The Wine Knows

Is Ste. Michelle Wine Estates for sale? That's the big question as its longtime parent company, US Tobacco of Greenwich, Conn., is being gobbled up by Altria Group.

UST makes smokeless tobacco products such as Skoal and Copenhagen, while Altria produces Marlboro cigarettes. The sale is in the $10.4 billion range.

Analysts figure that Altria will have no need for the Northwest's largest and most successful wine company, even though its profits have been at record levels for the entire decade.

Esther Kwon, alcohol and tobacco analyst for Standard and Poor, told the Reuters news service that she expects Altria to sell the wine division once the acquisition is complete.

"I would expect that they would put it up for sale once the deal closes," she told Reuters. "In a big organization like Altria, I don't see it making much sense (to keep Ste. Michelle)."

Experts think Ste. Michelle could go for about $800 million. It brought in $354 million in sales in 2007, according to Reuters.

Keith Love, Ste. Michelle's vice president for communications, said it's "business as usual" amid the swirling rumors. "We expect to remain a stand-alone entity," he said, adding that CEO Ted Baseler fully expects to continue running the company for the foreseeable future.

"Nothing is going to change," he said.

Ste. Michelle's roots go back to the repeal of Prohibition. National Wine Co. and Pommerelle opened in 1934 in Seattle. They merged in 1954 to become American Wine Growers and were renamed Ste. Michelle Vintners in 1965. An investor group purchased the winery in 1973 and renamed it Ste. Michelle Vineyards. A year later, UST purchased the winery and more than 800 acres of vineyard land at Cold Creek, north of Sunnyside. UST built a grand winemaking and visitor facility in the outskirts of Seattle in 1976 and renamed the winery Chateau Ste. Michelle.

Today, Ste. Michelle Wine Estates owns more than 4,000 acres of vineyards in Washington, as well as such wineries as Columbia Crest in Paterson, Snoqualmie Vineyards in Prosser and Northstar and Spring Valley in Walla Walla. It also owns Erath Vineyards in Dundee, Ore., and Villa Mt. Eden and Conn Creek in the Napa Valley. With the Antinori family of Tuscany, it co-owns Col Solare on Red Mountain and Stag's Leap Wine Cellars in the Napa Valley.

Collectively, the company produces more than 5 million cases of wine and employs about 1,000 people, more than half of whom work in Eastern Washington.

According to Decanter, a British wine magazine, Ste. Michelle is the fastest-growing top-10 wine company in the United States.

Who might be in a position to purchase Ste. Michelle is a point of speculation. New York-based Constellation, the world's largest wine company, is considered the leading contender. Earlier this year, it sold much of its Northwest holdings, including Columbia and Covey Run wineries in Washington and Ste. Chapelle in Idaho. It still owns Hogue Cellars in Prosser.

Mike Dunne, longtime wine writer for the Sacramento Bee, said Washington's profile in the global wine market has risen dramatically in the past decade and a California wine company could look to diversify its holdings into the Pacific Northwest. He said the heightened consumer interest in Riesling and Pinot Gris also makes Ste. Michelle a hot property. Ste. Michelle is one of the largest producers of Riesling in the world, making more than 1 million cases of the white wine per year.