Where Will the Wine Industry Be Led

pathLast Thursday at the Women for Winesense annual “Women in Wine” event, three remarkable women came together on a panel to chat about their views of the wine industry, offer some personal observations and inspire the crowd of 100 or so people at Buena Vista Winery in Sonoma. I was honored to moderate the panel. Since that evening I’ve not been able to get one comment made by one panelist out of my head.

Michaela Rodeno, owner of Villa Ragazzi and former head of both St. Supery and Domain Chandon, was one of the three panelists. She made the following observation:

There is a lack of leadership in the wine industry. Not since Robert Mondavi lead the industry and left us has a new leader emerged.

Robert Mondavi was undoubtedly a leader of the California wine industry. He provoked and prodded California wineries to believe in quality and produce quality and to do what it took for California as a whole to take its place in the world as one of the quality wine leaders. And the industry did just that and did so under his leadership.

I wouldn’t want to speculate on who now, some years after Mr. Mondavi left us, could step up and lead the California wine industry. What’s more interesting is where that leader might direct and take the California wine industry.

All three panelists last Thursday, including Michaela, Claudia Schubert—President of Diageo Chateau and Estates, and Gina Gallo—Winemaker for the Gallo Signature Series, spoke of the critical importance of innovation. Would a leader of the industry call for and lead a new sort of innovative approach to sales or marketing or even winemaking? I don’t think the latter is where this leader would take the industry. Winemaking is largely a matter of science and understanding our natural surroundings and innovation in this realm tends to proceed at a steady pace when capitalism is the driving force, with or without a leader.

This leaves, potentially, sales and marketing innovations. The great innovations over the past 25 years has been direct sales. Direct to consumer sales and provided the basis for an explosion of brands that the three-tier system of distribution could never have handled. The explosion of new wineries and the great wines that have emerged from these wineries was fostered in spite of, not due to, the three-tier system.

Ms. Rodeno cited the Internet as one of the most important changes that occurred and emerged during her forty years in the industry. Is there room in the realm of communications for a notable, wine-centric innovation that one leader or another might foster?

I don’t think this qualifies either. Despite the importance of the internet for reaching new consumers and disseminating information, the wine industry has been notoriously slow in adopting new marketing and communication technology to move the industry forward. There are individuals who are pushing the rock as hard as they can as they try to move the industry forward where the Internet is concerned. But even their heroic efforts seem most often to meet with either resistance or inertia.

Perhaps a new leader might be inspired by notable improvements to logistics technology and redirect the attention of producers on retailers, asking them to give more margin to those who sell their wines to the consumer by selling direct to the retailer. The problem with this scenario is that it would take a rejection of the wholesale tier, punishing it in effect for not driving efficiencies. I find this scenario somewhat unrealistic, despite its appeal.

Perhaps it is altogether unreasonable to even consider how a new leader would inspire the wine industry. The fact is, during Mondavi’s tenure as the undisputed leader of the American/Californian wine industry, there was a certain commonality among the wine producers, the wholesalers, and the retailers. During the 1960’s, 1970’s, 1980’s and into the 1990’s most wineries asked how they could get their wines into the hands of consumers via the wholesaler/retailer route. And there were few huge wineries and many fewer tiny wineries.

Today the industry seems divided into types and sizes and interest groups each contending for a particular slice of the marketplace, while fewer and fewer giant wineries monopolize the wholesalers attention. How does a leader corral such a diverse industry and send them down a single path singing the same tune? I don’t know how, nor what the path might be pave with.

There was a great deal more that came out of the “Women in Wine” event last Thursday that provokes contemplation. It was a seminar in the wisdom of success as epitomized by Michaela, Claudia and Gina. But it is this issue of leadership, the current vacuum and where a new leader might take the industry that sticks with me and confounds me.

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26 Responses

  1. Mike Duffy - September 16, 2013

    You, Tom! You must be Emperor of Wine!! :-)

  2. Tom Wark - September 16, 2013

    MIke,

    The cliff over which I would run the industry would be steeper than anything else anyone else could find. But thanks!!

  3. Bill Smart - September 17, 2013

    Tom – great insight here. I worked for Michaela for several years and have great respect for her insight and leadership. Did you know she was the first female CEO in the Napa Valley to come from the “outside” – a non-wine family member? She’s an impressive lady. Anyway, in my humble view, I believe the next great leader in the industry is not going to be a person or company. I think it’s going to be some technological innovation or break through for the industry as whole. As you are well aware, the wine industry has always been painfully behind the curve when it comes to the use of technology. Remember it was not that long ago that the concept of a winery website was a foregin object for most mid-sized and small wineries. Heck, Dry Creek Vineyard didn’t even get a computer onsite until the late 90’s! Will it be virtual tastings? Or a break through in the three tier system? I wish had that crystal ball – instant millions!

