Massive changes going on at Mondavi

[Carolyn Tillie]

From late last week:

Robert Mondavi Announces Plan to Eliminate Class B Shares; Board Authorizes Share Repurchase Program; Company to Create Two Distinct Lines of Business

OAKVILLE, Calif.--(BUSINESS WIRE)--Aug. 20, 2004--The Robert Mondavi Corporation (Nasdaq:MOND) today announced that its Board of Directors has adopted and will recommend to shareholders a plan to recapitalize the company that would result in a single class of shares and the elimination of Class B shares with super-voting rights. Subject to approval at the October 29, 2004 Annual Meeting of Shareholders, the recapitalization will be effected and the company will be reincorporated in Delaware.

Each Class A share of the current California corporation will be exchanged for one common share of the new Delaware corporation (the "Class A exchange ratio"), and each Class B share of the current California corporation will be exchanged for 1.165 common shares of the new Delaware corporation (the "Class B exchange ratio").

And now the repurcusions:

Mondavi giving up control of winery - Family's voting stake to drop to 40%; restructuring plans calls for company to be split in two

The Mondavi family for the first time is giving up majority control over the historic Oakville winery founded 40 years ago by Robert Mondavi and that is credited with ushering California into the premium wine world.

Changes boost Mondavi's stock - Restructuring, dilution of family's control could presage sale

Shares of Robert Mondavi Corp. jumped nearly 10 percent Monday on news of a corporate restructuring that would reduce the Mondavi family's control in the company, a move analysts said could be a precursor to a sale of part of the business.

There is a buzz here in the valley...

[Julia'sChild]

This has been going on for a couple months and speculated about for longer.

Look for most or all of Mondavi to be sold.

[mauss]

Guess what will be the future if the Mondavi sell all shares :

- more quality

or

more profit ?

And do not tell me both may fit together.

Anyway, a page is turning now in Napa : have th eright to feel sad.

[Carolyn Tillie]

It is true that this has been well-discussed here in the valley for some months. When Robert retired, several of the sons made attempts to run the business to no avail. There have been more massive hirings and then lay-offs in the past several years so this isn't a huge surprise.

It is just sad.

[KatieLoeb]

"It has become increasingly clear in the new wine environment that $50 Napa Valley Cabernet and $6 premium wines require different business models," Chief Executive Officer Greg Evans said in the release

Well - at least the CEO is making good business sense.

Since they've already hired someone from outside of the family to be at the helm of the company for the first time, clearly they either realize that outside people are better qualified to handle their company in a dispassionate and objective manner, or that no one inside of the company has been able to step up to the plate and do that up to this point, or both.

Hopefully this will be a good decision all around that will benefit the family either through a sale of all or part of the company, and benefit the stockholders as well through divesting themselves of parts of the company that are experiencing too much competiton in the market or that are too expensive to continue to operate at an acceptable profit level.

[rich]

Has any winery succeeded once it went public or was purchased by a conglomerate? I can't think or any, maybe someone else has a better memory.

[nwyles]

Any speculation as to who might be buying it ?

[Craig Camp]

outside people are better qualified to handle their company in a dispassionate and objective manner

A sure-fire plan for better wine quality. Nothing like getting rid of the passionate people.

[Craig Camp]

Has any winery succeeded once it went public or was purchased by a conglomerate? I can't think or any, maybe someone else has a better memory.

Remember Inglenook and BV.

[jbonne]

the family thing aside, i wonder it means for them to be splitting the company into two divisions. can't say i'm terribly upset about divorcing "lifestyle" wines from "luxury" wines, though i haven't been a huge fan of their luxury offerings.

but i'd like to think that two different approaches to two very different categories of wine should be exercised by two different sorts of people, at least when Mondavi is as big as it is. no?

[KatieLoeb]

outside people are better qualified to handle their company in a dispassionate and objective manner

A sure-fire plan for better wine quality. Nothing like getting rid of the passionate people.

Come on Craig. You know what I meant. I meant someone outside the family that could handle the business decisions without wondering how it would move the decimal point on their monthly trust fund check or inheritance.

Certainly no wine should ever be made by a passionless winemaker. That would be almost a contradiction in terms. Then again at those "it's-a-refinery-not-a-winery" levels of production I'm thinking theres little passion or care involved.

