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How does a winery get from the minor leagues to the major?

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I was talking yesterday with a guy on the marketing side of the wine industry who’s trying to promote his winery (as all good marketers should always be doing). He used an analogy with Major League Baseball—that his winery has reached AAA status in the minors (the top category) and now is ready and willing to hit the Major League. But it hasn’t happened yet, and he was wondering how to get it done.

As he put it, “How did those guys at the AAA level get to the Majors? How did they take the step to get access to capital to develop their business?”

Well, that’s the Big Question, isn’t it.

I replied that there’s no one answer to the question, but at least two that I can see, based on my years of observation. One is that some people simply buy their way into the Majors. They start with a ton of money they made from another industry or inheritance (Gordon Getty at PlumpJack), buy a prime piece of real estate in a significant appellation, hire the talent (viticultural and enological) to make killer wine, and then hire the public relations pros to promote the heck out of their wines. That’s how everybody from Tom Jordan to Kenzo Tsujimoto did it.

Fortunately it’s not the only way. Then there are the guys who started with little or no money and did it the old-fashioned way: sweat equity. They simply made great wine while no one was looking. Nobody gave them anything; they asked for nothing. Quietly, they did their thing until the media—and then the sommeliers and other influencers—noticed. Justin Smith, at Saxum, and Ehren Jordan, at Failla, come to mind.

The marketing guy’s reference to getting “access to capital” made me think. His idea was that if a winery is performing at the peak of their game with limited resources—i.e. at the AAA level–they should be able to convince a moneybags to invest to push the winery into the Majors. I replied that it seems to me that investors will only invest in a winery if they think it will make money, but he reminded me that there’s plenty of capital invested in wineries by people who don’t expect to make a pile of profit. They don’t want to lose money, but they do want to at least break even, and have the chance to live the winery lifestyle. (I’d love to take visiting friends to visit “my” winery but I don’t think that’s going to happen unless I win the Powerball Lottery.)

That’s the same dream that all those young entrepreneurs down in Silicon Valley have: an angel investor comes along and believes in them enough to finance whatever they need to realize their vision. I don’t really know enough about this investment side of the wine business to know if rich people actually do look for opportunities to help struggling younger winemakers up their game. But I do know that old adage: How do you make a small fortune in wine? Start with a large one.

Finally, there’s this reality: Not all Major League Baseball players are equal. Some, like Cal Ripken, have long, fabulous careers. Some, like Buster Posey (yay!) are just starting out on what could be long, fabulous careers. And some burn out early and fade away, sometimes going back to the Minors. Just because a winery makes it to the Majors doesn’t mean they can stay there—especially through all the ups and downs of the economy.

I’ve always thought there’s an element of magic to getting and staying famous. Heidi Barrett once told me that when she and Screaming Eagle got super-famous it caught even her by surprise; she described it as a wildfire that just erupted and swept everything before it. If there was a formula for making it, everyone would follow it. There isn’t. Short of being able to buy your way in, the best way to make it to the Majors and stay there is to do whatever it takes to make the greatest wine possible.

  1. That’s good advice Steve, thanks. My generation is very impatient, and we often forget that many of the successful people started 20-30 years ago, working the old fashion way. I sometimes ask that same question, the best answer is when someone stops, points at the bottle and says “it’s gotta start inside here.”

  2. Steve et alli:

    Just as a reminder, in many countries every pence you pour onto rural enterprises can offset taxes in as much as 100% of the profits. Ever wondered why a cement, an auto maker or bank group decides to invest in wineries or in soybeans farms in Brazil? How about coffee plantations in Costa Rica? Or that fine actor or racing driver who makes and sells wine with name or face on the bottle? Have i mentioned that it’s the easiest thing in the books to “modestly” inflate your expenses in rural companies?

    Russian caviar for a horse as food? Sure, why not?

    Not sure the 100% tax break applies to America, but i could name 20 countries where that’s the case.

