C. Mondavi CEO: ‘Cultural premiumization' fuels consumer thirst for higher-priced wine and other goods
The Caesar Mondavi and Charles Krug names span the history of California winemaking, and the brands that still bear their names also reach across the spectrum of wine-price segments, from "popular premium" to luxury.
St. Helena-based C. Mondavi & Family, now in its fourth generation, produces the Charles Krug brand, which has labels retail for just under $20 per standard 750-milliliter bottle and go up to $250. The bigger-production brand is CK Mondavi, which retails for $7 a bottle. Annual production is 1.7 million 9-liter cases, ranking the company No. 16 among U.S. vintners, according to Wine Business Monthly.
Krug started his Napa Valley winery in 1861 and was an early proponent of quality, such as making varietal wine.
Cesare Mondavi was father to the late vintners Peter Mondavi Sr. and Robert Mondavi. The elder Mondavi purchased the Krug winery in 1943. Robert Mondavi started his eponymous winery in 1966, but his brother continued to run Charles Krug. More than two decades ago, Peter Mondavi Sr. and sons Peter Jr. and Marc reinvested heavily into vineyards and winemaking to turn Charles Krug into a high-end brand and establish CK Mondavi as an entry-level wine.
Peter Sr. died two years ago. Peter Jr. and Marc last July brought in Judd Wallenbrock as CEO. Wallenbrock has been in the wine business for four decades. His executive experience actually started with Robert Mondavi Corp., where he was vice president. He moved on to lead operations at De Loach Vineyards, be president of Michel Schlumberger Estate and, most recently, serve as president, CEO and managing partner of The Good Life Wine Collective, which produces Jessup Cellars and Handwritten Wines.
He produced his philanthropy-focused label Humanitas. C. Mondavi & Family makes its own benefit wine, Purple Heart.
Wallenbrock is set to be on a panel discussing "premiumization" at the Business Journal's Wine Industry Conference in Santa Rosa on April 26 (nbbj.news/wine18). Previously called “trading up,” it has been a trend in U.S. wine sales toward faster sales growth at higher price levels, particularly more than $10 a bottle.
Wallenbrock talked to the Business Journal about how new premiumization actually is, the value in diversifying a vintner's portfolio by price point and whether there's a coming glut of higher-priced wines.
How is premiumization affecting your approach to brand-building and brand extension?
Premiumization is nothing new at all. I started in the industry in 1979, and it has been going on since then. Back in the day, we used to call “premiumization” the introduction of “fighting varietals,” and that was premiumization up from jugs.
Culturally, there is an evolution in the wine industry that has been going on for years. Like any cultural change, it is not really noticed.
When I first got into the business, the jug business was all in gallons, and now it's metric. Suddenly, you got those cork-finished magnums, and that was evolution of the jug-wine business. Then you started going into the evolution of (wine) being (labeled) a Chablis, Burgundy or rosé to a varietally labeled jug.
In the early '80s, Jess Jackson (the late proprietor of Jackson Family Wines) came out with a wine by the glass called chardonnay. Before that, there wasn't really varietal-labeled by-the-glass options. It was all house wines.
We limit premiumization to price, as opposed to other elements such as the marketing mix of wines. It's a premiumization of package, of how we have access to wines.
While I'm driving - although I would never do this - I could pull up an app and buy a wine. That is premiumization of access.
Maybe the ceiling on wine pricing has changed and the average has shifted up a bit, but the real premiumization has been in the sheer volume of wine - consumer choices.
When I got into the business, the place people sold wines was on the coasts. To think that 25 years ago I could go to Keokuk, Iowa, and see somebody ordering a glass of wine at lunch was rare, and now I can go there and see businesspeople regularly ordering wine. Cultural premiumization is a big overriding picture.
Many goods we deal with have been premiumized. The car I'm driving does more things than I could have dreamed of and is about to drive itself. I'm about to put my third kid in college, and the amount we pay for college has gone up substantially.
One thing that hasn't changed is we still want to have wine available for everybody at any time in their wine journey financially and educationally and also for any time of day or week. I would love to think that everyone could buy $100 bottles of wine for lunch on Monday, but I don't think they can.