Wednesday, October 2, 2019

To Kalon: Land or Brand?

Constellation Brands, the company behind brands such as Robert Mondavi, Kim Crawford, The Prisoner, Corona Extra, and SVEDKA Vodka, is currently engaged in a Goliath-versus-David battle to overturn the creek-naming iniative of the MacDonald brothers and, in so doing, strengthen its argument that "To Kalon is a brand, not a place." In this post I provide some background to this 'conflict."

I like to say that I have written the second best history of Oakville's To Kalon Vineyard, with Matt Stamp's effort on Guildsomm being demonstrably the best. What both efforts have in common, though, are the testimonies and documents on the vineyards provided by the MacDonald brothers, Alex and Graeme. In addition to providing 90% of the fruit for the Robert Mondavi To Kalon label, a large portion of the fruit for the Mondavi Reserve, and the fruit for their limited-production wine, the MacDonalds are avid preservationists and curators of the history of the land on which they ply their trade.

The MacDonalds believe that "... there is a genealogy of the land and that we have a responsibility to preserve that history for future generations." Towards that end they have conducted extensive research on the origin, owners, and utilization of the To Kalon Vineyard through the ages and have freely shared their findings with all interested parties.

In addition, they have:
  • Registered the creek running through the vineyard as To Kalon Creek with the US Board of Geographic Names
  • Published the To-Kalon Vineyard Historic American Landscape Survey
  • Submitted a To-Kalon Vineyard National Register of Historic Places nomination with the National Park Service
Constellation has appealed the creek-naming effort on the grounds that To Kalon Vineyard is a brand and not a place.

The To Kalon name has been embroiled in a number of legal battles over the years. Robert Mondavi registered the name To Kalon in 1988 and To Kalon Vineyard in 1994, trademarks that came into the possession of Constellation with its purchase of Robert Mondavi in 2004. The first of the trademark battles was with Andy Beckstoffer.

Beckstoffer requires that winemakers purchasing his fruit designate the vineyard of origin on the wine label.  Schrader Cellars followed this dictate and placed the To Kalon name on the label of its 2000 Cabernet Sauvignon which was made from Beckstoffer-sourced grapes. Robert Mondavi promptly filed suit against Schrader and Beckstoffer for infringement of copyright.  After a year of back and forth the suit was settled with Mondavi granting a perpetual, royalty-free trademark license to Beckstoffer allowing him to use the To Kalon Vineyard designation for grapes grown on his part of the original Crabb estate.

In 2011 Constellation applied for three new trademarks -- To Kalon Wine Company, To Kalon Vineyard Company, and Rooted in To Kalon -- but abandoned those applications in the face of staunch opposition from Andy Beckstoffer "who argued that To Kalon is 'geographically descriptive.'"

More recently, Vineyard House Winery filed a claim to gain the right to use the To Kalon name based on (i) its small plot being in the original Crabb holdings, (ii) large portions of the current To Kalon Vineyard falling outside of those original holdings, and (iii) an assertion that the original trademark names were obtained fraudulently because To Kalon has always been a place name and, as such, is not "trademark-able." This case is still pending before the courts (The To-Kalon Vineyard Historic American Landscapes Survey stipulates that Crabb had purchased 165 hillside acres in Oakville, proximate to present-day Harlan Estate, but that his probate specified this land as used for timber production rather than being planted to vines.).

In an attempt to lure the brothers into their camp, the Constellation legal team, in a meeting at their New York offices, offered them the rights to use the To Kalon designation on their label in exchange for support of the removal of the To Kalon Creek name. In other words, to trade in their integrity for future monetary benefits (as the use of the word To Kalon on their label would allow the brothers to immediately increase the price of their wines into the range of current To Kalon offerings). The brothers demurred.

The MacDonalds' efforts to memorialize To Kalon as a place has received broad-based support, with 9 of 11 owners signing on for the National Register nomination and Constellation being the sole dissenter in the To Kalon Creek appeal. On a more global level, Antonio Galloni has spoken out in an Instagram post in support of To Kalon as a place:
What is at stake is not just the legacy of To Kalon but the entire concept of place in American wine... My position is clear: To Kalon is a place not a brand, no matter what might be written on some legal document somewhere. Napa Valley and the US need to protect the integrity of our sites ...
I also believe in To Kalon as a place and had provided Constellation with a path-forward to leveraging the brand acquired with the purchase of Schrader while further entrenching To Kalon as a place. In 2017 Schrader Vineyards sold its business to Constellation Brands for a little less than $50 million dollars (even though it owned no vineyard or winery). Schrader was a brand built on the marketing prowess of Schrader, the winemaking reputation and skills of Thomas Brown, and the quality of fruit and name recognition of the Beckstoffer Vineyard.

My thought process at that time was that Constellation intended to leverage the Schrader name into creating new branded products with fruit obtained from its own vineyards. Much as I had proposed in my discussion of the Vietti sale, Constellation could create a number of high-end vineyard designates from fruit that is "underutilized" today based on the prices that Beckstoffer To Kalon wines command.

In this model, Constellation would treat To Kalon as a cru with multiple owners (much as is done in Burgundy and Barolo), each practicing its own discipline but leveraging the reputation of the vineyard into ever-increasing rewards from the marketplace. The current commercial owners of To Kalon land are Andy, the Macdonald Family, the Detert Family, Opus One, and Constellation.

If Constellation focused on delivering premium lines from the property it owns in the historic vineyard -- the two large plots on either side of the Beckstoffer et al block -- it could designate a number of sub-cru plots and label the products as Schrader Alpha To Kalon, Schrader Beta To Kalon, etc., and these would line up seamlessly with the naming convention established with the Schrader Beckstoffer To Kalon wine.

This opportunity is still available to Constellation.

©Wine -- Mise en abyme

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