Exclusive: Seghesio Family Sells Historic Winery

Wine Spectator has learned Crimson Wine Group will buy historic Sonoma producer

Tim Fish

May 31, 2011

Seghesio Vineyards, an historic Sonoma winery that transformed itself from a jug-wine factory into one of California’s elite Zinfandel specialists, is being sold by the Seghesio family to the Napa-based Crimson Wine Group, part of the financial conglomerate Leucadia National, sources close to the sale tell Wine Spectator. The sale price was not disclosed, but the purchase includes the Healdsburg winery, 300 acres of vineyards, the Seghesio brand and current wine inventory. Most of the family members involved with the winery will stay on board.

“It’s an incredible offer but it was still a difficult decision, a bittersweet decision,” said CEO Pete Seghesio. “Every Italian family gets into fights and we don’t want to be one of those families. The family is united on this. It has been an incredible ride but we want to go out on top.”

Seghesio is best known for five Zinfandels: Sonoma County Old Vine; its three single-vineyard wines Home Ranch, San Lorenzo and Cortina; and its regular Sonoma County bottling. The 2007 Sonoma County Zinfandel was number 10 in Wine Spectator's Top 100 Wines of 2008. Seghesio produces about 100,000 cases annually and also makes Pinot Noir, Petite Sirah and Italian varietals such as Sangiovese, Barbera and Pinot Grigio. Of the 92 wines Wine Spectator has reviewed in the past 15 vintages, 30 were rated 90 points or above.

“We kicked the tires on some very high quality niche wine producers,” said Earl Martin, Crimson CEO. “And the fit with Seghesio was perfectly seamless. What they have been able to do qualitatively and on their scale is almost without peer.” Crimson also owns Pine Ridge Vineyards in Napa’s Stags Leap District, Chamisal Vineyards in Edna Valley and Archery Summit in Oregon’s Willamette Valley.

The sale is part of a growing trend in Northern California, as longtime winemaking families increasingly opt to sell the business in the face of global competition, increased consolidation of distribution channels and the strain of succession issues and inheritance taxes. Those are among the concerns that led to the sales of the Sebastiani family's winery in 2008, Stag’s Leap Wine Cellars and Duckhorn in 2007 and Robert Mondavi's winery in 2004.

The Seghesios weathered Prohibition, the Great Depression, drought, floods and even a 1996 blaze that scorched the winery, but Pete said the challenges ahead are daunting. “We’re looking at this as a decision not for today but one for the next 20 to 30 years,” he said. “I think it will be more and more difficult for mid-sized brands like us in the future.” Seghesio will remain in his current role, along with winemaker and cousin Ted Seghesio. Pete retains ownership of San Lorenzo Vineyard, while Ed and Ray Seghesio keep Cortina Vineyard.

The Seghesios are second only to the Foppianos as the oldest winemaking family in Sonoma County. Four generations of Seghesios have been growing grapes and making wine from the Alexander and Dry Creek valleys in northern Sonoma County. Edoardo Seghesio immigrated to Sonoma County from his native Piedmont, Italy, in 1886 and became a winemaker at the old Italian Swiss Colony. Edoardo and his wife, Angela, planted their first vineyard, Home Ranch, in Northern Alexander Valley in 1895 and made their first wines in 1902.

By the mid-1970s, the winery was processing more than one fourth of the grapes grown in Sonoma County, but it wasn’t until 1983 that the family bottled its first wine under the Seghesio label. The quality was only marginally better than the day’s jug wines. The second generation was trapped in the past: maximum output in the vineyards, with wine fermented in concrete vats and aged in massive redwood tanks. “When the kids took over in 1995, this place wasn’t worth much,” Pete said. When the IRS delivered a $4 million bill for back taxes, the turning point arrived.

Ted and Pete believed the family’s future lay in its hundreds of acres of old Zinfandel vineyards and taking the winery upscale. The winery enjoyed good times for a decade, but now the family will step back.

Despite the new corporate ownership, Crimson CEO Martin said his company has no plans to change Seghesio or expand production. “Will there be a California appellation Zinfandel in the future? No!"