  4. Marcia Macomber - September 17, 2013

    Tom –

    Thank you again for moderating our “Women in Wine” panel Thursday. You asked these terrific ladies several thought-provoking questions and illicited many more fascinating answers from them.

    I, too, was rather stuck on Michaela’s comment about leadership. As you mention, there’s quite a bit of innovation in many arenas of the industry right now. It’s difficult to say if future leadership will require more specific focus in just one area (i.e. DTC or tech or something else), or if leadership will emerge as simply a bigger voice from the industry overall.

    Certainly our 2013 panelists, Michaela, Gina and Claudia, showed us they’ve got plenty of leadership steering their own businesses to new heights today. But it will be sometime before we see anyone remotely like Mr. Mondavi emerge again to the forefront.

  5. Sandra Hess - September 17, 2013

    Hello Tom,

    Great insights and questions you pose around leadership in the wine space, thanks for sharing. Perhaps the next great leader will focus on educating the masses? As direct to consumer wine sales continue to steadily grow, most US consumers have easier access to a variety of wines. Wine has traditionally be something that wine aficionados or “wine snobs” were good at understanding and sharing with friends. Many people outside of California have been intimidated by all of the fancy jargon used to describe wine and have never really become attached. Maybe wine needs to become more personal and relational? To borrow a recent quote from Joe Waetcher at Wine Direct, “the US is ranked #57 in wine consumption per capita”. There is still a lot of work to do in educating consumers in our country. Internet and social media outlets allow wine education to happen at a pace we have never seen before. Perhaps the next great leader will help remove some of the pretense and stigma around wine and help spread the new good news to all.

  6. Rob McMillan - September 17, 2013

    Tom –
    While I agree with my good friend Michaela about Robert Mondavi’s vision and leadership, I’ll disagree with her that the industry is lacking leadership.
    No disrespect to Robert Mondavi who deserves every accolade thrown his way, he was leading in a different era; one in which he determined to take gigantic risks and with success earned commensurate respect from his industry colleagues. But there were far fewer in number back then. Would anyone single person be able to truly repeat that kind of risk-taking and leadership role in today’s business? I doubt it.
    In truth, I think leadership is already happening in the industry and it’s not from a man or woman. It’s the from the PC and the internet and it’s shaping the way we sell, process information, make decisions, collect data, but most important it’s changed the way we communicate and listen. We have our own Moore’s Law being applied now with the pace of change quickening in a logarithmic manner every decade. That’s driving this sleepy cottage industry Mr. Mondavi led out of the wilderness, into a hard-charging one in which many who entered the business with different skill sets, now struggle to keep pace.
    The leadership now isn’t from a single person. It’s from the mass of people who are now using new tools to modernize and solidify the future of the business.

  7. Tom Wark - September 17, 2013

    Rob,

    I think you and I are thinking along the same lines when it comes to evaluating the context and circumstances that were different when Mondavi stepped up.

    However, I’m not ready to cede “leadership” to technological innovation. It’s just not romantic enough for my taste. Also, the idea that technology leads us really strikes me more as a matter of adapting to changing circumstances (and technology).

    Technology is a tool to be use in the pursuit of an agenda.

    In a leader I want a vision. Technology doesn’t supply that. A leader makes the case. A leader demonstrates a way in or a way out.

    That’s not to say that a leader is required. And I’m not sure Michaela was making that case anyway. I think she was making an observation about what’s different about today’s industry versus 10, 20 or 30 years ago.

    But, if I were to offer a reason for there needing to be a leader, it would be that we must find a way to expand the market and not just wait for the Millennials to take over. I don’t think that’s enough. They’ll bring change based on their size, economic circumstances and tastes. But a gifted leader will demonstrate how the industry can expand its reach; how we can convince a larger percentage of the population that wine is an alternative.

    • Rob McMillan - September 17, 2013

      Tom
      I’d love to disagree and spice up the debate but sadly I agree 100% and will likely use this as fodder for my blog this next Sunday.

      I under-expressed my last paragraph. Computers of course do what we tell them. While able to make mathematical predictions, they have no vision whatsoever. That said, higher computational power and the interwebs are making ginormous (Elf quote) ,,,, ginormous impacts in data collection and that is bringing in real people into the business who have vision.

      Again, I don’t think we will ever see anyone like Robert Mondavi in this business. Its too big and complex to see leadership from a single individual. But the combination of new blood coming into the business is creating its own slipstream that others can draft over …. because we are so better able to process information and communicate.

