Joint ventures all over the place

Label for Sena Chilean wine

16 April 2020 To complement Ali Cooper's opinionated tasting article about Chile published today, we thought it might be fun to resurrect this, the very first article we ever published on this website with the Chile tag. Interesting that neither of the joint ventures announced below ever flourished. See what happened to them at a coda added to the end of this article.

11 November 2001 Coagulation is all the rage in the wine world. Takeovers and snuggling up sessions abound, sometimes unlikely, sometimes incomprehensible.

Robert Mondavi of the Napa Valley already has alliances with Baron Philippe de Rothschild of Bordeaux for Opus One, with Eduardo Chadwick of Chile for Seña, the Frescobaldi clan of Tuscany for Luce and a host of connections in the Languedoc to enable various projects past, present and future there. Now the company has announced a joint venture with Rosemount of the Hunter Valley, for long the most aggressive exporter of Australian wine to the US.

Together in beautiful harmony they plan to make both California and Australian wines, particularly Shiraz/Syrah, and export them to each other's markets. But you know what? I don't see an Australian Shiraz with Mondavi input or a California Syrah with Rosemount input as particularly desirable. I certainly wouldn't pay a premium sufficient to warrant all those long-haul flights and man-hours of tasting to discussion that will go into them. What do they each bring to the party? Or am I being obtuse?

Mondavi say, tellingly, that they want a slice of the action in the burgeoning high-priced Australian Shiraz market. But is all this, as some industry commentators suggest, just a prelude to a more substantial merger between the two companies following in the footsteps of Fosters' acquisition of Beringer?

Pause for pregnant dots...

And are those dots relevant to another new, British alliance, most unlikely, recently announced? Oddbins, the wacky wine retailer, has been in limbo ever since its owner Seagram (talking of unlikely alliances) announced it was spinning off its drinks interests. Even before this there have for long been rumours that it is being sold to practically all possible candidates and some impossible.

Now there is an actual announcement: that Oddbins is getting into bed with super-stodgy supermarket Sainsbury's to sell better quality wine by the case using all present and future means they can think of, notably interactive TV via the Sainsbury-Carlton TV link. Both parties in this 50:50 venture hope to launch it direct to the consumer in the spring. I would quote what various high-ups in the two businesses have to say on the venture but I'm sure you can imagine.

I suppose Oddbins is hoping to leap with one bound over its somewhat larger competitors, after having been strangely slow off the mark into cyberspace ( was launched only moments before this new deal was announced). It's just difficult to imagine how the Sainsbury's and Oddbins cultures will mesh. Perhaps significantly, the announcement warns that all is dependent on 'the execution of mutually acceptable definitive agreements'.

16 April 2020 update In late 2001 the publicly quoted Robert Mondavi Winery was running into the severe financial difficulties that would eventually lead to Constellation's acquisition of the company. The sale triggered an exit clause in all of the winery's joint-venture agreements. Some partners, such as Chadwick, who now controls Seña himself, opted out (see Eduardo Chadwick's verticals) while the Rothschilds continued, and indeed strengthened, their participation in Opus One. (Our most recent article on Opus One is Opus goes wild.)

These decisions had to be made in 2005 or so which is also the year Foster's bought the then-amalgamated Southcorp/Rosemount (thereby creating today's Treasury Wine Estates). Those who thought the Mondavi/Rosemount joint venture was a good idea – Robert Mondavi's older son Michael, for instance – were long gone by then, so it was not surprising that it all fell through. And anyway Australian wine was beginning to lose its lustre in the US (see How Australia went down under). 

As for the unlikely alliance between the mainstream UK supermarket Sainsbury's and the quirky high street wine chain Oddbins, this was probably simply ahead of its time. (See the notes at the top of our long list of Wine retailers who'll deliver to self-isolators and imagine how successful it would have been over the last month if it were a smooth operation today.)

The Destination Wine Company was the brainchild of John Ratcliffe and Richard Macadam of Oddbins, then owned by Seagram, and Allan Cheesman, Sainsbury's head of wine, who was itching to get into online retailing. But again, the scheme was stymied partly by changes in ownership way above its head. Seagram decided to get out of drink altogether and in 2002 sold Oddbins to Castel of Bordeaux, who had almost zero interest in DWC's expensive new website. Mike Paul, ex Southcorp and out of a job after the Rosemount amalgamation, was hired to run this new company. But the main board of Sainsbury's was unimpressed by the return on what had been a very substantial investment and pulled the plug.

The main beneficiaries of the short-lived scheme were, arguably, management consultants Boston Consulting Group, who were commissioned to come up with a giant business plan which still sits on the shelves of John Ratcliffe, now a very successful specialist wine management consultant himself.