CEO of Francis Ford Coppola's wine pursuits talks reading the consumer Zeitgeist

Wine business insights

These key players on the California North and Central coast and in Oregon talk about what's coming for the industry and layout of the marketplace now.

David Duncan, proprietor, chairman and CEO, Silver Oaks Cellars

Corey Beck, CEO and winemaking chief, Francis Ford Coppola Winery

Bob Torkelson, president and CEO, Trinchero Family Estates

Alex Ryan, president and CEO, Duckhorn Wine Company

Dan Baker, executive vice president, Korbel

Michelle Benvenuto, executive director, Winegrowers of Napa County

Ron Denner, Denner Vineyards

Cam Baker, proprietor, Larkmead Vineyards

Tom Bonomi, president and CEO, Price Family Vineyards & Winery

Steven W. Spadarotto, Far Niente Wine Estates

Sarah House, director and senior economist, Wells Fargo

They are set to speak at North Bay Business Journal's Wine Industry Conference in Santa Rosa on April 18.

Forward-thinking has served Francis Ford Coppola in his pursuits in film, wine, hospitality and now cannabis.

At the helm of much of this business is Corey Beck. Early last year, he was promoted to CEO of The Family Coppola, which runs Francis Ford Coppola Winery in Geyserville, Virginia Dare Winery (formerly, Geyser Peak), Domaine de Broglie vineyard and tasting room in Oregon, Great Women Spirits, film production company American Zoetrope, art and literature magazine Zoetrope, Mammarella Foods pastas and sauces, and Cafe Zoetrope in San Francisco.

Coppola himself leads luxury Napa Valley winery Inglenook. Late last year, he started a personal venture, The Grower's Series, a cannabis-focused brand produced with North Coast partners.

Beck came to Francis Ford Coppola Winery in 1998 as assistant winemaker, then rose to winemaker, general manager and finally president and director of winemaking. He's also a partner in Safe Harbor Wine Storage, a Napa company that offers 3.5 million gallons of bulk storage for area vintners.

Wine production is estimated to be 1.8 million cases annually, according to Wine Business Monthly.

Ahead of his panel discussion at the Business Journal's Wine Industry Conference on Thursday, we talked with Beck about the company's long-running venture into the some of the hottest trends in premium wine (rose, sparkling wine and cans), the velocity of demand for upscale wine, the rise of Gen X and millennials, and winery destination marketing.

As the economy goes, sometimes, so does people's choice in terms of wine, in terms of moving up the ladder. So we've seen this growth within price points. The price point right now that seems to be doing well is $15 retail - doing extremely well.

Part of that is growth we've seen on the on-premise side and with some of the (wine brand) purchases, wanting to get into that segment. Some of the wineries that maybe haven't played in that segment before. It takes a few large wineries and all of a sudden, they can push into the retail world and make it a little more accessible for our customers.

Over the course of the last 10 years, and maybe a little bit longer in California, technology (has increased) in the vineyards and wineries. The wines we're making now as an industry are incredible, from the low end to the mid tier to the high end. We're continuing to evolve and make our products, plus our packaging, more unique and different. All of those things add up, and they can warrant higher pricing.

It's been a journey. These things don't just happen overnight. Think about Sonoma County and the pledge that (Sonoma County) Winegrowers made to make all 60,000 acres (of grapes) grown here 100% sustainable. We're 97% there now; in 2020 we'll be 100% sustainable, the first (American Viticultural Area) in the United States to do that.

All of those little things that we're doing are working. We're continuing to tell a story. We're continuing to add value to our customers, and that will help warrant a higher price.

You mentioned technology that's come along with different types of packaging. You have been out on the forefront with wine in cans, starting with Sofia. How challenging was it to get that started and moved along?

We launched our Sofia in minis in 2003. We were the only one the time. And so we were for the longest time trying to get people to get into the market, so it would help not just with our sets but also being able to have a category. And now - be careful what you wish for - everybody's coming out with a can.

It's all about timing and progression. If you think about the majority of the people consuming the cans - specifically, the millennials and some of the Gen Z - they have all been raised that you can get anything quality in a 250-(milliliter) can.

Think about Starbucks and Peet's coffee. For me growing up, I couldn't get a latte macchiato in a can. But now all of a sudden, all things premium are coming in cans. Perrier sparkling water: It used to be in the nice big glass bottle. San Pellegrino (sparkling water). With the consumers, they are willing to pay for convenience - and then also sleek, good packaging.