[Craig Camp]

It is true that this has been well-discussed here in the valley for some months. When Robert retired, several of the sons made attempts to run the business to no avail. There have been more massive hirings and then lay-offs in the past several years so this isn't a huge surprise.

It is just sad.

It may be sad in an historical sense, but the reality of the situation is that Mondavi has been making boring wines for years and that is why they are in trouble. They have almost single-handedly destroyed what should be a good term: food wine.

They are getting what they deserve for making inferior product. That's how the market is supposed to work.

[Craig Camp]

Certainly no wine should ever be made by a passionless winemaker.

Unfortunately almost all the wine in the world is made by passionless technicians. Passionate wines are the exception to the rule.

[Carolyn Tillie]

Has any winery succeeded once it went public or was purchased by a conglomerate? I can't think or any, maybe someone else has a better memory.

Remember Inglenook and BV.

And Sterling and Ravenswood and Penfolds... gads there are dozens (I'm sorry to say!)

Best look at what is being placed for sale at your local grocery store (if you are in a state that sells wine in grocery stores). The ones that get grocery store placement are the large, corporate-owned wineries that have group clout. Sadly, those ARE the ones that succeed...

[Really Nice!]

Haven't the trade magazines been documenting (for the last four or five years at least) the problems at Mondavi?

[Carolyn Tillie]

Haven't the trade magazines been documenting (for the last four or five years at least) the problems at Mondavi?

Yes, that is why I said:

It is true that this has been well-discussed here in the valley for some months.

But this is starting to hit the non-trade papers which is why I shared the info.

[CtznCane]

Robert Mondavi has meant a lot to the U.S., California, and Napa Valley wine community. When it comes to the heavy hitters he's up at the top, so from my viewpoint I do find it to be somewhat sad and sort of marks the beginning of the end of a very important and dynamic era in California wines. Certainly he is well beyond his prime but I remember (and I'm not that old) when, having broken away from Charles Krug, his winery was young, progressive and on the cutting edge of the fine wine market.

Even though I don't think I've bought a bottle of the Robert Mondavi label wine in close to 15 years, just seeing that label in the store evokes memories and thoughts of the past and sort of keeps that era going in a way. Be it a winery, a restaurant, or whatever it might be, when they close or change hands a part of us (however little) sort of goes and changes as well. While their quality for some time now may have been diminished, when the ownership changes hands there is just a finality that we don't like to see some times. It's not that there aren't other interesting or new wineries to keep us enthralled, it is just a reminder of our own mortality as well.

[winesonoma]

Robert Mondavi has meant a lot to the U.S., California, and Napa Valley wine community. When it comes to the heavy hitters he's up at the top, so from my viewpoint I do find it to be somewhat sad and sort of marks the beginning of the end of a very important and dynamic era in California wines. Certainly he is well beyond his prime but I remember (and I'm not that old) when, having broken away from Charles Krug, his winery was young, progressive and on the cutting edge of the fine wine market.

Even though I don't think I've bought a bottle of the Robert Mondavi label wine in close to 15 years, just seeing that label in the store evokes memories and thoughts of the past and sort of keeps that era going in a way. Be it a winery, a restaurant, or whatever it might be, when they close or change hands a part of us (however little) sort of goes and changes as well. While their quality for some time now may have been diminished, when the ownership changes hands there is just a finality that we don't like to see some times. It's not that there aren't other interesting or new wineries to keep us enthralled, it is just a reminder of our own mortality as well.

Well said Sir!

[jbonne]

Robert Mondavi has meant a lot to the U.S., California, and Napa Valley wine community. 

so my question is: what will his legacy be?

he's done an unimaginable amount to bring the California wine industry to its current, world-leading state -- and he's done that by creating both some very good, very expensive wine and by building his empire on a lot (a *lot*) of so-called "value" wine. (i hate that term.)

so will the Mondavi name in time come to stand for the quality of his Reserve line, or for providing Woodbridge and Private Selection to half the supermarkets in America?

[KatieLoeb]

Certainly no wine should ever be made by a passionless winemaker.

Unfortunately almost all the wine in the world is made by passionless technicians. Passionate wines are the exception to the rule.

Sadly true, which was where my refinery comment was leading.

But in the perfect world that exists in my dreams, all wine would be made by extremely passionate artisans that steward each and every barrel through the process.