brand and related assets.

    This would be the second time in as many years that Guerneville-based F. Korbel & Bros. has agreed to sell the Sonoma County-focused brand. If completed on June 30 as anticipated, the acquisition would be part of Pernod Ricard’s big growth plans in the U.S.

    Included in this deal are all assets of the Kenwood Vineyards brand including trademarks, inventory, winery and estate vineyards, as well as additional Sonoma County acreage of chardonnay, cabernet sauvignon, merlot, sauvignon blanc, zinfandel, syrah, malbec, pinot blanc and petite sirah vineyards.

    The Kenwood winery operations will be managed by Pernod Ricard Winemakers, the premium wine division of Pernod Ricard.

    Terms of the deal weren’t disclosed.

    “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,” said Bryan Fry, president and chief executive officer of Pernod Ricard USA. “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.”

    Kenwood’s strong presence in chain accounts will further strengthen Pernod Ricard’s presence in that fast-growing market segment and enable increased distribution of the company’s other premium wines and spirits, he said.

    Gary Heck, president and owner of F. Korbel & Bros. said the sale of Kenwood “will allow us to focus the company’s resources on our leading California champagne and brandy business.”

    That was the the announced goal of F. Korbel & Bros.’s most recent effort to sell Kenwood. The brand went into contract to sell to New York-based Banfi Vintners in March 2012. But F. Korbel called off the deal by that June.

    The Kenwood brand was launched in 1970, and F. Korbel & Bros. acquired full ownership in 1999. Since then, production has grown from less than 300,000 cases a year to more than 500,000 cases.

    The acquisition of Kenwood Vineyards would fit into Pernod Ricard USA’s growth plans, according to the company. The global company on Thursday reported net sales of €6.65 billion (about $9.19 billion) for the nine months ending in March, down 7 percent from that pace the previous fiscal year. Sales in the Americas were down 6 percent to $1.71 billion in that period, compared with decreases of 12 percent in Asia and 2 percent in Europe.

    Those plans include leveraging the strength of its Champagne and sparkling wine portfolio, which includes Perrier-Jouet and G.H. Mumm from Champagne and Mumm Napa sparkling wine; increasing investment in its core brands, particularly Brancott Estate, Graffigna and Campo Viejo; repositioning Jacob’s Creek; continuing to build Deadbolt, a California still wine introduced in 2012; and driving an aggressive innovation agenda.

    “We see continued growth in the wine and champagne category in the USA, and we are focused on seizing opportunities to help us grow our share ahead of competition,” Mr. Fry said. “Consumption is growing, driven by millennials; consumption of premium wines is growing; and consumers are more receptive to innovations. We’re committed to building brands of desire that meet these trends.”

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