NG: The Next Generation in Wine smooths business transition

Winery owners often hold much of their wealth in the winery itself or in ownership of vineyards where they grow grapes for production. As they look toward retirement, winery owners may decide that their best long-term investment strategy is to pass the reins on to their offspring. If they build the winery's business, expanding production and sales, that next generation can inherit a steady flow of profits that sustain them indefinitely.

Respecting the family transition of winery assets, a group of heirs and eventual heirs of wineries formed a group dedicated to educating themselves on marketing, money management and investing, called NG: The Next Generation in Wine. Most of the 27 members are located in the Napa Valley, and most are under 40 years of age. The organization was founded in 2007.

Garrett Busch, proprietor and CEO of Trinitas Cellars in southern Napa County, became president of NG in May 2014. The group does both social and educational events, and recently hosted a series of seminars on succession planning — wealth transfer to the next generations — as well as on financial management.

To be a member of NG, the 'requirement is that you are a second or later generation working full time for a family's winery,' said Busch, who is from the second generation. 'You have a mix of people from their twenties through their fifties.'

'In 2002, my mom and dad founded Trinitas,' he said. His parents have little involvement in day-to-day operations. 'I do most everything now,' he said. The company has about 18 employees, including Busch's wife Betsy, CFO.

The winery produces about 20,000 cases a year, including 24 different varietals. 'We do a lot of really small case production projects,' he said. The most popular wines are chardonnay, a red wine blend, a meritage, as well as cabernet sauvignon and sauvignon blanc. Most of the grapes are purchased from various growers in Napa Valley. Trinitas wines range in price from about $25 a bottle to $135 for an amarone wine (Amarone della Valpolicella) bottled and produced in Italy using dried grapes. His father became enamored of the amarone wine in the 1990s, Busch said, and Trinitas makes 100 to 200 cases a year.

In Napa, the winery's high-end products are $75 single-vineyard cabernet sauvignon wines.

'Our goal for the NG organization as a whole is marketing' family wineries, particularly those that have been handed to the next generation, and those that have been kept within family management.

Since he started as president last year, he has brought in expert speakers. Members have varied roles in the wineries they represent, including upper management, winemakers and vineyard managers. 'Some family members are starting from the bottom,' working in tasting rooms, he said.

A recent meeting focused on accounting principles, led by accounting firm BDCo (Brotemarkle, Davis & Co.) in St. Helena.

'I've already been handed the top management role at the winery,' Busch said. Other members are going through transition to top management or are looking forward to that phase, 'trying to figure out those transitions,' he said. Some of the wineries have been around only a few years; others, in the family for decades.

'The number one thing when you are in a family business,' Busch said, 'is that the succession plan is not only not talked about, but is not really considered until it's too late in a lot of ways.'

His father is an attorney who does estate planning, so his situation was different, with advance preparation and ample clarity. 'He is always on the ball with the game plan,' Busch said.

Last year he brought in another expert to speak to the group about marketing, including how to market to each other.

When he first started in his role as CEO, there were roadblocks internally before employees discovered his leadership talent. 'But I have grown the company,' Busch said. 'We doubled our revenue and everything else.'

When he started, there were only nine employees — half the current number. 'A lot of the people here, I brought in,' he said. 'But the people here before me, it's all about gaining respect.'

'In society, there is a stereotype about the owner's son or owner's daughter,' he said. 'When you come in and prove what you are doing on your own merit, there's never an issue. Reasonable individuals see that and respect it. That's what I have experienced,' he said. 'Once you come in and do a good job, treat everyone with dignity and respect, you get the exact same in return.'

Lisa Augustine, co-founder and previous president of NG: The Next Generation of Wine, said the organization had other co-founders including: Holly Finkelstein of Judd's Hill Winery; Chris Hall of Long Meadow Ranch; Liz Marston of Marston Family Vineyards and Kristen Spelletich of Spelletich Family Wine Company.

'When we first started meeting, it was a support' organization, said Augustine, who is now chairwoman and does marketing for Broman Cellars. 'We were new to working for family wineries. We wanted to get together to see how other people were dealing with this.'

NG's primary mission is to do collaborative marketing for next-generation wineries. 'We are second generation or later for our families' wineries,' Augustine said. 'This is someone who actually works with their family. The previous generation is still there' in most cases.

'We want to make sure that our parents feel respected so that we feel respected as well,' she said. 'You need to see each other in a business situation as well as, oh, this is my dad or this is my brother.' The business relationships are often tricky due to the complexity that comes of long family ties.

'We all make it work, but there are definitely frustrations,' Augustine said. 'It's the same as working in a corporate environment, but the family brings an extra interesting dynamic.'

Family businesses can generate and maintain a warmth that may be more difficult to cultivate in non-family enterprises. 'Personality shines through,' she said.

Her winery is tiny, making about 1,300 cases a year of sauvignon blanc, cabernet sauvignon and a proprietary red wine blend. The Broman Cellars reserve cabernet sells for $80 a bottle; classic cabernet is $52; sauvignon blanc sells for $20. The smallest case number for the reserve cabernet was 56; the highest was 80 cases.

'We are huge compared to what we used to be,' she said, chuckling. The company, based in St. Helena, started in 1994 with 148 cases. 'Compared to that, we're enormous.'

'My parents are the owners,' she said. Her stepfather Bob Broman is the winemaker, she said, and has been making wine since about 1973. 'He's never retiring,' she said. 'That's what he tells me.'

She has no plans to learn winemaking. 'I don't like to get dirty,' she said. 'I don't mind the vineyard so much. It's totally different,' and she likes to watch the grapes get picked, but 'getting all sticky' is not her thing. She helps sort grapes when they arrive.

Broman Cellars is growing production a bit each year. 'Ideally, we would be double to triple the size we are now,' she said.

NG's board has members including Augustine, Busch, Chris Hall, Kristen Spelletich, Mary Yates of Yates Family Vineyard, and Kendall Hoxsey of Napa Wine Company.

'We have had marketing' speakers, 'financial planning, succession planning' sessions, Augustine said.

The NG training on succession planning involved three speakers as a series, she said, dealing with 'how we should be planning, the kinds of questions we should be asking, how we can help our parents to assure a smooth transition. Show them that we are prepared. We continue to educate ourselves and learn more about our companies,' she said.

'Our parents want to know that we are able to continue on with the company that they have cultivated for so many years,' Augustine said. 'They want to make sure that we are not going to drop the ball. In showing that we are engaged and have the same ideals, we are fully prepared to continue on their legacy.'

Without a clear plan for family business transition, some winery founders may consider selling the company.

Sessions on financial planning included training on how to read financial statements and understand the money aspects of a wine company. Several of NG's members have training and background in the financial management of their wineries.

She worked in a restaurant then decided she enjoyed wine and wanted to learn more about it. She began working in a small winery as a teenager in the tasting room then moved on to larger wineries in different roles. Her experience at other wineries spanned 10 years before she settled into her family's winery. 'They are happy that I got experience elsewhere,' she said. 'It gave me a better comprehension of the industry as a whole.'

Augustine has a bachelor's degree in businesss. She studied wine at Napa Valley College. Broman Cellars has regular loyal customers. The company's wines are distributed in five states. 'When you want to continue growing,' she said, 'it's important that you cultivate new customers.'

NG also helps in cross-marketing to bring new customers to members' wineries.

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