troubling non-news

Wednesday, February 24, 2010

After many years as a journalist – most of it outside of the wine world – I’ve developed a twitch. My twitch acts up when a story appears to withhold more than it discloses. That's when the reporter in me wants to hunt down the rest of the story – when I see a spin-meister at work. I’ve been twitching since last Thursday, when Bloomberg reported that Altria, the tobacco company that more or less accidentally acquired Ste. Michelle Wine Estates a year ago, will “hold on to its wine unit... because it wouldn’t currently fetch enough in a sale.”

This non-news came from Altria CEO Michael Szymanczyk (someone buy the man some vowels!). “There’s no great deal to be had in selling,” Bloomberg quotes him as saying; “our position is that, for now, we are going to keep that business.”

“For now.” Those two words got the twitch-ometer fired up. It just doesn’t pass the twitch test, at least not for me. I’ve spoken more than once with SMWE CEO Ted Baseler, a straight-shooter and a man I greatly respect. He has always said that what is important is to make his business strong and profitable, and he’s certainly done that, even in this industry downturn. Furthermore, unlike many of the big corporate wine companies, SMWE does much more than just turn a profit. Over the decades they have been instrumental in building the Washington wine industry – with research, vineyard support, marketing muscle, initiatives such as the Riesling Rendezvous, and help to smaller wineries in difficult times.

For over 30 years the wine business was owned by US Tobacco, and UST kept it pretty much at arm’s length – a situation that seemed to work well for all concerned. Let’s face it – no wine company wants the added burden of being associated with a tobacco company! They might as well go out and open up a few cathouses in Nevada while they’re at it.

But I digress. I inquired once again if SMWE had a response to this latest news item. Kari Leitch, the VP of Communications, responded in an e-mail this way:

“Ste. Michelle continues to be managed in Woodinville as a stand-alone
subsidiary of Altria. Altria demonstrated its support for the wine
business last week by adding to its mission statement a commitment to
responsibly provide wine consumers with superior products.”

A quick check of the Altria website led me to this “Code of Conduct”. Somewhere in this massive document I assume is the phrase to which Ms. Leitch is referring. All good. But nothing new. SMWE has been providing wine consumers with superior products pretty consistently for a long time. They do it as well as any big wine company in the world – and better than most. Putting the company up for sale when Mr. Szymanczyk decides it might “fetch enough” could actually be a good thing. But it definitely takes the company – and to a large degree the Washington wine industry – into uncertain, uncharted waters.

For now, no news is good news – I guess. Maybe I’m just a worrier by nature. Twitch twitch.

5 comments:

Anonymous said...

Paul,
No purchase of vowels is necessary - only a familiarity with languages other than English. The name is pronounced Shyh-man-chyk - just like it's written.

Which cigarettes go best with Washington Riesling?

Nicolas said...

Paul,

My guess is that as long that Ted keeps up the good work, Altria will keep the company. May be the press release was a way to communicate to potential buyers: "don't come up with a low ball offer, because we won't sell at a loss".

Nico

Anonymous said...

Probably does not matter, but it will probably not be in a Code of Conduct. Checked real quick, and here is part of the Mission ... Our Mission and Goals

Our Mission is to own and develop financially disciplined businesses that are leaders in responsibly providing adult tobacco and wine consumers with superior branded products.

In pursuing our Mission, we have established the following goals for Altria Group and its subsidiary companies:

http://www.altria.com/about_altria/1_1_altriagroup.asp

Douggator

Anonymous said...

I'd bet many wineries in North America in todays economic environment would LOVE to be a subsidiary of a large tobacco company given their access to capital and leverage throughout their supply chain.

Anonymous said...

Paul,

I do not believe your instincts (twitch) are far off. No news is good news---for now. Until there is a change in top management and some consultant recommends to spin off "non-core" business. Then SMWE will resemble Beringer, post Nestle. But as long as they stay with Altria, they will continue to be a great comapny that they are.

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