Winebits 197: Steve Case, Geyser Peak, $3 wine
• Virgina wine gets big name: That would be the same Steve Case who founded the original America Online, and turned it into an Internet powerhouse as important in its day as Google is today. Almost everyone who used the Internet at the turn of the century had an AOL email address. Case wants to buy Sweely Estate near Charlottesville, which gives Virginia a true big name, deep pockets investor. Why is that important? Because regional wineries are traditionally undercapitalized. Case, who made a bundle when he merged AOL with Time Warner in a $350 billion deal in 2000, has the cash to take the Virginia winery to the next step — improve the quality of the wine and do increased regional and then national distribution, which is something most non-California wineries can't afford to do. This is just another example of how Virginia is starting to challenge New York and Missouri as the top regional wine state in the country, while Texas, once considered a player, is taking giant steps backward.
• Geyser Peak bankruptcy? Lew Purdue at Wine Industry Insight (behind a pay wall) reports that Geyser Peak and its corporate parent, Ascentia Wine Estates, may be close to bankruptcy. If true, it would be among the biggest casualties of the wine industry recession. Geyser Peak, which produces quality grocery store $10 wine, has had three corporate parents over the past couple of years, as the biggest wine brands have been buying and selling labels in a furious effort to appease stockholders and reduce expenses in the wake of flat sales.
• More $3 wine: Fresh & Easy, the West Coast high end convenience chain, is expanding its line of $3 wines. Called Big Kahuna, the wines have been the retailer's best seller since their introduction in 2007. Fresh & Easy will sell cabernet sauvignon, merlot, rose, shiraz, tempranillo, sweet white and crisp white for about $3. Consider that $3 wine is now a staple of some of the country's biggest and most prestigious retailers, including Walmart, 7-Eleven, Trader Joe's, and Whole Foods, and you'll begin to see a pattern emerging. Unless, of course, you're in the mainstream wine business, and desperately need to sell overpriced $15 wine whose only attribute is a cute label.