  3. Good advice! Interesting and apt comparison to baseball. Lots of minor league teams (and many leagues) in the country! It is amazing that many of them don’t want to get out of the Midlands League.

  4. You lost me at Buster Posey. I suppose us Dodger fans have to live with this for one more year!

  5. And now you can buy Screaming Eagle at Costco!

  6. I really enjoyed this article as I too wondered how one would make it to the ‘big leagues’ of the wine industry without huge amounts of capital. My respect for those who have achieved this milestone is great. Not only does it take a special drive, it involves lots (if not tons) of hard work and a little bit of luck. Then you figure once they are at the top, they have to work even more hard to stay there since everyone is trying to beat them out. Ahhh… the never ending competitive side of the wine industry :)

  7. My impression of someone asking me that question is if he doesn’t already know what it takes, no amount of input from me as a wine critic is going to help.

    Since you are using baseball as an analogy, how about “If you build it, they will come”? Nobody has ever been successful in baseball (at any level beyond tee ball) if they can’t run, catch, throw or hit. It has been my experience in the wine business that you need to come into it with multiple ‘tools’ – there is no substitute for hard (and smart) work, uncomprimised devotion to quality, a long-term vision as well as creating something that is relevant. I have seen it happen with a part-time winemaker producing 300 cases in a warehouse,(Kimberly Hatcher at Morgado) and at the other end someone who had to put in a million-dollar road just to get to their winery,(David Long at David Arthur). There are also those who have a great ball park (Bruce Phillips at Vine Hill Ranch, who ‘signs’ Francoise Peschon and Mike Wolf). Obviously these examples are at one end of the spectrum for size and focus. At the other end are K-J, Fred Franzia and Gallo, all of which I would consider Major League brands with many moving parts.

  8. One (sad) reality is that if a winery lives a once promising and fruitful career , if they mis-manage the career they can see it quickly burn and fade away before they know or better yet in the wine business (go bankrupt, ruin their reputation through bad product or marketing, or maybe worse run out of money and have to be purchased by another “team” to keep the brand alive — and simply have the dream be dashed).

    With that being said every body likes a comeback right? It happens in wine, sports, celebrities etc so let’s hope those who don’t make it on the first round take another crack at it. Some consumers would have been saddened not to see as you pointed out someone like Ehern Jordan not make it to the “big leagues” but thankfully I’m sure he took his lumps and is reaping the reward of his and staff’s hard work (and the consumers thank them!)

  9. Steve,

    Buster Posey’s story inspires me as a minor league
    vintner that has his sights on the majors.

    I ask many of theese questions, sometimes in moments
    of doubt.

    Too many of the comments, you do come to the
    game prepared, passionate and focused on your craft.

    Uncompromising and hard working, I hope
    they do come.

    Will see…

    Thanks again for the piece.

    Greg

  10. We at Cerro Prieto are incognito, making only 300 cases yrly, selling the other 97% of our grapes. With us it was to grow the perfect grape in one of the world’s best places in which to grow redwine grapes(several university enology programs are nosing around here trying to figure out why this very localized area is so unique when it comes to growing ultrapremium redwine grapes) , and then make wine you like for yourself. If others happen to have the same palate you do, then you will be successful.

    Justin Smith is 2 hills NW of here, Jack Creek is two hills SW, Linne Calodo 1.5 hills due S, Booker 2 hills to E and Stefan Asseo 2 hills to the ENE . All these guys are vineyardists first, all worked the land, all had world class terroir. We all have huge temp splits 65-75degrees day/nite. Most have limestone soils. All of us are low yield mentality. All are craftsmen with their wines, and all have been extremely successful. All those noted above were vinyardists first( I believe) and winemakers second.

    But the question of going AAA to the majors, makes me think the fellow positing the question really is talking about going large in volume and $$. I wonder if he had quality as the main ingredient in that or was it just the volume and $$ ?

    Every great winemaker I know is making world class wines, but none are doing hundreds of thousands of cases. Yet they are all imminently successful. Isn’t that going from AAA to the majors?

