A Short-Sighted Decision in Mendocino Wine Country—Inevitable?

Posted by Tom Wark on Jun 7, 2012

The demise of the Mendocino County Winegrape and Wine Commission by a no confidence vote of its members is bad news for that region's industry. It also points to a perennial gulf that exists between the two fundamental elements of the supply side of the wine industry, growers and wineries, that is reliably difficult to bridge.

In the case of the Mendocino County Winegrape and Wine Commission, a promotional organization founded in 2006, reports have it that when the membership voted on whether to continue the Commission, wineries largely supported its continuance, while growers of grapes opposed it.

Alex MacGregor, the interim chairman of the Commission told the Santa Rosa Press Democrat this in the wake of the no confidence vote:

“I think ultimately, our county probably just wasn’t ready for the unique setup we had, which included both growers and vintners. It created some challenges.” This is an understatement.

At a February hearing on the Commission, Mendocino grapegrower Helen White, owner of White Oak Ranch, put a pretty clear voice to the apparant feelings of many grower members of the organization calling it "taxation without representation." After noting that she had paid $7,500 a year in dues to the organization for the past five years she claimed she had "received not a single nickel of value." She concluded, according to the Ukiah Daily Journal, "You cannot combine both growers and vintners. Growers pay more than 80 percent of the money and receive nothing. More than 99 percent of the commission  is used to promote wineries."

Most similar promotional commissions focus only on growers or only on wineries. And here's why: Grape growers, who sell to wineries, naturally want to get as much money for their grapes as possible and naturally are most concerned with promoting their product to wineries. Wineries, on the other hand, buy from grape growers and want to pay the lowest price possible and are most concerned with promoting their product to consumers, retailers, restaurants and distributors. There is an inherent, basic and foundational conflict of interest. To make an organization that represents both growers and wineries work, it would have to serve the fundamental interests of all its members. This is not impossible, but it's not easy.

Wineries will argue, and it's not a bad argument, that every bottle of Mendocino wine sold supports Mendocino grape growers. This is true, but it's no solace to a grower who didn't get any direct payment for the sale of that bottle of wine and who may have sold grapes to the winery that did make the sale for a mere $1,000 per ton, or less. Clearly I'm not suggesting that growers ought to profit directly from the sale of a bottle of wine that was produced with their grapes that they were paid for, no matter what the per ton price was.

What I'm suggesting is that the "every-bottle-of-wine-sold-helps-the-grower" approach to organizing a promotional commission probably isn't going to satisfy growers, particularly if they are, as were the Mendocino growers, FORCED by law to contribute to the Commission. Rather an approach that seeks to aggressively promote Mendocino grapes to potential buyers probably needs to be an important part of any involuntary promotional commission that includes both growers and producers. The Mendocino Commission did set up an on-line grape marketplace, which was a great and obvious step to take on behalf of the Commission's grower members. But when 80% of your members are growers, as was the case with the Mendocino Commission, you are probably going to have to go beyond that kind of effort, which I'm sure the Commission must have in one way or another.

I've worked with regional promotional organizations in my role as a communications and media consultant, but never with one that was involuntary and state-regulated, nor with one that included both grapegrowers and winemakers. I do not envy Megan Metz, the executive director of the Mendocino commission, and the job she was tasked to undertake. One indication that Megan new what she was doing is the development of an initiative that will now never get off the ground.

In March, Metz hired the team of Mark Chandler and Steve Burns to "forge and implement a five-year marketing plan and build brand recognition" for the Mendocino wine industry. It's difficult to imagine a duo better suited and with more experience in this particular area than Mark and Steve. Mark spent many years as the brilliant director of the Lodi Grape Commission and can rightly be given much credit for the rise of that region's wines. Steve became known as one of the country's best wine organizational leaders through his work with the Washington Wine Commission and Washington Wine Institute. What we are talking about here is something of "dream team" for regional promotion.

The strategic plan developed by these two gentlemen will never be put into place. That's too bad. I personally would love to see this plan just for education's sake given who put it together and given the challenge of funding and inherent challenges associated with promoting the Mendocino wine industry, such as its remoteness from large metropolitan areas.

Regional promotional associations are not he be-all, end-all. They are not required for a regional industry's success nor for the success of an individual business within a region. But they sure do help. Like it or not "Mendocino Wine" is a brand. The degree to which it is viewed favorably by consumers directly impacts overall sales of Mendocino-based wineries. This in turn directly impacts the sales of Mendocino grapes  and the prices growers get for those grapes.

That said, Helen White, of White Oak Ranch, who complained in February that she has long paid $7,500 per year for years and "not received a nickel of value" from her investment in collective marketing, is somewhat better off now that the Mendocino Winegrape and Wine Commission is dead. She and other growers like her will save the $625 per month she has been paying to the Commission. Perhaps she will find a good way to put that to use to promote her own business.

But is the Mendocino County wine industry better off? They compete with now far better organized wine industries in Napa, Sonoma, Lodi, and many other regions. There are individual promotional organizations within the country that promote Anderson Valley, Redwood Valley, Yorkville Highlands and the Hopland region. They are going to have to step up even more now.

It's not accurate to say that the Mendocino Commission was doomed from the beginning due to its inclusion of both growers and producers as members. It is possible for these two competing groups to work together despite their often contradictory interests. But it made the whole endeavor a much more difficult undertaking and, in the end, proved to be what killed it. I agree with others that believe the disbanding of the Mendocino Winegrape and Wine Commission is shortsighted and probably detrimental to the economic health of this region's wine industry. Time will tell.