Mondavi dumps Caliterra

Wines & Vines, March, 2004

Robert Mondavi Corp. took a big step back from its commitment to Chile with the sale of its interest in the Caliterra brand and assets to Vina Errazuriz. Mondavi will retain a 50% ownership in the premium brands Sena and Arboleda, with Eduardo Chadwick of Errazuriz. Mondavi also retains import rights to Sena, Arboleda, Caliterra and Errazuriz in the U.S. and will represent them in some other world markets. As a result of the sale, Mondavi has cut its earnings guidance for the quarter ended Dec. 31, 2003 by $3.9 million.

Mondavi made its initial investment in Chile in 1995, with the expectations that Caliterra would become a 1 million case global brand, selling in the $7-to-$8 range. The brand reportedly never topped 500,000 cases and sells in the $5-to-$6 range. The sale included 1,000 acres of vines and a winery. Vina Errazuriz paid $1.5 million for Mondavi's 50% ownership.

The sale of Caliterra is apparently part of a $70 million divestiture program Mondavi announced in 2002. At this point, about $25 million in assets have been sold. Almost 1,000 acres of vineyards in Santa Barbara and Mendocino counties are on the market. The Byron Winery in Santa Barbara is also reportedly for sale.

In a separate statement, Robert Mondavi Corp. reported increased sales during its last quarter ending Dec. 31, but its net profits decreased because of a $6.1 million loss in the sale of Caliterra. Mondavi sold 3,136,000 cases of wine during its second quarter, an increase of 3% from the same period a year ago. Net revenues for the quarter were $147.3 million, an increase of 4% from net revenues of $141 million a year ago.