E. & J. Gallo Buys Edna Valley Vineyard & Winery

Gallo’s presence in California’s Central Coast wine country expands with the purchase of the 62-acre property.

E. & J. Gallo has purchased Edna Valley Vineyard—a 300,000-case producer located in the Edna Valley five miles from the Pacific Ocean in San Luis Obispo County—from Diageo Chateau & Estate Wines Company and Paragon Vineyard Company.

According to Roger Nabedian, senior vice president and general manager of Gallo’s Premium Wine Division, the deal will further expand the company’s presence in California’s Central Coast. In 2004, Gallo purchased the Bridlewood Estate Winery located in the Santa Ynez Valley of Santa Barbara County. In 2007, Gallo purchased the William Hill Estate Winery in Napa.

Edna Valley Vineyard produces a range of wines from Syrah to Merlot and Sauvignon Blanc, but most notably specializes in Chardonnay and Pinot Noir. The vineyard will remain owned by the Nivens, under their Paragon Vineyard Co. umbrella, but Gallo will acquire the winery’s 62-acre property, 44 acres of which are planted with Chardonnay and Pinot Noir grapes.

“We wanted to retain our half interest and find a new partner, but then Gallo came with a proposal we thought was the best solution for our employees and our families,” John R. Niven, Paragon’s CEO, tells Wine Enthusiast Magazine. Diageo notified the family some time ago it wanted out of the partnership because the joint project didn’t fit their strategic plans.

Nabedian says that the purchase confirms Gallo’s commitment to the $12–$15 Chardonnay tier, which is what Edna Valley’s Paragon Chardonnay bottling sells for. The brand also produces ultra-premium level reserve wines.

“Right now, we have no plans to dramatically change the pricing structure, although we’ll likely make some adjustments,” says Nebedian. Gallo, however, does plan to increase total case production significantly over the next five years.

Asked if the winery will have to look beyond the Paragon Vineyard, or even the Edna Valley appellation, in order to supply that increased production, Nabedian said: “Today, not all the grapes in the brand come from their vineyard. But as the brand gets bigger, we’ll have to consider other [grape] sources. It will be either San Luis Obispo [County] or potentially Central Coast, but Paragon will remain the backbone of the brand.”

Published on June 29, 2011