What happens when a successful international wine and spirits company acquires a respected but slightly shop-worn winery and brand? Chances are that it would apply considerable resources, financial and otherwise, to restore the former’s luster.
That’s just what’s happening to Kenwood Vineyards in Sonoma Valley. French wine and spirits giant Pernod Ricard bought the 170-year-old Kenwood Vineyards winery and brand from Gary Heck’s Guerneville-based sparkling wine company, F. Korbel & Bros., in 2014 and immediately took stock to plan improvements.
These improvements are intended to bolster the success of Kenwood Vineyards to be on par with the rest of Pernod Ricard’s other brands, which include Mumm Champagne, Mumm Napa, Jacobs Creek in Australia, Brancott Estate in New Zealand, Campo Viejo in Spain and Graffigna in Argentina, Absolut Vodka and Beefeater Gin.
Kenwood Vineyards’ Long History
Felice Pagani bought the property that is now Kenwood Vineyards and planted grapevines in the late 1880s, then built the Pagani Brothers Winery off Highway 12 in 1906. In 1970, John Sheela and his brothers-in-law, Mike and Marty Lee, created Kenwood Vineyards when they bought the property. The new owners helped pioneer its transition into the modern, premium wine industry in the ’70s and ’80s.
In 1996, Heck acquired a 50 percent stake in the winery and bought out the founders three years later. Under his management, Kenwood nearly doubled in size, growing from less than 300,000 cases in 1999 to more than 500,000 cases by 2014.
In addition to the sale of Kenwood in 2014, Heck sold two of his other three Sonoma Valley-based wine brands, Valley of the Moon Winery and Lake Sonoma Winery, to West Coast Wine Partners in 2012 and now makes only Korbel sparkling wine and brandy.
Pernod Ricard’s acquisition gives the world’s second-largest wine and spirits producer its first property in Sonoma County, and is part of a plan to sell more wine in the United States. Kenwood is also its first California still winery, but it may not be the last. Pernod Ricard’s chief financial officer Gilles Bogaert said the company is open to other “tactical acquisitions of premium brands such as Kenwood.”
Ironically, the purchase came at a time when several spirits companies reduced their wine business—the most notorious example was Diageo’s sale of all its wine brands, many of which were picked up by Australia’s Treasury Wine Estates.
The First Steps
Though they kept the due diligence confidential, Kenwood chief winemaker Pat Henderson said that when Pernod Ricard took possession, the company quickly evaluated the property, the vineyards and the brand to see what it needed to do to take it to the next level. Henderson assisted in that evaluation, though he admitted, “We wondered if we would have jobs!”
In view of the industry’s emphasis on premiumization, Pernod predictably decided to increase the focus of Kenwood Vineyards on Sonoma County and reduce the share of lower-priced California appellation wines available. They also want to focus more on higher-end wines under the well-known Kenwood umbrella. At the same time, Pernod decided not to increase production.
In 2016, the winery introduced six wines in its Six Ridges tier, all from respected appellations: Alexander Valley Cabernet, Russian River Valley Chardonnay and Pinot Noir, Dry Creek Zinfandel and Merlot, and a surprising Sonoma Coast Sauvignon Blanc that includes grapes from Carneros and the Russian River Valley.
Since 1976, Kenwood Vineyards has also been the exclusive producer of wines from the Jack London Ranch on the western slope of Sonoma Valley in Glen Ellen. Its artist series of Cabernet Sauvignon is highly regarded.
Kenwood is now making 10 small-production wines (200 to 300 cases) for the wine club and tasting room. It even produces a small amount of sparkling wine.
One of the first steps the new management took was to develop new packaging. It is also increasing emphasis on marketing, though about two-thirds of its distributors changed under Pernod. “We expected a little dip, but it bounced back better than expected,” said Henderson.
It also had to develop vital infrastructure for services, such as human resources, accounts and other functions that had been previously handled by Korbel.
“We had a light crew as it was,” Henderson said, “but this allowed them to bring in people from around the world to beef up our staff.”
A new general manager and head of finance, not unexpectedly, came from Pernod, and other Pernod people served temporarily as they recruited and trained permanent replacements.
One obvious source of help was Mumm in Napa, but it was already pretty much at capacity. “We do cooperate on some services, like HR and maintenance,” said Henderson.
That doesn’t extend much to winemaking as their operations are so distinct, but Kenwood’s vineyard staff does work with Mumm’s even though Kenwood is focusing on Sonoma wines.