There's a lot of factors within this. Boomers: still consuming. My generation, the Gen Xers: We seem to be the lost (generation of wine consumers), but we are also still consuming. The millennials: Everyone's trying to figure (them) out. But the big thing with the millennials is how do we market to them?

When the baby boomers were in their 20s, they didn't start off drinking first growths (the best of Bordeaux wine). White zinfandel was a huge part of getting people over that hump. And then as people started to make a little bit more money, they graduated into, maybe, a Kendall-Jackson Vintner's Reserve chardonnay in the mid-'80s. As your income level goes up, so do some of your (spending) habits, and wine parallels that.

Right now, we are seeing a huge boom in these hard seltzers, like White Claw. It's water with a little bit of flavoring and about 5% alcohol. And on that can, it says 90 calories. We're looking at marketing to people that are health-conscious, that don't need to have something that's 14% alcohol. But what that's doing is getting people to - hopefully, becoming the white zin from the '70s - consume alcohol on a different platform.

As you start to move up, it's, “Wow, I would love to have a can of chardonnay with this halibut.” Wine industry must continue to push food and wine as a complement.

Then there's how the consumers are shopping - millennials, specifically. If we have fewer people going into grocery stores, how are we going to market to them to ensure they're buying our wine?

I have two small boys. This morning, one son walked down and says, “Alexa, tell me what the weather is going to be today in St. Helena.” People are doing that now: “Alexa, what's the best chardonnay from Sonoma County?” How do we become that voice? How is Alexa able to market our brands? So these are the things that for us as an industry and in many industries (we need to be) continuing to be on the forefront (of) and figure out.

It's going well. DTC (direct-to-consumer sales) now are $3 billion. Wine clubs are continuing to grow. Retailers like Drizly are platforms where people are ordering and having their wine delivered directly to their house. You've seen here in California with delivering cannabis right to their house and not going to dispensaries. The delivery side of it is becoming more and more accessible, and people are taking advantage of that.

We were talking earlier about the innovations in packaging, and cans being a lighter-weight packaging.

That's part of it. But then there's this been this movement to lighter-weight glass. Some of these cabernets or higher-end wines were the big, heavy bottles. (Vintners) are moving away from that. Going back to (what I said about) the sustainability efforts, (it's about) being more conscious about that. It's a social thing.

So the ones that are going to take advantage of that right now are the entrepreneurs out there that are that are doing a private label for a retailer that hadn't committed to grapes, because they could take advantage of the bulk-market pricing.

Because as you know, we've had our largest harvest ever … in California. So if you hadn't had anything committed, you can go on the bulk market right now and really take advantage of it.

For wineries immediately, it doesn't mean much, because the wines that we're selling right now, either are the '17 vintage, which we hadn't seen pricing go down at that time. And they are committed grapes that we had signed up prior to '18 (harvest). So, we won't start to see some of these things into the market until we go through (the cycle and) as contracts expire and we renegotiate at a different price.

Long term, definitely, we could get a little bit of reprieve for the wineries.

From labor to corks to glass to trade tariffs - you name it - pricing keeps going north. There really hasn't been a segment or a sector of our business (where costs have) gone south. Grapes, for the first time here in probably five years-ish, are giving us that little bit of window of opportunity to help with lowering our cost of goods.

Everybody loves to think pricing keeps going up, that the wineries can raise their FOBs (free-on-board prices) to our wholesalers. Well, it doesn't work that way at all. We have now 11,000 bonded wineries in the United States. So if you raise your FOB, all of a sudden that (wholesale) buyer's like, “I have 100 people right behind you that will give me that product for 20% less.” So we don't have that luxury. If we can get a little bit of price relief somewhere, that's going to help.

Down the road, (lower) grape and bulk-wine pricing will be part of that.

Right now, 6% of our total production goes to the export market. I was just in ProWein (trade show) two weeks ago, meeting with all 35 countries that represent our brands, and there's a lot of opportunity. Certain (countries) do extremely well.

We got to figure out some of these tariffs in Southeast Asia. But Canada is a wonderful market for California wines. We are definitely seeing California wines are doing well on the export stage.

Imports coming into the U.S. now represent about 36% of all wine sold. That trend continues to go up. The big players of Italy and France and some of the New World wines from Chile and New Zealand have done a very good job of bringing in wines at lower costs.

It's not just competing with our neighbors; we are competing on the world stage. That's why our export market needs to continue to thrive.

