I was surprised to learn a couple of weeks ago that Robert Skalli, founder of the St Supéry winery in Rutherford, was selling his family’s iconic winery and vineyards to Chanel, the French luxury goods producer.  Press coverage such as an article in Decanter was pretty limited — not much more than the press release version of things — lots of unanswered questions in my mind.

Sue and I visited St Supéry in September (we loved the wines and the people we met) and we were told many times how committed the Skalli family was to the project, so I was caught off guard by the change in ownership. It is natural to keep quiet about a business deal until it is finally done of course, but the quick change got my attention.

All in the Families

The facts of the sale are these. Chanel owners Alain and Gérard Wertheimer,  who are said to be worth €16.6bn, have reached an agreement to pay an undisclosed sum for the winery on Highway 29 in Rutherford, the 35-acre vineyard there and the magnificent 1500-acre Dollarhide Vineyard up north in the hills.

No reason was given for the sale, although Skalli is quoted saying he happy that his winery will be run by a firm that shares his values. The Wertheimers own two wineries in Bordeaux, Château Rauzan-Ségla and Château Canon, but there is no indication that they plan to build a luxury winery portfolio. Lots of questions — why, how much, and so forth — but winery sales happen all the time and details are not always fully revealed. So why am I so curious to find out more?

I first got interested in St Supéry when I was working on my 2011 book Wine Wars. I was examining the tensions between New World and Old World ideas about wine and I came across the fascinating story of the Skalli family wine empire.

Rise and Fall of Skalli Wine Empire

Robert Skalli is the founder of the Skalli Group, a holding company that was until 2011 one of the largest producers of wines in the Languedoc.  The Skalli conglomerate made branded varietal wines  and sold them in France and around the world. Skalli sold almost all its wine interests to Boisset in 2011. Almost all? They  held on to St Supéry.

Robert Skalli’s grandparents were pied noirs, French migrants to Algeria.  Many pied noirs emigrated to Algeria starting in the 1870s, when phylloxera wiped out vineyards and grower incomes in the Languedoc. The Skallis left France in the 1930s, presumably in search of greater opportunity in Northern Africa – and they found it.

Robert-Elle Skalli, Robert Skalli’s grandfather, built an empire on grain and wine. By the time that Francis Skalli took over from his father after World War II, the family business included a huge grain operation, Rivoire et Carré with a mill in Marseilles, the number two pasta company in France, Lustucru, a vineyard in Corsica, a rice producer, Taureau Aile, and of course vineyards in Algeria.

By 1964 the Skalli vineyards in Algeria spread over 600,000 acres, which is nearly as large as all the vineyards in Languedoc today (700,000 acres, which is much less than a few years ago). This was the wine that the French négociants blended with the weaker Langudoc product to make industrial strength vin du jour and they made vast quantities of it.

Like many other pied noirs families, the Skalli eventually fled to France as a result of the Algerian war and its independence in 1962.  They settled in the Languedoc and went about rebuilding their business.  Robert Skalli entered his father’s and grandfather’s business in the 1970s and, as part of his education, studied and worked (as  a “flying intern”) with winemakers in Australia and the United States.

California Inspiration

Significantly, according to the official company history, he worked with Robert Mondavi, who introduced him to the idea of branded varietals and opened his eyes to a different vision of the wine business, one based not on the condition of supply (and the traditional practices and regulations governing production) but on demand and the development of vineyard, cellar and marketing techniques that would provide buyers with wine that they could understand, appreciate and that they would buy.

Skalli returned to France and began to organize a business to make the clean, consistent, mid-range varietal wines that he saw in California and Australia. He established partnerships with growers and cooperatives in the Languedoc, providing financing for the process of pulling out their tough old vines and replanting with market-friendly varietals like Merlot and Chardonnay. Replanting is expensive, both in direct outlays and in lost production while the vines mature.  I suppose having the backing of the profitable Skalli grain business was useful in this transformation process.

The main Skalli brand, Fortant de France, was established in 1983 to produce and market these wines both in France and in 25 foreign countries.  The Cabernet Sauvignon sold  for about six dollars a bottle back when I was doing my Wine Wars research. There was a cheaper brand, Couleurs Du Sud, sold mainly in European hypermarkets and also a kosher wine line.

Mondavi Again

The Skalli family eventually decided to concentrate on wine – the grain and pasta businesses were sold or spun off.  They had wine interests in Languedoc, the Rhone Valley, in Corsica, where they owned the largest private vineyard, and in California.   Skalli credits Mondavi with helping him make the St Supéry investment.

And in return Skalli supported Mondavi’s aborted attempt to invest in the Languedoc on the logic, I believe, that anything that Mondavi did would draw favorable attention to the Languedoc, which would benefit both family businesses.

In 2011 the Skalli family sold off their wine interests to Boisset but, significantly, retained St Supéry. This surprised me at the time and I figured that it must either signal a new direction or a special fondness for the Napa project. Now I am not sure what to think.

But it seems like the winery is probably in good hands if Chanel gives the excellent local team that Skalli developed some autonomy. Luxury goods companies are sometimes more focused on managing brands than making wine. Skalli seemed to be good at both and perhaps Chanel will take the winery to the next level. Fingers crossed for a bright future at St Supéry.

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The decade from about 1975 to 1985 featured a surprising number of European wine investments in California. Sue and I have made a point to visit many of them over the last few years to find out how they have changed or developed. How have those ambitious Euopean investments of 30-40 years ago turned out?  Tune in next week for some thoughts.

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The Wall Street Journal published an interesting article about Chateau Canon, one of Chanel’s French investment on November 11, 2015.  Unclear if this is  St Supéry’s future.