Kendall Jackson Winery, Ltd. Business Information, Profile, and History

Company Perspectives:

To make truly exceptional wines, we work to control the countless details inherent in the selection of our vineyards, the quality of our barrels, and the delicate balance of assembling the final blend. Ultimately, the fate of each bottle is in the hands of our winemakers. Since nothing has ever surpassed the caliber of wine classically crafted through hands-on techniques, we will remain devoted to artisan winemaking.

History of Kendall Jackson Winery, Ltd.

One of the few remaining family-owned wineries in the nation, Kendall-Jackson Winery, Ltd. is one of California's largest and fastest-growing wine companies. Kendall-Jackson and its sister wineries comprise the 13th largest wine operation in the United States. The company produces approximately 1.7 million cases of wine annually from the fruits of its more than 10,000 acres of vineyards, and exports to at least 40 countries worldwide. According to company documents, Kendall-Jackson's four separate wineries house what is possibly the single largest barrel fermentation project in the world. Wine and Spirits magazine ranked Kendall-Jackson wines as the "Number one brand of the fifty top selling brands" by owners and sommeliers (wine waiters) from the nation's top restaurants for three years in a row (1995--98). Kendall-Jackson's award-winning Vintner's Reserve line includes Chardonnay, Cabernet Sauvignon, Sauvignon Blanc, Pinot Noir, Zinfandel, and Merlot varietals.

In 1982 Kendall-Jackson Vineyards and Winery was founded by California native Jess Stonestreet Jackson. Jackson was born in 1930 and grew up in San Francisco where he was informally introduced to wine and family winemaking by Italian neighbors he befriended. Academically, Jackson's ranking earned him a scholarship to attend college at the University of California at Berkeley, where he studied law while working at the San Francisco docks to pay living expenses. He also worked as a Berkeley policeman and as a legal researcher for then California Attorney General Pat Brown, who later became governor. Jackson passed his bar exam in 1955 and became a respected attorney specializing in land use and property rights issues. In one of his most famous cases, he helped represent Joe Gallo against his winemaking brothers, Ernest and Julio, in a "failed attempt to gain a third of the world's largest winery, E. & J. Gallo," according to Kim Marcus of Wine Spectator.

Establishing a Vineyard in the 1970s

Jackson and his family owned 80 acres of pear and walnut orchards in Lakeport, the Clear Lake region of northern California, but Jackson's perennial interest in grapes and winemaking motivated the family to remove the trees and convert the crops to vineyards. The vineyards flourished and for seven years the family sold the grapes to local wineries such as Fetzer, until the market shifted in 1981, leaving most of their crop unsold. In Jackson's words, "I never intended to go into the winemaking business," adding "but I was forced to. We couldn't sell our grapes for what it cost us to grow them. So we did the only thing we could do--we made wine." The first two Chardonnays were bottled under the Chateau du Lac label. For almost a decade, Jackson had experimented with different styles of wine, growing several varieties of grapes and supplementing them with grapes grown in vineyards throughout California's cool coastal regions. Most California wineries emphasized making wines from a single vineyard, but Jackson blended grapes grown in locations such as Santa Barbara, Monterey, Sonoma, and the Lake counties. He and his first wife established the Kendall-Jackson Winery (Kendall was Jackson's first wife's maiden name) when they discovered a market niche for reasonably priced Chardonnay wine.

Under the supervision of Jedidiah Steele, the winemaker recruited to oversee processing, the Kendall-Jackson Chardonnay became an instant success thanks to a mishap involving unfermented sugar. The fermentation became "stuck," meaning that there was too much sugar left in the wine. Several winemakers were recruited to help save the wine, but their methods could not accomplish the degree of dryness they desired, which as it turned out, created a flavor much appreciated by consumers. The Chardonnay became one of California's most popular wines--before long 60 percent of American consumers would choose sweet and fruity Chardonnays as their wine of choice. The first Kendall-Jackson Chardonnay vintage, introduced in 1983, was named the Vintner's Reserve Chardonnay, and won the American Wine Competition's first-ever Platinum Medal. The wine, described in company documents as "rich, round, flavorful" was made at the Vinwood winemaking facility with "hand-crafted methods, including small oak barrel fermentation, malolactic fermentation and aging on the yeast lees (wine sediment)." The Vintner's Reserve line was expanded to include Sauvignon Blanc, Cabernet Sauvignon, Pinot Noir, Merlot, Zinfandel, and Riesling. Following on the footsteps of those successful introductions--and further experimentation--Kendall-Jackson soon introduced a new collection of wines, the Grand Reserve line, made from the finest of their grapes from the finest vineyards, including Chardonnay, Cabernet Sauvignon, Pinot Noir, Zinfandel, and Merlot. The Grand Reserve line was committed to producing a product only in years when the company's highest criteria for quality could be met, according to company accounts.

