Current controversies on North Coast traffic to wineries could benefit from a 165-year perspetive on the business locally, according to speakers at the Business Journal’s 2015 Wine Industry Conference on April 24.
Keynote speaker Michael Mondavi, son of icon Robert Mondavi and "quiet icon" himself, surveyed the growth of the wine business from two wineries in the mid-1800s to more than 8,000 nationwide today.
The bottleneck in the three-tier alcoholic beverage distribution system in the U.S. is at the wholesaler tier, but it wasn’t always that way, Mondavi said. In 1980, there was a 4-to-1 ratio of wineries to distributors, with 1,200 wineries. A decade later, the ratio had shrunk to 1.6 to 1, as the number of wineries grew but wholesaler consolidation evaporating all but 3,000 distributors. By this year, there are 12.3 wineries to distributors, with more than 8,000 producers in the U.S.
“Opportunities are created under duress,” he said to the audience of 370. “Look for the opportunity and not just the problem.”
Mondavi said he is “very concerned” about the future of the wine business in the North Coast, particularly in Napa County. While county leaders are “trying to do the right thing” about concerns over growth of the industry.
“They are not thinking about how to keep this industry healthy,” he said.
North Coast vintners have been in a global wine business for the last 20–25 years, Mondavi said. And to be competitive, producers have to develop personal relationships with consumers and wholesalers through the Internet and on-site visits.
“We need to protect the environment, but we need to protect the ability of wineries to communicate with consumers and distributors,” Mondavi said. Wholesalers want to sell products of winemakers they know, and consumers nowadays want to buy products from those they know are responsible with the soil and resources.
He said North Coast governments can learn from rural winegrowing regions in France and Italy with centuries of dealing with land use and, in recent decades, traffic.
One of the two panels at the conference was on how wineries can get through the wholesaler bottleneck.
Vintners need to ask why their brands exist, said panelist Bill Leigon, president of Jamieson Ranch Vineyards.
“There needs to be a compelling story that creates an emotional connection to your brand,” Leigon said.
Panelist Dan Grunbeck, head of corporate strategy for Young’s Market, the nation’s fifth-largest alcoholic beverage wholesaler, said he recommends brand owners adopt the “SHOW UP” mnemonic — Self-aware, based on honesty; Have a plan, not hope; be Original, not a me-too; answer the four W questions about the brand; U for the you personality of the brand; and Perseverence — for getting through the distribution consolidation.
“There may be all those suppliers in a small hourglass, but if you show up and have passion, you can get through the hourglass,” Grunbeck said. “If you don’t care about your brand, why should I?”
The onus for brand visibility ultimately is on the producer, Joy Sterling, partner and CEO of Iron Horse Vineyards.
“We feel very strongly that it is the responsibility of the winery to create pull,” she said.