In April 2002, Diageo plc (Diageo) announced its intent to sell its Glen Ellen and MG Vallejo wine subsidiaries to the Wine Group for $83 million. The sale was to include the Glen Ellen and MG Vallejo brand names and all existing inventory but not the vineyards/facilities of the two wineries. Glen Ellen and MG Vallejo wines typically sold for about $5–$7 a bottle. These brands did not fit into Diageo’s increasing emphasis on marketing premium wine brands that sold for $10–$15 a bottle and higher. Wine industry observers viewed the sale of Glen Ellen and MG Vallejo as a move towards brand rationalization, that is, allowing Diageo to concentrate its marketing efforts on a smaller number of more upscale brands.

Six months later, in October 2002, Ray Chadwick, President of Diageo Chateau & Estate Wines, reviewed his company’s remaining wine portfolio. Diageo Chateau & Estate Wines was based in Napa, California. Chadwick was pondering which, if any further changes to the portfolio should be made:

If you were to ask me, ‘Will there be changes to the portfolio?’ We understand and pay attention to the desires of our consumers. We’re constantly evaluating our business. We own over 2,000 acres in the Napa Valley. We have long-term leases on over 300 acres in Napa. That makes us the largest grape grower in the Napa Valley. We are still open to acquiring new vineyards if we can do so at a price that makes sense. The economics have to be right. We are currently looking at several vineyard opportunities in the Napa Valley. I can tell you that we have no plans to sell any of our vineyards at this time. We have a very large vineyard operation in Monterey County, Paris Valley Ranch (approximately 1500 acres). We have in addition to that probably another 700 acres or so of coastal vineyards in the south coast [of California].