Rombauer Vineyards shows how luxury wine can raise prices in discount world
From its beginnings with an oversized production facility, Rombauer Vineyards was positioned for the future.
Similarly, the new hand at the yoke has been working to set the Napa Valley family-owned winery on a course toward success long over the horizon.
Bob Knebel, 63, was promoted to CEO in early May, when co-founder Koerner Rombauer died at 83. Knebel had been chief operating officer since 2015, but he had been helping to advise Rombauer on its next steps for 15 years before that as a member of the board of directors.
Rombauer Vineyards started making wine from its winery near St. Helena in 1982, and several years ago the winery opened a production facility for the chardonnay it’s known for near Napa County Airport.
Today, the winery produces several hundred thousand cases annually.
Knebel met Koerner Rombauer through their mutual love of aviation. Both were attending a 50th anniversary party for Napa County Airport in 1995. Knebel at the time was vice president of sales for business jet manufacturer Cessna Citation out of Wichita, Kansas. A friend recommended he try the Rombauer chardonnay wine that was being poured at the event and meet the proprietors, Koener and Joan Rombauer.
“With our mutual interest in aviation and my longtime interest in beautiful wine, we developed a nice relationship,” Knebel said.
Their friendship grew during the years shortly thereafter, when Joan Rombauer was battling pancreatic cancer. After she died in 2002 following a three-year battle, Koerner Rombauer started developing a business-succession plan, so the operation could pass to his children and grandchildren should anything happen to him.
Rombauer formed an advisory board of three, with executives from outside the wine business.
“As a family-owned business, they are very private in all aspects of their business,” Knebel said. “To maintain that level of privacy, he thought it would be good to have outside business leaders. Koener himself came from a different industry, and during 25 years (in aviation) he had associated with leaders in other industries.
He recognized that there was a cross-fertilization that could occur in business practices, hospitality, strategy, all those things that the wine ?industry in Northern California tends to focus on internally.
That looking outside the wine business is part of the secret sauce of Rombauer’s ability to be able to hold its pricing in the marketplace, he said. Looking at how other owners of luxury hospitality and consumer products brands approach marketing has been helpful.
“It hasn’t always been that way; that’s how we’ve evolved,” Knebel said. That shift has accelerated in recent years, but Koerner Rombauer laid that foundation in its infancy.
“He was focused on making the best wines we could in a style that was appealing to a broader audience of people who knew something of wine but also to people knew a great deal about wine,” Knebel said.
Also equally important was the authenticity of the story behind the brand. For it to be a family operation, the family would have to be involved in the business and paying attention to how consumers interacted with the brand.
That was partly done through the design and operation of the hospitality center at the main winery on the 40-acre knoll-top property Koerner and Joan Rombauer purchased near St. Helena in 1972. But the family also went to the consumer and trade customer, with Koerner and his son, Koerner III aka K.R., logging miles of travel throughout the country to present the wines. Joan and their daughter, Sheana, also made trips.
That worked well with Koerner Rombauer’s jovial and larger-than-life personality and love for the gourmet, Knebel said.
“We weren’t focused on the next new fad on developing styles,” he said. “We were focused on varietal purity, making the purest expressions of any variety we were involved with and polishing them every year. That focus helped us become known as a very reliable, committed, serious provider of wines at a favorable price for the quality.”
The stalwart pricing strategy for Rombauer wines amid the pressure for discounting during the Great Recession came out of planning. In 2008–2009, it became challenging to sell high-priced wines, and owners of notable brands started moving inventory by methods such as flash sales and relabeling as lower-priced retailer private labels.
Though sales growth largely returned for luxury wine producers in the North Coast a few years after, the pressure from retailers and wholesalers against moving up pricing has been a lingering challenge. That pressure has been building, with increasing costs of grapes and labor plus the entry of more vintners into faster-selling higher-priced segments.