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A message to Ascentia

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Timing, they say, is everything, and unfortunately, Jim DeBonis’s timing was horrible.

He was a founding partner and CEO of Ascentia Wine Estates when the newly-formed company made big news by buying, for a reputed $209 million, Atlas Peak, Buena Vista, Gary Farrell, Geyser Peak and, up in the northwest, Columbia, Covey Run and Ste. Chapelle. That was in June, 2008.

The deal was described as the biggest, most famous clutch of wineries ever to switch hands in a single transaction.

I thought at the time that it was a pretty cool deal. These were all solid wineries, or had been at one time. Nothing against Constellation, which sold them to Healdsburg-based Ascentia, but it was nice to think that the wineries would be returning to local control and, hopefully and possibly, see their quality level improve. The California properties had clearly slipped from the heights of their glory days, which had been glorious, indeed.

Well, the late spring of 2008 was not the best time to be investing a whole lot of money in anything, much less superpremium wineries that weren’t scoring all that well with the critics. The Great Recession struck that Fall, the nation’s economy fell off the cliff with breathtaking suddenness, and the wine industry was hurt as badly as everything else.

By last Fall, Ascentia was being sued by one of its investing partners, the Deutsch family, of the wine importer W.J. Deutsch & Sons. The company was reputed to be on the edge of bankruptcy, and poor Mr. DeBonis had to declare, in a statement Ascentia’s P.R. company gave to me in reply to my questions, that “We [Ascentia] have complete confidence in our growth strategy.”

Yesterday, the Santa Rosa Press Democrat reported that DeBonis “has been replaced as chief executive officer.” No reason was given. He will remain with the company as vice chairman for corporate matters, whatever that means.

We’ll never know just how the bat came down on DeBonis’s head, but it seems to me that Ascentia’s investment partners must have been making so much noise that somebody had to be the sacrificial lamb, and it turned out to be the CEO. That’s the way the corporate world works. At least they had the decency to let DeBonis stay, instead of telling him to take a walk.

Here’s my advice for Ascentia going forward. Reinvest in these wineries. Don’t let them fall any further. They still have good names, but you can’t ride on a reputation forever. At some point, even these famous brands will go the way of Christian Brothers and Inglenook, if you’re not careful.

I’m sure the temptation will be to cut corners: use old barrels instead of buying news ones, stretch production of the grapevines, source from cheaper vineyards and so on. That is absolutely the wrong thing to do.

You should also reach out to the wine media to tell your story. You, Ascentia, have been flying under the radar. I know you have employees who understand the value of having the media on your side, but you’re not letting them do their thing. Out of sight, out of mind, as they say. You have many friends in the wine trade, or, at least, your brands do. We would be delighted to see a resurrection of these wineries. But we need to be reassured that you’re taking them seriously. We need to hear from you that you are 100% committed to preserving them and their heritage. So far, the message is mixed, which is worrisome. And then, of course, no matter what you say, we need to see that commitment proven in the bottle.

  1. Steve,

    Sometimes large corporations do offer overloaded wheelbarrows of money to smaller successful wine brands. Nothing wrong with that. It’s capitalism as it should be. The part that’s hard to swallow is the standard corporate regurgitation that the previous owner is obligated to issue as a condition of the buy out, proclaiming that business operations will remain as they always have and the integrity of the brand is beyond compromise. The lower shelves of our supermarkets provide many examples of how the story often ends.

    Your advise to Ascentia ” reinvest in these wineries ” is sound. If they follow it we can all be winners. The consumer gets to enjoy good products and the corporations gets to stay in business.