Growing a Company in the 1980s

Following the initial success of the Kendall-Jackson Vintner's Reserve wines, Jackson decided to give up his law practice in order to devote all of his time and energy to winemaking. His competitors credit him with having a keen sense of the consumer's perspective. "He's been creative when the industry's been lethargic," according to a Kim Marcus interview in Wine Spectator with Michael Mondavi, president and CEO of Robert Mondavi Winery. His wines appealed to the consumer's palate, especially the slightly sweet Vintner's Reserve Chardonnay, a wine suited for most any occasion. Jackson, savvy in the field of real estate dealing, continued to buy prime vineyards at bargain prices and proceeded to hire the best winemakers he could find. According to Marcus, Jackson sometimes relied on the advice of another Napa Valley winemaker, Ric Forman, who described Jackson as "a hard-bargaining businessman." He continued, "He's outrageous. He thrives on the game. It's not the money for him, it's the game." His talents have earned him a reputation as a cunning dealmaker with high energy and entrepreneurial skill, evidenced by his enormous production and relatively fast ascension within the industry. While wine purists have sometimes dismissed the quality of the sweeter Kendall-Jackson wines, Jackson insists that his wines are made from the finest grapes and provide a product desired in the marketplace. Virtually all of the grapes (99 percent) that go into making Kendall-Jackson's intensely flavored fruity wines come from two climatic zones in California, on land that stretches from Mendocino in the north to Santa Barbara in the south. Wines such as Chardonnay, Pinot Noir, Syrah, and Zinfandel taste best when the grapes are grown from coastal vineyards, influenced by the cooling breezes of the Pacific Ocean. A second, more temperate zone is suited to varietals such as Cabernet Sauvignon, Merlot, Sangiovese, and Sauvignon Blanc. Soils within zones also vary&mdash do influential altitudes--which is why a Chardonnay from the Santa Maria Bench-area tastes tropical, like guavas and mangos, while the more northern-grown grapes produce a Chardonnay that has more of a pear and citrus flavor--considerations that Jackson and his vintners appreciate before buying and planting grapes, and before blending. Jackson told Kim Marcus that "All good grapes are mountain grapes, because of natural selection. Because the first vinfera vines grew in the Caucasus Mountains of the former Soviet Georgia, grapes bear the best fruit in thinner, but well-drained soils," which explains Jackson's tendency, says Marcus, to grow grapes on small slopes with drainages that mimic mountain conditions.

The fruitful 1980s gave way to the birth of traditional values in winemaking. An awakening had occurred as consumers and vintners recognized the taste and consistency advantages of designating certain vineyards for particular wines. In 1995 Jackson structured eight of his smaller wineries into an organization called Artisans & Estates, made up of his start-up wineries: Stonestreet, Cambria, Camelot, and Lakewood; plus the acquired wineries of Edmeades, La Crema, and Robert Pepi. Separate expert winemakers were set up to run each winery, each specializing in making wines from single vineyards and viticultural regions. Among the top winemakers hired were veterans such as Charles Thomas formerly from Robert Mondavi, John Hawley formerly from Clos du Bois, and Tom Selfridge formerly from Beaulieu. Soon after their formation, the organization launched a sparkling wine called Kristone from the Santa Maria region. They also introduced a tenth label, Hartford Court, specializing in Russian River Pinot Noir. In a Wine Spectator interview, Jackson told Marcus: "I have been intrigued by the concept of a given vineyard that could give great results. The reason why I went up and down the coast was to find that perfect vineyard. But in any given year, a particular vineyard will let you down," he explained. His strategy combined the blending of wines for the Kendall-Jackson label, to assure a reliable product, and added specialty wines from particular vineyards to enhance the company's reputation for producing what he referred to as "hand-crafted" wines, presented by Artisan & Estates. Through the purchase of what he considered the best vineyards from each grape-growing region, the Artisan & Estates wines were intended to encompass a more exclusive image, a production concept described by the company as a "flavor domain," an exceptional flavor indigenous to each area.

