Skalli Group History

Address:

46 avenue Kleber
F-75116 Paris
France

Telephone: 33 (1) 56 26 12 00
Fax: 33 (1) 56 26 12 09

Private Company
Founded: 1964
Sales: $482.8 million (2003)
NAIC: 311422 Specialty Canning; 311823 Dry Pasta Manufacturing; 312130 Wineries

Company Perspectives:

Wine has been much more than a profession for three generations of Skallis--it runs in their veins! With its passion for the land, its taste for perfection and its desire to create, the new generation remains faithful to the Skalli heritage. More than ever, these values are firmly embedded in every step of the Skalli wine-making process.

Key Dates:

1964:: The Skalli family relocates to southern France.
1975:: Robert Skalli takes over the family business.
1977:: Robert Skalli studies wine-making in California.
1981:: Skalli purchases the St. Supery Vineyards in Napa Valley.
1987:: "Vin de Pays d'Oc" appellation is created; Fortant de France label is launched.
1990:: Skalli renovates its aging cellars.
1998:: Skalli introduces its premium varietals in the United States.
2003:: Phillippe Giraudon takes over general management of Vins Skalli; Robert Skalli assumes oversight of Groupe Skalli Family Wines.
2004:: Fortant de France changes its name to Fortant.

Company History:

Skalli Group, one of the pioneers in producing branded varietally labeled wines, has been in the grain and wine business for three generations. Beginning in the late 1970s, the company began to organize the planting of new Languedoc varieties such as chardonnay and cabernet sauvignon. In southern France, the Skalli Group owns Les Vins Skalli whose brands are Fortant, Reserve F, and Robert Skalli varietals. In the United States, the Skalli Group owns St. Supery Vineyards & Winery.

1930s-70s: An Empire in Grain and Wine

The Skalli story begins in Algeria, near Oran, in the 1930s with Robert-Elie Skalli. The Skallis were pieds noirs French vineyardists, who first came to Algeria after phylloxrea devastated French vineyards in the 1870s. Robert Skalli built an empire in grain and wine. He established Rivoire et Carret, one of Europe's largest producers of cereal products, and purchased a flour mill in Marseilles and several wine cellars in France, including one in Sete. Skalli also began planting South-of-France varietal grapes such as carignane, alicante, grenache, and cinsault in Algeria and adapted vinification methods to take into account the North African climate.

By 1938, Algeria had close to a million acres of vineyards. By the 1950s, France depended heavily on Algerian vineyards for its everyday blended red table wines. After World War II, Robert-Elie's son, Francis, took over operations of the family business (which included Rivoire et Carret; Lustucru, France's second largest pasta company; Taureau Aile rice; and a vineyard in Corsica) and began blending vines from the Oran vineyards with those from Mostaganem. In 1944, he established some of his own Algerian vineyards. By 1964, these vineyards totaled more than 600,000 acres, and Francis Skalli had begun a producer-partnership with other growers that prefigured his son's cooperative relationship with growers in France two decades later.

The Algerian war of independence eventually caused the pieds noirs to leave the country and return to Europe. The Skalli family relocated to the Languedoc region of southern France in 1964, the year that Francis Skalli died and two years after Algeria gained its independence.

Languedoc-Roussillon stretches along the Mediterranean coast approximately from Provence westward to the Spanish border. It is a huge vineyard area, comprising 400,000 hectares or about one million acres of cultivated land. But, by the end of the 1970s, the Languedoc region of France was producing inferior wines. Until 1982, the Skalli cellar in Sete purchased cheap, local wines that it used for blending vins de table.

Robert Skalli, son of Francis, took over the family's food conglomerate in 1975. In 1977, he traveled to California to study with some of the state's top winemakers--Robert Mondavi, Michael Reno of Domaine Chandon, and Bernard Portet of Claude Duval. California winemakers had pioneered the concept of varietals in the 1950s and 1960s in order to set themselves apart from France, and to avoid being sued for using a French regional name for their wine. Skalli's visit to California convinced him that varietal wines were viable in France. He began to view the Languedoc as a new world wine region.

1980s-90s: A New Base of Business in Varietal Wines

After the European Union took action to dry up the Languedoc, offering growers premiums for ripping up their grapes and abandoning viniculture, Skalli organized dozens of meetings. He convinced winegrowers in the departments of Aude, Herault, Gard, and Pyrenees-Orientales to tear up their inferior wines and replant their vineyards with cultivars then in demand--Cabernet Sauvignon, Merlot, and Chardonnay--to produce clean, sound wines at affordable prices. "We were pretty convincing," he recalled in a 1999 Wall Street Journal article. "We said, 'What's your market? The European Community, which accounts for 30 percent of your business, buys your wine for distillation. One day, after the surplus wines have been ripped up, the European Community will stop buying your wine because it will have found a balance between offer and demand. So you'll make vin de table at cut-rate prices, which interests nobody and which will no longer be subsidized by the European Community.'"