It's probably like working at Apple in the mid-'80s and '90s. You continually need to give your consumers another great experience (at) every new launch, be it the iPad, music, the iPhone. For us, (it's) continuing to raise the bar for all of our consumer experiences. The great trend that we're seeing is that people are coming and wanting education. So it's no longer just tasting (at) five wineries.

People are seeing fewer wineries. The experiences are longer at each winery. There's a cheese component, a food component, to it. There's the education, of course. That's all great, but what else can you provide?

We even do smoothie tastings for kids here. You need to continue to do things that are a little outside of the norm to make it pleasurable. You have to cater not just to the adults but to the children, and then how can you do that?

Francis had the foresight back in the late 2000s to build a swimming pool, when most people would never even thought of that. I joke around that we have more lifeguards than winemakers. That has served us well, because we're continuing to get new consumers and new millennials that want to get out of the city and spend the day at the pool.

I just got back from (Wine & Spirits Wholesalers of America trade show in) Atlanta. I was with a group that represented our wine through our wholesaler; there's 10 millennials, in their early 20s to mid-30s. Out of the 10, four of them didn't know who Francis Coppola was, in terms of his movie career. … The bright side is that they know him for our wine, that he's a famous winery owner.

A couple years ago, we added four more cabines (on the pool deck), which people rent for the day for a family of four or for four people. We have 32 of them. Those sell out from Thursday to Monday, through whole summer. That is something that we provide for our customers. The goal there is of course, we have the outdoor cafe, we have the bocce courts, we have a teepee that is a children's library, we have music on the weekends. We have an event that we do, Dancing Under the Stars, where we bring in a tango dance teacher for our wine club and our guests. And so people come and they have wine and they have food and they learn how to dance from professionals. There are certain things we do that just aren't about wine or about food. It's an experience.

So we have the (Great Women Spirits) line that we launched last year, a separate company. That is another avenue for us to continue to garner new customers. The spirits world, especially brown spirits, continues to grow.

When we bought the (former Chateau Souverain winery in March 2006), we went in for a use permit change, because we (wanted to build) the pool and the restaurant. We went in, laid it all on the table to the county and said here's what we would like to have in terms of the number of events, (visitors), all of that. We did it in a way to make sure everybody was very transparent about that.

I made sure that every single one of our neighbors has direct access to our facilities manager, to me and our operations person, if there ever is an issue. So much of it from the winery side is about communication with your neighbors and making sure that you are informing them or at least giving them an outlet if something does go wrong.

We as an industry have done over the last five years a wonderful job. Michael Haney at (Sonoma County) Vintners has done an amazing job of fostering relationships with and educating our (Board of) Supervisors and our government appointees about what we're trying to do as an industry and being good stewards. We hired somebody at the Vintners specifically to take on calls with the enforcement. They have a hotline for complaints: It's not (about) wineries. It's oftentimes special events: bike races, running races. Very few (are) winery-related.

Some of the press have gotten a little bit overly zealous on this relationship with the county wineries (and rural events complaints). I've been very close to this. We have done everything that our neighbors are asking and (are) making sure that we are stewards of the land and our community.

The obvious one, which you touched on a little bit, is California and other states that start to legalize cannabis and (its nonpsychoactive compound) CBD. When the federal laws change - they will at some point; it's inevitable - what will that mean for wine, cannabis, CBD? Because we have the three-tier system (of distribution from producer to wholesaler to retailer to consumer), does cannabis follow suit with a three-tier system? That will directly and indirectly affect wineries, breweries and operations like that.

Wine business insights

These key players on the California North and Central coast and in Oregon talk about what's coming for the industry and layout of the marketplace now.

David Duncan, proprietor, chairman and CEO, Silver Oaks Cellars

Corey Beck, CEO and winemaking chief, Francis Ford Coppola Winery

Bob Torkelson, president and CEO, Trinchero Family Estates

Alex Ryan, president and CEO, Duckhorn Wine Company

Dan Baker, executive vice president, Korbel

Michelle Benvenuto, executive director, Winegrowers of Napa County

Ron Denner, Denner Vineyards

Cam Baker, proprietor, Larkmead Vineyards

Tom Bonomi, president and CEO, Price Family Vineyards & Winery

Steven W. Spadarotto, Far Niente Wine Estates

Sarah House, director and senior economist, Wells Fargo

They are set to speak at North Bay Business Journal's Wine Industry Conference in Santa Rosa on April 18.

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