Expanding into Italy, Jackson purchased Villa Arceno, a 110-acre Tuscan estate with vineyards suited to Chianti, Cabernet Sauvignon, and Chardonnay wines. Within 18 months, several other properties were added to the list, including a 200-acre Merlot vineyard in the Carneros district of Napa County, the 67-acre Veeder Peak vineyard in Napa, known for its Cabernet Sauvignon, a portion of the Durell Vineyard in Sonoma Valley with prime grapes for Chardonnay and Syrah wines, among others. One of his largest purchases was the 5,500-acre, $8 million Gauer Ranch in Sonoma County, followed by the acquisition of the 1,200-acre, $12 million portion of the Tepusquet Vineyard, a source of grapes for the fruity-tasting Vintner's Reserve wines. He also expanded southward into Chile and Argentina. Jackson observes a basic investment strategy: buy low and sell high. New players within the California wine industry in the 1980s and into the early 1990s increased competition which forced many of the smaller wineries into extinction. Jackson took advantage of opportunities to expand through the purchase of bargain properties without highly leveraging his winery, as profits were routinely reinvested in the business. He also began planting vineyards in the lower-priced southern California coastal regions (compared to Sonoma and Napa Counties), a region relatively new to the production of large-scale vineyards.

The 1990s: Barrel Manufacturing

Vintner John Hawley oversaw all of the Kendall-Jackson wine production. He emphasized the advantages of handling the grapes as little as possible during the winemaking process, choosing not to fine, filter, or manipulate the wine needlessly. At the Vinwood facility, grapes were fed whole into the presses on a conveyer system, allowing for more free-run juice and less sediment in need of filtering. The initial fermentation took place in 20,000-gallon stainless steel tanks before being transferred into small oak barrels where the major fermentation occurred before aging and finally, bottling. The barrels imparted a spicy--sometimes compared to vanilla or butterscotch&mdashøasty-oak flavor to wine and allowed a slow evaporation of water and alcohol, which intensified as the wine aged. The shape of the barrels, grain density, oak source, thickness of stave, and level of toasting were some of the variables in the manufacturing process that contributed to a particular wine's taste. After determining that the high cost of oak wine barrels--considered by Jackson to be a significant flavor component in crafting quality wine--cut into profits, Jackson, in partnership with the Independent Stave Company of Missouri, bought a wine barrel making operation in Beaune, France, called Merrain International. Typically, the French oak barrels cost in the range of $650 each. By controlling his supply, Jackson cut the cost of producing the tens of thousands of needed barrels in half and gave his winery an assurance of source, quality, and handling of the oak.

Viticulturist Randy Ullom became Jackson's winemaker for Camelot Vineyards in 1993. He soon was responsible for heading the company's winemaking production at Vina Calina in Chile, and also helped establish the Argentinean Mariposa label while overseeing the Argentinean production. Prior to employment with Jackson, the wines Ullom had produced while working for De Loach's Vineyards in Sonoma County were consistent gold medal winners at wine competitions. Jackson eventually invited Ullom to become winemaster for the Kendall-Jackson Winery, a job he accepted with trepidation. According to company documents Ullom commented, "Sometimes I look at all of the vineyards we own, and all of the individual lots of wines that we make, and the thousands of barrels we have sitting in our cellar and I think, You gotta be kidding me. After I've sufficiently recovered from my daily panic attack, I just take off my coat, dig in my heels and take it one barrel at a time."

In 1995 Wine and Spirits magazine named Kendall-Jackson "Winery of the Year." In the following year Kendall-Jackson focused on marketing and signed a distribution contract with Regal Wine Company, a direct sales concern, making it the predominant California distributor for Kendall-Jackson wines, an account which was previously handled by Southern Wine and Spirits. In that year Jackson sued E. & J. Gallo, the world's largest winemaking operation, for trademark infringement, citing the similar bottles and "colored leaf" logos used by Gallo, but the jury rejected the claim which was later affirmed in a federal appeals court ruling.

Jackson maintained that controlling growth--and avoiding the fate of many smaller wineries, who during the 1980s expanded too rapidly and then were forced to sell out to larger operations--was paramount to being successful. He was determined to remain a family-owned business, along with his wife who served as president of Cambria, two daughters who worked at the winery, and six other relatives. Committed to further developing the Artisans and Estates wines, Jackson also continued to focus on how consumers thought about California wine. "Wine is entirely different from liquor or beer, and I'd like to see our industry free itself from the images that are used to sell those products," he stated. "Wine is a part of our cultural heritage. It has always been the traditional partner with food. Wine celebrates friends, family, love--all of the best things in life!"

Principal Subsidiaries: Kendall-Jackson Vineyards and Winery, Ltd.; Majestic Marketing Group, Ltd.; Regal Sales Co.