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The Globalization Of Beringer Blass Wine Estates

8612 words - 34 pages

In late September 2002, Walt Klenz was deciding whether Beringer Blass Wine Estates should pursue internal growth via development of its current premium wine brands or external growth via acquisitions of new brands. Klenz was ending his first year as Beringer Blass's managing director and twelfth year as Beringer's President.Two years earlier, he had overseen a merger between the Australia-based Foster's Brewing Group and California-based Beringer Wine Estates, a move that had triggered a wave of similar consolidation transactions around the world of premium wines. Rumors abounded in the industry that larger rivals such as E. & J. Gallo, Constellation, and Diageo were actively seeking acquisitions of premium wineries to increase global market share.As Klenz (rhymes with "cleanse") prepared his notes for a presentation called "Globalization of the Wine Industry" to over 300 attendees at an annual wine industry conference in Napa, California, he privately wondered how he was going to guide Beringer Blass towards globalization in the future.Beringer's historyIn 1875 two German emigrants, Jacob and Frederick Beringer, purchased property in St. Helena, California, for $14,500. During the following year, Jacob began working his new vineyards and started construction of a stone winery building. He employed Chinese laborers to build limestone-lined aging tunnels for his product. In 1880, Frederick opened a store and a wine cellar to accommodate the sale of wine in New York. The Beringer Brothers commenced an education and marketing program to introduce Napa Valley wine to the East Coast market. Their specialty, even in those early years, was premium table wines.Beringer family members continuously owned the winery until 1971, when they sold it to the Nestlé Company, which renamed the Beringer subsidiary "Wine World Estates." Over the next 25 years, Nestlé hired management to implement an expansion strategy that included purchase and development of extensive acreage positions in prime growing regions of Napa, Sonoma, Lake, Santa Barbara, and San Luis Obispo counties in California. Ownership of these vineyards enabled Wine World to control a source of high quality, premium wine grapes at an attractive cost.In a series of sweeping moves, Wine World's winemaker, Myron Nightingale, overhauled operations, retooled the winery, acquired new vineyard properties, negotiated long term leases for additional vineyard capacity, and refocused production on the development and sale of world-class wines. Michael Moone became CEO in 1984 to oversee the operations of Wine World. Moone pursued expansion via both acquisitions and start-ups of new brands. Chateau Souverain, located in the Sonoma Valley, was acquired in 1986. Also in that year, Wine World launched a new brand, Napa Ridge. In 1988, Wine World's Estrella River Winery in Paso Robles was refurbished and renamed Meridian Vineyards. Results of these initiatives began to bear fruit by the late...

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