Tuesday, September 14, 2004

At Least There Wasn't a Fist Fight This Time.....

Michael Mondavi has announced that he, like his father before him, is leaving the family business. Although the press release suggests a much more amicable separation that the previous generation, Michael is leaving because of continued differences with his brother, Tim, as to how the company's wines should be made and sold. (For the record, Michael is more of a HJWOW, "give the consumer what they want" type of guy whereas Tim is more of a "make great wines and the world will find a path to your door" kind of guy).

In related news, as noted
here three weeks ago, the Robert Mondavi Corporation announced today that they are "divesting" themselves of their luxury brands (i.e. everything above $10 retail) to focus on Woodbridge, RM Private Selection, and new brands like Papio (yes, Papio the one with the monkeys playing musical instruments...sigh...if you can't originate, imitate I guess).

What's interesting is that RMC publicly announced their intent to sell brands. This is unprecedented as wineries typically avoid this type of publicity for for that their distributors will ignore their brands, expecting the new buyer to move them to a new wholesale house. Its possible that this announcement is a result of Sarbanes-Oxley, but a quick look at the website reveals that it is far too boring for the HJWOW to research....

The result of all of this is that the family will be buying back the Napa brands (unless the Peter Mondavi family (CK-Mondavi) outbids them! Wouldn't that be a battle for the ages!), but will be selling their 50% share of Opus One to the Rothchilds to pay for it! This is a good strategic move as the bloom is off the rose for Opus. They've been using 100% Opus grapes (not using RMC's Oakville fruit) for a few years now and their scores and wine quality show it. The Opus vineyards are planted near the Napa river in deep soil, with a high water table and have tremendous vigor problems and spotty quality. Good time to get out.

Obviously, this will develop over the coming weeks and will certainly continue to be worth watching......stay tuned.


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