Concha y Toro share price leaps as Fetzer purchase announced
- Wednesday 2 March 2011
The US$238m acquisition, from Fetzer's owner Brown-Forman, includes such brands as Fetzer, Bonterra, Five Rivers, Jekel, Sanctuary and Little Black Dress.
The purchase also includes 429ha of vineyards in Mendocino County, California, and cellars in Hopland and Paso Robles, California. The key facilities, a press release says, employ some 240 people.
One of the most important aspects of the deal is Fetzer’s organic credentials. Its flagship winery, Bonterra has been at the forefront of organic winemaking since 1987.
With annual sales of 3000 cases, Bonterra is more than three times the size of its nearest organic competitor.
This is the largest acquisition deal for any Chilean wine company – even one of the size of Concha y Toro, one of the world’s 10 biggest wine companies in terms of volume of sales.
Concha y Toro farms 9,300ha of vineyards in every winegrowing region of Chile, and exports around 16m cases, one third of them to the UK, spearheaded by the ubiquitous Casillero del Diablo brand.
‘This is fantastic news for Chile – and it’s strategically a very good move,’ Wines of Chile’s UK director Michael Cox told Decanter.com.
‘Fetzer is one of the foremost wineries in the world in terms of eco-friendly winemaking and this fits perfectly with the Concha y Toro philosophy.’
Cox added that it demonstrated the growing international success, and confidence of Chilean wine companies.
The Wall Street Journal reported this morning that shares in Concha y Toro leapt 7%. It said the company had ‘struggled’ in the wake of the massive earthquake in February last year that temporarily halted production.
Investment bank Banchile Inversiones said it believed Concha y Toro could ‘profit from Fetzer's operations’.
Concha y Toro CEO Eduardo Guilisasti said the acquisition ‘is the largest transaction of this type in the company’s history. It represents a continuation of our business strategy [and it ] opens additional growth opportunities globally, as well as in the American market.’
Paul Varga, CEO of Brown-Forman said, ‘We are particularly pleased that such a prestigious wine company as Viña Concha y Toro will continue the legacy of success these brands have enjoyed over the last several decades’