Some of the solutions for today’s challenges to California wine industry growth — whether it be regulation, climate or crop disease — can be found by looking at how the business has responded to impediments to progress over a long stretch of time, according to a Michael Mondavi, whose family has been seen flowing and ebbing fortunes of the making wine in the North Coast for more than a century.
“A lot of us look at the business as what is going on today and tomorrow, but we forget to look at the longer cycles in the wine business,” said Mondavi, 72.
In his keynote talk at the Business Journal’s Wine Industry Conference on April 24, he plans to reach back to the 19th century for actionable lessons on looking for and taking advantage of opportunities. That’s how the Napa wine business became a California business then nationwide business and now a global endeavor, he said.
For example, today’s premium branded wine business might have looked more like the largely commoditized dairy industry had it not been for government price controls, Mondavi asserted. Government price controls around World War II froze the price of wine at 12.5 cents a gallon, and almost all wine at the time was unbranded, delivered by rail tanker car to national wholesalers.
With costs for making wine from Napa and Sonoma counties costing around 12 cents a gallon, his father, Robert, uncle Peter Mondavi and grandparents Caesar and Rosa Mondavi decided a better way to make money was to turn a commodity into a consumer product. In 1943, they bought Charles Krug winery and began bottling branded Napa Valley cabernet sauvignon wine for 25 cents a bottle, as well as selling it in bulk. Peter Mondavi and his sons are still at the helm of the 150-year-old Krug winery.
“That law changed the way wine was made and sold in America,” Michael Mondavi said. “Some of the regulations today are crazy, so I’m hoping that using this example and a few others will help people think about the opportunity in the roadblock, rather than just the roadblock.”
Michael Mondavi Family Estate started in 1999 with his wife, Isabel, and children Rob Jr. and Dina, after they bought a vineyard in the Atlas Peak appellation of Napa County. Now the family has 120 grape-bearing acres in two properties located above 1,200 feet. Five years later, the family opened Folio Wine Partners as a sales and marketing company for family-produced wines from regions such as Italy, Spain, Austria, New Zealand, Argentina and California, with annual case production ranging by brand from 250 to nearly 40,000.
The companies have 62 employees combined, and 45 of them are partners via 12 percent of nonvoting company stock set aside for the workforce.
“If they think like an owner, they will ask the right questions and will ask if it’s the right thing to do for their customers,” Mondavi said. Eight percent of the stock has been awarded to employees so far.
Also known as the “quiet icon” of Napa Valley’s meteoric rise to global recognition, Mondavi’s career began in 1966 just after graduating from college. At that time, his iconic father, Robert, and he co-founded Robert Mondavi Winery in Oakville. Michael Mondavi served in many positions at the winery, including winemaker for the first eight harvests, through 1974. From 1969–1978, he was vice president of sales then was named managing director and CEO in 1990. Following the company’s going public in 1994, he was appointed president and CEO and later served as chairman 2001–2004.