Henderson has collaborated with Pernod winemakers in other countries to share best practices and even had experienced harvest crews from the southern hemisphere assisting him during their off-season. But he emphasized, “Pernod doesn’t want all its wine to taste the same.”
Winemaking and Vineyard Selection
Henderson has worked more than 30 vintages. He grew up in Sonoma next to a home-winemaking neighbor, but he considered it a hobby until he discovered the winemaking program when he attended the University of California, Davis.
While completing his degree in the viticulture and enology program, Henderson worked at five wineries, including a summer at Kenwood Vineyards as enologist in 1983. After graduation, he worked in both the Napa and Sonoma valleys before taking his first position as a head winemaker in Washington state—then later joined Valley of the Moon Winery in Sonoma County.
He rejoined the Kenwood team in 2003, as senior winemaker, under the original Kenwood winemaker, Mike Lee, and in 2015 he became chief winemaker. Henderson also taught winemaking part-time at Santa Rosa Junior College from 1991 to 2014 and co-authored a textbook for culinary students called About Wine.
Henderson also works closely with the vineyard management team. Kenwood is not primarily an estate winery as it buys three-quarters of its fruit. About 23 acres of Merlot and a third of an acre of Zinfandel are planted at the winery, though it owns two other vineyards in the area—a total of 145 Sonoma Valley acres, with another 42 acres owned in Dry Creek Valley.
Included with Pernod’s purchase was the 37-acre Green Valley Ranch, which Pernod sold to the vineyard manager this year. Pernod/Kenwood retained the contract to receive all of the fruit from the upper portion of the vineyard. (The lower part is more suitable for sparkling wine.)
In addition to these vineyards, Kenwood buys fruit from quite a number of vineyards in Sonoma County. It has been buying the fruit from some of them, like Jack London Ranch, for more than 40 years.
Building a Modern Winery
In 2000, Kenwood built a new winery in the same configuration on the old hillside site, but it developed severe limitations as it grew into a facility producing half a million cases. “It was laid out when people delivered grapes in the back of a Model T,” noted Henderson.
For one thing, trucks that delivered grapes had to make a tight turn down a steep hill after unloading. “Sometimes we had to use a forklift to move the back end of the trailer to allow it to make a turn,” commented Henderson.
Pernod stepped in to solve the problem and built yet another new winery, which relocated grape delivery to a new driveway behind and above the winery. That also allows for a gentle feed to the destemmer-crusher and three presses, where juice is gravity-fed to the tanks below.
This also moves the path of the tanks away from the adjacent tasting room. “We always worried about some kid running out there,” Henderson said.
In the old driveway’s location is a new building containing 30 new Westec fermentation tanks. It is designed to complement an existing tank room and allow for on-site processing as Kenwood used to get a lot of its juice from the Korbel facilities.
In fact, Korbel processed Kenwood’s wine in 2014 and 2015, but the new facility at Kenwood should be ready for this year’s harvest.
The new tanks are all suitable for red wine with spray capability plus screens to isolate skins and stems, but Henderson only expects half will be needed for red wines for now. The tanks hold 17,500, 15,000 and 8,500 gallons, allowing Henderson to choose a size suitable for the lots processed. The winery also has older tanks from 1987.
One interesting innovation was the use of new earthquake-resistant supports for many of the new tanks. The supports from Onguard Seismic Tank Systems are similar to automobile shock absorbers and are installed in 18-inch holes drilled in the tank room’s concrete floor, allowing the tanks to “bounce” under stress instead of tearing. That said, the winery sits on solid ground and incurred no damage in the 2014 earthquake, which caused extensive damage to many wineries in Napa and Sonoma counties.
Henderson also recently acquired a new cross-flow filter and centrifuge, part of the winery’s push to reduce the use of diatomaceous earth.
Kenwood has bladder presses from Germany, Italy and France, and is installing new equipment for its updated area.
In the works are plans to completely renovate an existing production and storage area and create a winery within the winery to process small lots. Pernod has been increasing the offering of small lots, including single-vineyard wines, to help drive interest to the wine club.
The winery has applied to the county to relocate the now-rustic tasting room to a largely underground, 5,200-square-foot space designed by MAD Architecture of Petaluma near the top of the hill behind the winery. It has spectacular views and better isolates visitors from the production-oriented winery—but approval will be under scrutiny in an area increasingly concerned about winery visitors and events.
For Henderson, Pernod’s acquisition of Kenwood Vineyards gave him the resources to improve his winery’s facilities and upgrade production. “I’m delighted that Pernod Ricard bought the winery, not just the brand. I see lots of opportunity ahead,” he said. WBM