Estate of Richie C. Heck, Deceased , Gary Heck, Special Administrator - Page 19




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          50 percent of the methode champenoise or high-end market and                
          8.8 percent of the total domestic market.  For the period 1985              
          through 1994, the low-end and high-end champagne markets fared              
          differently.  Sales of champagne produced by means of the Charmat           
          process or transfer method (the low-end market) fell steadily               
          between 1985 and 1994.  In 1994, sales of the lower priced                  
          domestically produced Charmat process and transfer method labels            
          dropped 11 percent, when compared to 1993.  Canandaigua’s                   
          sparkling wine sales reflected that trend in 1994, declining by             
          about 8 percent from 1993.  In sharp contrast, led by Korbel’s              
          6-percent increase in champagne sales for 1994, 1994 sales by               
          domestic methode champenoise producers as a whole grew 4 percent,           
          when compared to 1993.                                                      
               Mondavi markets premium still wine under seven different               
          labels, but it produces little or no sparkling wine.3                       
               Other Factors:  Dr. Spiro testified that, as of the                    
          valuation date, compared to Mondavi and Canandaigua, Korbel was             
          smaller, more profitable, and growing more slowly.  It also had             


               3  Both Drs. Bajaj and Spiro state that Mondavi does not               
          produce any champagne.  Gary Heck testified, however, that                  
          Mondavi produces “about 1500 cases [of champagne] that they only            
          sell through their wine shop, kind of like we do with still                 
          wines.”  Even if Mr. Heck is correct, the amount of champagne               
          produced by Mondavi is negligible in comparison with its wine               
          production, which, for 1994, was 4,274,000 cases.  Thus, as a               
          practical matter, Mondavi was a producer of still wines, whereas            
          Korbel was a producer of high-end champagne and a small amount of           
          brandy.                                                                     





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