Constellation chairman Richard Sands has made absolutely clear he is not interested in anything but the entire Robert Mondavi Corporation – and that it would be ‘a travesty’ to split it up.
Speaking exclusively to decanter.com the Constellation Brands boss – who is watching the progress of his company’s US$1.3bn for Mondavi with optimism – said it is ‘important [Mondavi] makes a decision after a timely process of negotiation’.
‘This is so that the chaos that exists at the moment is minimised, so that the brands maintain their value. This ongoing restructuring can cause irreperable damage to a company.’
Constellation’s bid came a month after Mondavi announced it was selling off its luxury portfolio, its vineyards and wineries – all except high-volume brands Woodbridge, La Famiglia and others, which amount to 75% of Mondavi sales.
Sands is now anxious for resolution. He suggested the unions’ anger over sacked workers – a third of the workforce was laid off three weeks ago, and this weekend workers picketed the Oakville winery – and rumours that production of brands such as Robert Mondavi Napa Valley was going to be slashed, was worrying evidence of imminent chaos.
He reiterated his position: while Mondavi had announced it was considering alternative bids and that the whole company was not for sale, Constellation would not consider anything but the whole.
‘This is the best brand in the world. It would be a travesty to split it into pieces, which would only detract from the value of the brand.’
Sands is not alone in this. Both Michael and Tim Mondavi have resigned senior positions in the company recently. Michael is explicitly opposed to breaking up the brand.
As for Opus One, the luxury joint venture with the Rothschild family, Sands believes Constellation would be its best guardian.
‘Constellation is much better suited to build Opus in the US the old Robert Mondavi wine company because of our ability to focus on individual markets, and because of our decentralised sales apparatus.’
He stressed Opus One would remain a joint venture, as ‘it would be impossible to separate Robert Mondavi from Rothschild – both parties add tremendous value.’ Both should remain on the label, he said.
He recognised however that what happened to Opus One was up to the Rothschilds. The contract contains a provision on change of control of the company allowing them to buy Opus outright.
Sands is bullish about his company’s chances, outlining his plans for Woodbridge and other brands, how Constellation’s worldwide distribution network would ‘greatly increase’ their presence throughout the world.
He is confident his offer – ‘a clear cut premium on the share price’ – is large enough to make any other company ‘think twice’ about meeting it, and he says the shareholders are right to demand the Mondavi Corporation consider it. The Mondavi board’s seeming unwillingness to recognise the offer is ‘simple posturing’, he said.
Lastly, Sands stressed his company’s record as ‘believers in terroir’ and therefore fit stewards for terroir-based wines.
Citing such deals as the one with Domaines Barons de Rothschild, Chalone group and Huneeus of Chile to produce a terroir-based icon wine in Napa, he said, ‘As a large company we support differentiation through terroir more than the little guy.’
Written by Adam Lechmere