Schrader sold to Constellation

Constellation buys Scrader!

Schrader

Here’s the WS link

Brilliant move. Can see all sorts of upside for Constellation.

They can increase production a lot because Schrader now has access to 500 acres of ToKalon. Their production price drops because they won’t have the fruit costs, as they can go in-house. As the old contracts ends with Andy, they won’t be subject to the new 175x bottle price for fruit. And they can remove the “Beckstoffer” from the label and just call it “ToKalon.” Not to mention Constellation has even better sections of ToKalon than Beckstoffer. Finally, they won’t be subject to the tonnage reductions all of the other clients in TK will have to deal with as the vineyard goes through its replant.

TRB is probably in line for a raise. im not saying he has built the brand as much as the fruit sources, but he has had a lot to do with their success as a whole and how they are viewed.

I would be pretty sure the number crunchers at Constellation will have no interest in subsidizing the Schrader brand by selling ToKalon fruit below market price. They’ll be looking at their return on the land as well as on their new winery.

Drinks giant Constellation Brands has purchased Napa Valley cult winery Schrader Cellars, founder Fred Schrader told Wine Spectator. The blockbuster deal gives Constellation one of the elite names in Napa Cabernet, known for its Beckstoffer To Kalon Vineyard cuvée and several other notable bottlings.

Wow just wow.

They would save enormous sums by going in house. Why pay $100,000 per acre for fruit when you can pay the cost of managing the vineyard at $15,000? Besides, they don’t sell fruit to others. It’s all in house already so there is no “subsidising.” It’s just being shifted from Mondavi Reserve going 3-tier at $150 to all direct sales of a lot of cases at $225. Not only will it save many dollars per bottle in cost but will also add many dollars of revenue per bottle. Not to mention there is no way to expand the brand while Beckstoffer ToKalon lowers production due to a decade of replants.

Constellation does not outsource.

What C Fu said

really? dang!

Wow, didn’t see that coming

Yeah, that was my reaction. Wow.

We have a winner!

We hope this note finds you well and enjoying a wonderful start to the summer. In the Napa Valley, our growing season began right on time with beautiful warm, dry days that are ideal for flower set. While it is a little too early to provide feedback, all indications are that very good things will come our way for harvest.

As we head into our 18th season at Schrader, we reflect with great pride on what we have achieved together and we are excited for the path ahead.

2000 was our first harvest from the Beckstoffer To Kalon Vineyard and we began with a brilliant young man who had never before made a bottle of Cabernet Sauvignon. Now, Thomas Brown is the most critically celebrated winemaker in America and the youngest to receive a perfect 100-point score from Robert Parker, Wine Advocate, and the only one to receive the same ‘perfect’ score from James Laube, Wine Spectator, via the blind tasting review program.

Our commitment to winemaking excellence began with a single block of clone 4 Cabernet in the heart of the Beckstoffer To Kalon Vineyard, and it has carried forward through nearly two decades to include what we believe are the finest sections of the Beckstoffer Vineyards in Oakville, Rutherford and St. Helena. Our goal, always, has been to bring you the very finest wine experience possible.

Since beginning on this journey, it has been an honor to faithfully and diligently care for our wine program and do our personal best to serve our loyal customers.

Recently, we were presented with an exceptional opportunity that will allow us to bring forward greater resources to create the Schrader wines you love and enjoy. After thoughtful discussions with our winemaker, Thomas Brown, and heartfelt consideration, we have made the decision to move forward with Constellation Brands, the perfect steward for our wine program. We embark on this path together, along with Thomas at the winemaking helm, committed to our standard of excellence in wine and customer relations. We are excited for the possibilities that will be realized with this transition.

Thomas will continue to oversee the vineyard operations and make the wines at Outpost. We will continue to participate in brand development and welcome you at events and tastings, and Frank will continue to be the friendly voice you hear on the other end of the phone for customer service. This is a ‘work with’, not a hand off. We have spent the better part of our lives bringing forward this magical wine and we will continue to be part of its enduring success.

In the coming months, what changes will you see in your experience with Schrader — none. We will continue to do our very best and bring you our very best. The 2017 harvest is poised to be one for the record books and we are delighted to be cultivating it with our friends and now family at Constellation Brands.

If you have any questions about this news please refer to our ‘Questions You May Have’ page on our website that may help clarify your initial questions. For immediate assistance feel free to email us at info@schradercellars.com or call us at 707 942 1212.

As ever, we sincerely appreciate your faith in us and enthusiastic support of our wine program.

With warmth and cheer,

Carol, Fred & Thomas

A quick look at the financials of Constellation is an eye opener as to the value of name brands in the drinks business.
Three things pop out immediately.

  1. They have a huge amount of debt as a result of buying those brands.
  2. Fully 60% of their net assets and Goodwill and Intangibles i.e. the cost of the brand names.
    As a corollary of the first two items, they actually have negative tangible net worth.
  3. The kicker comes in the profitability, up steadily over the last three years increasing from an enviable 14% to an astounding 20% of sales.

P Hickner

Third times the charm.

Wow, another one by Constellation!

roy-thanks for saving me the time to write this reply. this sale clearly creates a beckstoffer vacuum, assuming schrader is completely done with andy now or in the near future. who do you see (in terms of producers) filling this vacuum? existing clientele or new blood?

I’m going to assume 2 items that I’m certain Constellation had locked up for rest of eternity:

  1. Schrader grape contracts with Beckstoffer
  2. Thomas Rivers Brown is winemaker from now until the end of time

I mean let’s be honest, those above 2 items are what make Schrader what it is.