Chateau St. Jean, BV, Sterling, Beringer wineries part of Treasury Wine Estates high-end shift

North Coast operations of Treasury Wine Estates, such as Chateau St. Jean, Beringer, Sterling and Beaulieu Vineyard and related vineyards, will be getting a “close to triple-digit millions of dollars” injection of capital as part of a shift in U.S. production toward higher-end wines.

The Australian wine company (ASX: TWE) announced June 3 that it would be restructuring its U.S. wine-supply and production to fold in wine brands, vineyards and operations acquired late last year from Diageo PLC.

“Going forward, the focus is on masstige and luxury wines,” said Megghen Driscol, spokeswoman for Treasury Wines Estates’ Americas business.

Over the next two years, production of luxury-tier wine, or those retailing for $20-plus a bottle, will be consolidated to the Beringer Vineyards winery on Pratt Avenue in St. Helena, and “masstige” wines - retailing for $10–$20 - will be made in Paso Robles on California’s Central Coast. The company said the additional investment in U.S. production will support sales of premium American wines in Asia.

Production at Chateau St. Jean in Sonoma Valley will move to Beringer late this year or early in 2017. The tasting room and hospitality events at the chateau will continue.

Similarly, all but BV’s top-end wines would shift to Beringer, and Sterling’s luxury labels will be made with the rest of the brands at the hilltop Calistoga winery.

The Paicines winery acquired on California’s Central Coast from Diageo will be sold, as will “a small number of vineyard and land holdings,” the company announcement said.

“The best news in all this is the savings we are taking advantage of will not go into someone’s pockets but is going to be reinvested in production and vineyards,” Driscol said. “The numbers will be in the range of almost triple-digit millions. Most of the vineyards getting investments are Diageo vineyards. I would not say they were neglected, but they need a little TLC. Diageo was doing lot of things, but we only do wine.”

Chateau St. Jean winemaker Margo Van Staaveren plans to make a “very smooth transition” of production to Pratt Avenue after her 36th harvest at the Kenwood winery this fall, Driscol said. Van Staaveren’s long-term plans with the brand haven’t been discussed, but she will be working with the Beringer facilities high-tech equipment such as optical sorting and shake table systems for selecting choice grape berries, Driscol said.

“We like it when Margo is happy,” she said.

These changes to Treasury’s U.S. production “will affect a number of roles,” but the new owners of divested operations may pick up employees, the company said.

The landmark Sonoma Valley estate will continue to be used and upgraded for wine-tasting and hospitality functions, Driscol said. Though the company isn’t currently marketing the production facility for lease, that option is possible, she said. Chateau St. Jean currently crushes 2,500 tons of grapes annually and is permitted for double that. The cellar can store 15,000 barrels and has 1 million gallons of tank capacity. Bottling currently isn’t done on site.

At the BV winery in Rutherford, winemaker Jeffrey Stambor is set to focus production there on top-end labels, such as Georges de Latour cabernet sauvignon ($135–$200) and Tapestry Napa Valley red blend ($65), with other labels moving to the Beringer or Paso Robles wineries. The company plans to invest a couple of million dollars upgrading production for the higher-quality wines, Driscol said.

Sterling, which Treasury acquired from Diageo along with BV, also will be getting a couple million dollars of investment in luxury-tier winemaking, she said. Those wines currently are made at a winery at the base of the hill but will transition to the tram-served winery at the top.

While the winery investment and changes are expected to happen over two years, the adjustments to vineyards are set to happen over six, Driscol said. Certain vines in Napa and Sonoma counties will be replanted from chardonnay and sauvignon blanc to cabernet sauvignon-focused varieties.

“We were limited by land,” Driscol said. “What made the Diageo acquisition so attractive is it doubled our ability to grow red wine across all brands.”

This shift upscale has been underway inside Treasury Wine Estates for a few years, starting before the Diageo acquisition, she said.

Treasury Wine Estates employs 750 in the U.S.