      And last to the comment on Milllennials, any fine wine producer waiting for them to drive their sales higher before 2020 is foolish. Further, marketing to them as a homogenous group is equally foolish. Marketing to affluents is in order, weather Boomer or Millennial or lizard. Age is not the best metric to define next year’s marketing budget. There are far better indicators that can be discovered using big data for a fine wine producers direct sales targets.

  8. Thomas Pellechia - September 18, 2013

    So Rob:

    “Marketing to affluents is in order, weather Boomer or Millennial or lizard.”

    How many wineries do you think it will take to market to one percent of the country?

    Until the U.S. figures out how to operate an economy for everyone, a leader will be the wine industry’s last problem.

    • Rob McMillan - September 18, 2013

      Thomas – Mine isn’t a social commentary. There is a widening gap between the have’s and have-nots that should be addressed but not by wine marketers. That would be a social commentary. A Wine Marketers job is to sell wine and identify buyers. If they only sell to the 1% they will go broke. If they sell to the have-nots, they will go broke. Its really the upper 20% who buy most of the fine wine produced. Millennials are not a substantial component in that as a cohort and represent about 15% of total wine purchased. That demographic should be marketed to by volume wine producers or in a more broad way through a Marketing Order building the wine category as a whole.

    • Steven Mirassou - September 18, 2013

      Thomas:

      I take your point, and I don’t think its really about the 1% of wineries appealing to 1% of consumers.

      The industry has done a lousy job of creating a reason and meaning for itself above and beyond the desire to sell something…and even that has been done in a real slipshod way.

      In my mind there is no other consumer product that has nearly the depth of association, of history, of politics and religion, of family and friends and nature and craftmanship as wine.

      I’d contend that, like Shakespeare, Wine is Bottomless. No matter how passionate one is, wine is capable of giving back ever more meaning. If we do a better job – as an industry – of showing the wonders of wine, we have a much greater chance of truly making it part of the American table.

      • Thomas Pellechia - September 18, 2013

        Stephen:

        No doubting what you post, but I am not saying wineries are appealing to the 1%, at least not on their rhetoric. The prices, however, often belie that rhetoric.

        Just yesterday, Tom Hill posted on a couple of forum sites his experience with Picpoul: one from Pinet and a few from California.

        I’ve been drinking Picpoul de Pinet for over a decade and not once has the price exceeded $15–more like $10-$12.

        What do we get from California? Picpoul at $25, and if we are to believe Tom’s tasting notes, not likely worth the money.

        If getting the cost of production down is the issue, then maybe winery owners on the West Coast will have to think about going back to their Silicon Valley jobs. If the problem isn’t the cost of production, then what is the problem?

        One of the things Robert Mondavi did was to open the wine market to those of us who weren’t collectors, weren’t geeks who drink wine once a week at a gathering of other geeks, and weren’t trust fund babies. A leader who can bring the wine industry to understand it for the future will be a star, because, as I said, if the U.S. economy is on new footing, the evidence points to people having to wear much cheaper shoes.

        • Thomas Pellechia - September 18, 2013

          Sorry–that should be addressed to Steven.

  9. Samantha Dugan - September 18, 2013

    Dunno, I sort of feel that there are far too many proper and right paths within our industry to have one leader.

  10. Eric V. Orange - September 18, 2013

    For all the talk about the wine industry slow to adapt to technology, do you think that a “website was a foreign object for most mid-sized and small wineries” if they had, from the beginning, the ability to sell their products directly to consumers in any state at any time?

    My guess is that they would have jumped in with both feet.

    EVO

  11. Paul Mabray - September 18, 2013

    Eric,
    If you remember, the industry had unfettered access to almost 60% of the market way back to 1995 with the 14 reciprocal states.
    P

  12. Does the California Wine Industry Need A “Leader”? | Hoot n Annie - September 18, 2013

    […] industry needing a leader before nor really cared about whether they do or not. After reading this blog post by Tom Wark I found myself pondering the question. You may or may not know me well enough but I […]

  13. Richard - September 18, 2013

    Good commentary and interesting observations. As for who can take over the California wine industry leadership role – the few who are in a position to do so don’t have the force of personality of Robert Mondavi – if they do, they are too cantankerous and have no people skills! and we all know who they are! Others who are in a position to take over, very likely don’t want that albatross around their neck. Gina Gallo, for example is in a perfect position – she is well-respected everywhere, has the background and credentials, but… suspect she doesn’t want that mantle of responsibility as “the mother of the California Wine Industry…”