  2. Michael Kenton says:

    To Steve and Readers,

    I am the new CEO of Ascentia Wine Estates. First, I want to thank all of you for your comments about our company and your opinions for the future of our great wineries. I want to assure you, and the greater wine consumer community that the Ascentia portfolio of brands is in good hands. Jim DeBonis and his team did a great job in the formation of Ascentia and will remain as a vital resource for the company and me. As you aptly stated, 2008 was a difficult time to buy a new enterprise and go through transition. The economy, coupled with the poor performance of our previous New York based sales company made matters very difficult. But let me assure you, I joined Ascentia because our brands are some of the best in the industry with storied histories and reputations. I agree with all that cost cutting and shortcuts is not the answer to greater glory. My 33 years in the business will be fully employed to build our brands and burnish our reputation to the fullest. Rest assured you will see innovations, quality enhancement, and much creativity coming out of Ascentia going forward. I am very confident you will appreciate the efforts and results that will come out of the great team of people at Ascentia. We have the talent, resources, and commitment to drive our business forward and more importantly to always strive for qualitative leadership. My thanks to all of you in the wine community for commenting and caring about our products. Regards, Mike Kenton-CEO Ascentia Wine Estates

  3. AS far as Mr. DeBonis staying on in some capacity, my guess is that his “golden parachute” was probably more expensive than his current salary, so the business decision was made to keep him on. Wonder what he’s doing about “corporate matters?”

  4. The problem for Ascentia is two fold. It has not done a very good job of promoting its successful brands like Gary Farrell and Buena Vista. The Farrell label, because its style has pretty much stayed true to the direction set my Mr. Farrell when he was there, has continued to meet with good critical success. In today’s world where so many people want lower alcohols and higher acidity, this label has always occupied that space. It should be prospering like crazy. Since I don’t see sales figures I have no idea how true that may or may not be. But, I do not see any effort to make it so and think Ascentia has so far missed a golden opportunity.

    In some ways, at least as far as I can read the public reaction, the Buena Vista is in even greater need of attention. Some of its vineyard-designates are very fine wines. My view is that the winery gets little credit for those successes and Ascentia has done little to make the world aware of them.

    But then there are the other labels, and they are a mixed bag with even less clear focus. Geyser Peak feels like it has gone cheap, and even though some of its inexpensive wines can be good values at times, the label just does not seem to have generated any pizazz for it occasionally good vineyard-designates. This is a now a label in search of a mission.

    As for the Pacific Northwest properties, it is the rare wine from any of them that meets great critical acclaim. Whether the lower-end Covey Run and Ste. Chappelle products are selling is a different matter. But their quality certainly has had a hard time even keeping up with their price niche peers. I can’t speak to commercial success, but at the wine quality level, Ch. Ste. Michelle is kicking their proverbial backsides.

    All of this sounds like Mr. Kenton has his hands full.

  5. History repeats itself. Someone makes up a spreadsheet showing vibrant future growth in a brand or group of brands. They attach to it a justification for that growth based on either predicted growth in a category coupled with certain expansions in distribution or other remedies they plan to make. This is their plan, they find an investor, make the purchase, and invest more capital to secure the increased resources needed to meet the plan. And then they realize they have the same brands, the same wines, in the same markets as the last guy who wanted out. And they find they are no brighter, more clever, or better equipped than their predecessor to make the brand succeed. Rarely do they come in with anything new or creative in the brand or vineyard or winery that will turn the heads of the customer to a degree to realize the projected growth. And never do they have a plan B.

  6. Morton, you may be right. But these are great brand names. We can only hope to hold Mr. Kenton to his word. We will be watching to see if he keeps it.

  7. “Great brand names???” If you say so. Frankly, the juice is average at best, and that’s going back thru the last 10 years. Sure, when Farrell actually made Farrell it was much better, but as a whole that group of labels is a big yawn, and will continue to be.

  8. Richard, I couldn’t agree with you more!! As far a “grocery store wine” goes these may be some of the better options but in the wine world they are mass produced, watered down and devoid of individuality. I’d rather pay more to buy a super small production wine that has personality and you can tell the difference from one vintage to the next. These brands trait is that they are consistent from year to year. That’s fine if you like monotony. Ho-hum wines like these can be poured at mass parties were people just want alcohol and don’t care how it is delivered. For those with an even marginal palate would reject them and drink water.