French tradition dictates that a wine be named after its region of origin instead of the grapes from which it was made (chablis instead of chardonnay). But Skalli named his wines in the New World way. "I discovered varietal wines with Robert Mondavi one afternoon in 1972 at age 22," Skalli explained in a 1998 Toronto Sun article. Varietals were more sophisticated than vins de table, but less subtle than high-end appellation d'origine controlée (AOC) wines; they became France's new mid-range market.

Skalli started with three growers and a cooperative. Initially his replanting project suspended production for three years, during which time Skalli Fortant, Skalli's wine division, provided support to growers through financing. Grower contracts took one of three forms: a one-year contract to explore the potential for a long-term relationship; a five-year agreement specifying grape variety and cultivation techniques; or a ten-year exclusive contract putting production under Fortant's direction and access. In 1983, the company introduced its Fortant varietals. By 1999, Skalli, working with 150 growers, including half a dozen coops, exported 65 percent of his wine to 25 countries.

In 1981, the company began looking for Napa Valley land to expand its vineyards, and in 1982 Skalli purchased the Dollarhide Ranch in Pope Valley for $3 million. By 1986, Skalli's new World vineyards were producing a limited supply of wine. The company released its first Atkinson Manor wine in 1989. The Dollarhide Ranch later became the St. Supery Vineyards & Winery. When complete, the St. Supery Wine Discovery Centre had a self-directed tour in a one-acre demonstration vineyard where visitors could pick leaves and taste grapes.

Beginning in the mid-1980s, many millions of bottles of varietal wines from Languedoc-Roussillon began to arrive in the United States. The Languedoc's economies of scale, fertile soils, and favorable climate meant that these wines were priced extremely competitively. In the late 1980s, Skalli S.A. entered the wine business as a negociant, or broker, producing 600,000 cases of varietal wines a year, cabernet sauvignons, chardonnays, merlots, sauvignon blancs and syrahs, under the Fortant de France label. In 1987, the French Institut National des Appellation d'Origine created the "Vin de Pays d'Oc" appellation for varietal wines from the Languedoc. Vins de Pays are several ranks below AOC and subject to less stringent regulations.

In 1992, Fortant de France wines arrived on the Australian market. From 1993 to 1998, French sales of varietals went from six million to 29 million cases, and, while overall wine consumption in France was down, domestic sales of varietals jumped 44 percent from 1994 to 1995 and increased an additional 30 percent in 1996. Fortant de France was the leader among French varietal wines by 1998, with 30 percent of the market and $80 million in sales. The company exported 65 percent of its production to 25 countries.

2000s: A Focus on the Medium- and High-Quality Wine Market

By 2000, vins de cépage, or varietals, comprised the fastest growing segment of the French wine market. Production had nearly tripled during the 1990s, leaping to 51.2 million gallons from 5.5 million gallons. Fortant de France had reached 2.5 million cases in sales in its first ten years (from 1987 to 1997). Skalli employed a team of enologists and agronomists and had two vinification cellars and a barrel-aging cellar. In 2000, it was the fourth largest company in the Skalli Group.

In the new millennium, Skalli Group determined to focus its business on wine and abandon its other division. After acquiring the distribution networks of Caves de Notre-Dame and those of wine dealer Sefivins in Chateauneuf-du-Pape in 2001, Skalli Group announced its intended restructuring with plans to sell its pasta and rice businesses. Panzani, the leading French pasta group, bought the fresh pasta, sauces, and rice business of Lustucru, France's number one fresh pasta and rice company in 2002; however, owing to a ruling by France's competition authority, the dry pasta, semolina, and couscous business had to remain in the hands of the Skalli Group. This business became part of a new company, Pasta Corp.

The company also embarked upon its strategy to make Skalli wines a major player in France's medium- and high-quality wines market. This plan began with the withdrawal of Skalli's wines from supermarkets, making them available only in restaurants and specialty wine shops. It also focused on sale of its branded wines in the United Kingdom in 2002 in an attempt to increase the French share of the British wine market, and on its direct-to-consumer sales in the United States.

By 2003, Skalli had 2,500 hectares of vineyards under contract. It comprised approximately 150 growers working 17,500 acres of vineyards, six coops, and exported 65 percent of its wine, marketed under the Fortant de France (renamed Fortant in 2004), Robert Skalli, and F brands, to 25 countries.

As consumers and producers had become more confident, the company's range of experimentation had broadened. To accommodate this expansion, in 2003 the company underwent reorganization: Phillippe Giraudon took over general management of Vins Skalli, while Robert Skalli assumed oversight of Skalli Group Family Wines, producer of premium cabernet and chardonnay from top growers. By 2004, grapes such as syrah, grenache, muscat, viognier, and mourvedre had joined the original chardonnay, cabernet sauvignon, cabernet blanc, and merlot, and the company looked forward to continued growth and marketing new wines.

Principal Subsidiaries: Skalli-Fortant de France UK Limited.

Skalli Group History

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