    As for the future – Mr. Orange makes an excellent point – if I invent a widget and put my widget on my WonderfulWidgetWebsite, anyone, anywhere, with few exceptions, can go online, order my widget and have it sent overnight – they will have my wonderful widget the next day. However, I make some wine – extremely small producer – I use a custom crush – but I can’t sell my wine to just anyone because I have to jump through the following hoops:
    – I have to get it licensed;
    – have the label approved;
    – have to get the label approved;
    – in some cases, I have to get the label approved in other states I sell to;
    – in some states, I have to go through a middleman (who doesn’t want to distribute my wine because I don’t make enough); my widget doesn’t have a “widget middleman” or a “widget distributor.”
    And, the list goes on and on! Of course, I can and do sell in California and a few other more liberal wine law states where it is easier to sell.

    Thus, the next leader, if there is one, will want to work toward a true technological revolution in wine law reform; distribution reform; etc. The best leader in the world can’t do anything if wine doesn’t become a sellable commodity like widgets, coffee, etc.

  14. Tom Wark - September 18, 2013

    Richard:

    Can you expand on what a “true technological revolution in wine law reform” might look like?

    Thanks,
    Tom….

  15. Douglas Allan - September 18, 2013

    Everyone is so concerned about “leading the industry.” If everyone was more focused on leading their respective parts of the industry, the industry will progress far more than trying to find a leader for the entire industry. For better, the industry, as a whole, is much larger and more complex than when Robert Mondavi was the undisputed leader (and to give him the credit he deserves, it wouldn’t be nearly as large and complex without him). Along with that complexity comes innovation, growth, expansion and capital far beyond one persons leadership capability. For better, the industry no longer has one leader. It is now comprised of many different types of leaders, that individually are less influential than one but collectively are more influential than one leader.

    • Tom Wark - September 18, 2013

      Hi Doug,

      Sometimes the best leadership is merely inspirational, with a nice dose of cajoling from someone successful who also leads by example and who occasionally works on behalf of the industry, rather than only themselves. That kind of leadership can be instilled in one person.

      • Douglas Allan - September 18, 2013

        Then you aren’t necessarily suggesting that the industry needs a “leader” so much as a spokesperson, which do not have to be the same person. Mr. Mondavi was both, a truly extraordinary feat in any era and trying to repeat that would be like winning the lottery twice.

        To the point you made on your blog on August 5th about pop culture taking wine into mainstream America, the wine industry needs a modern pop culture icon. Much like Rachael Ray, Bobby Flay and Emeril have become for food. Would I call them leaders of the entire food industry? No. (The food industry is too complex and fragmented, much like wine) Are they leaders in food media pop culture? YES! They are leaders in one aspect of their industry, it just so happens to be the most visible public aspect of the business. Wine could use a person like that. But, unfortunately, we are a good 10 years from having mainstream America accept a wine pop icon like Ray, Flay, Lagasse or Child. Doesn’t mean we shouldn’t all work to get there.

        BTW…I read your blog frequently but first time commenting.

  16. Bill Haydon - September 19, 2013

    California–and Napa in particular–is between a rock and a hard place regarding the Millenials. You either market to them now with very little immediate bang for the buck, or you risk losing them forever.

    It is the height of hubris to believe that these millenials who are cutting their teeth on and gaining a sophisticated appreciation for ‘European wine are suddenly going to abandon it for big over-ripe, over-oaked and over-priced Calijuice down the road. They will simply move up to more expensive and sought after European wines. That Barbera drinker will start buying Barolo. That Muscadet drinker will start buying Puligny-Montrachet. That drinker of $18 old-vine Albarino is not suddenly going to pay $50 for John Kongsgaard’s Funhouse Mirror version of the grape.

    California wine needs a leader or leaders who not only possess a long term vision but the courage to look at market trends without delusion and a willingness speak some hard truths to the kool-aid drinkers.

  17. Tom Wark - September 19, 2013

    Bill,

    I’m not sure I agree with your conclusions. In fact, I have no doubt that Milenniials, when they do finally have the kind of disposable income that allows them to move up the price ladder, will indeed include Napa and other CA wines in their buying mix. Clearly, today, someone LOVES Napa wines as they sell like hot cakes at prices considerably higher than wines from all other American winegrowing regions. I don’t see how all of a sudden Napa wines will have no buyers. Further, I don’t agree with your assessment of Napa wines as altogether “big over-ripe, over-oaked and over-priced Calijuice”

  18. 1winedude - September 26, 2013

    We have leaders in the wine Biz, it’s just that most of them aren’t very good role models

  19. Where is the Wine Industry heading? - The Wine Observer - October 8, 2013

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