  9. Ron Saikowski says:

    Geyser Peak holds promise even though Mick left the wine-making responsibilities to Ondine Chattan. This young lady has made soeveral zwesome Zins and holds promise for Geyser Peak, assuming she will be allowed to have the required barrels, grapes, facilities, and technology to advance Geyser Peak in conjunction with good, solid advertising!

  10. HeardItThroughTheGrapevine says:

    I believe that Ascentia is levered with such a load of massive debt that there will sadly be no recovery for these brands either in quality or volume.

  11. I was recently at a trade show pouring wine next to the Ascentia table and tasted through many of the wines. There is a lot to be said about the viability of the company, especially with its debt levels, etc. But I think Richard and Doug’s comments regarding the wines are way off base. I would challenge them to taste the Buena Vista wines double blind against a true competitive set. These wines are well made.

  12. Chris, I agree the wines are well made. Of course, what we’re tasting now are wines made 1-3 years ago. It remains to be seen if Ascentia will keep the quality up, but I’m hopeful they will.

  13. Does anyone think it’s funny that the bigger you get in spirits, the more cache your brand has in the public eye, yet the bigger you get in wine the less cache your brand has in the public eye. It is one of the great paradoxes of the adult beverage business. Why the difference? I don’t view a wine brand as bad just because it is big. There are several brands in the business that have scale and deliver terrific and consistent quality. Geyser Peak, La Crema, etc. These are fine wines. Why do we so look down on them? Why the snobbery for wines but not spirits? And why don’t we look at companies like Apple in the same light? 14.8 million iPads sold last year: heck, that’s too big for me. I’m going with a smaller, artisanal tablet computer asap!

  14. Carol: You think Jim Beam, Jack Daniels, Captain Morgan, Cuervo and Absolut have “cache”? You need to branch out more… there are some great artisanal spirits being made and they have tremendous cache with consumers.

  15. I agree, Jason.

    And Carol, there are plenty of “big” brands making wine much better than the Ascentia group. When I called them boring, it wasn’t due to the size of the company, but rather what’s in the bottle. For instance, Stimson Lane makes great wine across the board, and they’re a huge company. But have you ever had the top-priced Geyser Peak reds? Horrible. Also, as a big fan of Bourbon, I hate on Jim Beam products for sport.

    And Buena Vista? Hah. Sure, there’s nothing technically wring with the wine, but there’s plenty of technically correct wine that makes me yawn.

  16. Steve
    OK, Ill bite. Who among us who love wine and devote our lives to it have ANY respect or concern with corporate wineries? Corporations are money-making machines who have only the bare minimum amount of care and respect for their product as is necessary to maintain profitability. As a blogger, and a part of the industrial hegemony, you think it’s important. You are getting on the wrong side. Wine and corporations are antithetical by nature. Yes, we need six or ten dollar wine, and corporations are best able to supply it. But it’s not the wine that makes one euphoric; it transports no one. I don’t care if Ascentia or Constellation or any other wine corporation crashes and burns. They’ll soon be replaced by another. And their poor employees? They have been screwed by The Old Boss, they can easily enough secure a position to be screwed by The New Boss. They’ll be laid off a month before retirement no matter who they work for. It’s got nothing to do with the sort of wine that drives us wine-lovers to distraction. Corporate wine is a commodity beverage, the lowest common denominator, equivalent to Pepsi, MacDonald’s or Bud Light. I say **** corporations, and **** their crappy wine. Sincerely yours, Mark

  17. Bunt, good rant! I can’t get as worked up about corporations as you. They have their role, just as little family wineries do.

  18. Ron Rolls says:

    Blunt Marker,
    No “screwed employees” here. We enjoy working for a company that actually cares for their workers. It is fun to work here. Can you say that about your job?

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