Maybe it’s a coincidence. Maybe not.
In the past few months, I’ve heard several winery owners talk about rebalancing their businesses.
They emphasize, above all, rededicating their efforts on wine quality.
They also want to avoid becoming a sales-driven company.
Anyone who watched Robert Mondavi Corp. spin out of control could see the handwriting on the wall.
Mondavi became a sales company. It seemingly mattered more that the company had something to sell than what it was selling.
The deterioration in the quality of the Woodbridge by Robert Mondavi brand hardly slowed sales.
But as the publicly traded company focused on profits generated by sales of Woodbridge wines, it lost sight of its flagship winery, Robert Mondavi in Oakville, and the quality of those wines declined.
Francis Ford Coppola witnessed the demise of Robert Mondavi Winery and said that was one reason he decided to split his company into two.
So did Tom Selfridge, the new president of The Hess Collection.
Coppola’s company had become a sales company, where the “tail wagged the dog,” he said, which is why he moved his less expensive, value-oriented wines to Sonoma.
“If you allow sales [staff] to dominate,” he said, “they don’t care if they erode the premium wine.”
But Coppola was in constant need of cash to finance his flagship wine, Rubicon, an estate-grown wine from Rutherford. He also added expensive vineyard land, paying some $330,000 an acre for the old Cohn Ranch vineyard, and he bought the old Inglenook chateau.
For Hess, the line of Hess Select wines, carrying a California appellation, grew to 350,000 cases. In the process, the winery’s Mount Veeder estate-grown wines lost traction.
I once thought this would be a marquee property, but of late it has underperformed.
Selfridge is refocusing on the Mount Veeder line, shrinking volume to concentrate on greater quality. He’s keeping the lower-priced wines, though, for value and cash flow.
It’s a delicate tightrope for companies to walk. On one hand, wineries such as Rubicon and Hess want to be known for their estate wines.
Trouble is, they just can’t make ends meet without their cash-cow lines, and that has dragged down more than one company.
The key, it seems, is making sure those value wines are solid, not just boxes to move.
At the same time, the estate wines had better deliver.
Larry Schaffer — Central Coast — July 25, 2006 7:28pm ET
Karl Mark — Geneva, IL. — July 25, 2006 11:30pm ET
Jeffrey Ghi — New York — July 26, 2006 8:53am ET
Dan Jaworek — Chicago — July 26, 2006 12:21pm ET
Brian Loring — Lompoc, CA — July 26, 2006 1:04pm ET
Larry Schaffer — Central Coast — July 26, 2006 1:59pm ET
Joseph Tredici — Ramsey / NJ — July 26, 2006 2:44pm ET
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