  11. Then there are those of us, having played in the majors, who now prefer to remain profitable playing Tee Ball.

  12. Nick C, I’ve rarely seen a winery burn out and then come back. Maybe never, at least in California. Do you have specific examples?

  13. Sorry, but what does that question mean, “to hit the Major League?” Do AAA players receive salaries? I have to assume the question is really, “How do I make money like a star athlete?” Someone was musing, out loud, to a wine writer on that question? No pretense of humility there!

    As a former strategic planner, I always say that wines–and wine businesses–have personalities, giving each a unique potential path to success. We’re all snowflakes on a crowded shelf, and that’s why it’s fun–there’s always room for a new standout and that’s also why it’s hard, as there are so many messages vying for buyers’ attention. Put another way, there are many ways to be successful in this business; define what success is to you, and build a plan to achieve it given your resources. (And then expect to be doing lots of rework on your plan.) For some, as Carlos notes, success is a tax write-off or a decent use of the land containing their retirement home; for others success is the opportunity to work at every detail to achieve a wine style in their mind’s palate, refining it each vintage to be better and better, closer to the unattainable perfection…. for the next guy, that refinement agenda is WAY too much work, he just wants a steady (or big) paycheck and nobody asking him any questions. And another wants to “be the best” by critic scores, or sell at the highest possible price for prestige, or grace the cover of magazines. I recall Bill Foley quite humorously said, “I just want Ted Simpkins to return my call.” The list goes on.

    Serious answer for success in the wine biz: What you promote on the OUTSIDE of the bottle needs to be there INSIDE the bottle. This is harder to do than one thinks – in a larger operation, for example, you would need your marketing person and winemaker to communicate with each other (or both with you). Congruence applies to all levels; from a silly critter label at low $ with enjoyable liquid inside to high-end pricing and packaging with remarkable wine of true character inside.

    Short answer to hitting the major league: first, define “major league.”

  14. John Buckley says:

    I’ve noticed that wineries in this market segment are not uniformly considered “major league” based on region. A wine in this segment may become a breakout hit in a certain region, Chicago, Atlanta, Dallas, and still be a minor league player for years in New York, Boston, etc.

    I think this comes down to falling into the right hands on the local sales, distribution side. Sometimes is comes down to just falling into the portfolio of a really talented sales rep in a certain city. A couple years later the law partners, bankers and doctors of that geography are serving it at their dinner parties, then it really takes off. It’s hard to find talented sales people out there, finding the right channels is such an art.

  15. Dear Steve, I hesitate to jump in, but I love the analogy. Wine making, especially wine growing, is definitely a team sport. It follows some of the same rules, like the one that says you are only as good as your last home run. And, you have to swing for the fences every day. Cheers! Joy

  16. Great advice…it’s a great journey just keep on keeping on…

  17. Hi Joy, don’t ever hesitate to weigh in!

  18. Major League is achieving a position in the marketplace to provides maximum reward for maximum effort.

  19. As a die-hard Yankee fan I can attest to the effects – and limitations – of Big Money as a a “success factor”, but I will never forget what a winery owner once said to me almost off-handedly as if it was the most obvious thing in the world: Quality is not a selling point. It is the STARTING point, because if it’s not in the bottle you haven’t got a product you should be bringing to market. Once you’ve got that resolved, it is a matter of luck, timing, and dogged persistence to position your “brand” so it can move from AAA to the big leagues. As a producer of premium wine, that means knowing what your label stands for and how you define success. If that means a hot Advocate score, or if it means pulling a particular style of wine out of your vineyard source, or you just want to see your name on a label to impress your friends, there you go. But if you don’t have wine that expresses SOMETHING when you pull the cork, forget it…and even that doesn’t guarantee lasting success. As Malcolm Gladwell says in his excellent book “Outliers”: Being a clever boy doesn’t count for much when you are in a room already full of clever boys.

  20. I loved the article, title and dialogue. It’s pretty clear what the major leagues means — the 20/80 rule and going from good to great in every aspect of the artistic creation and business.

  21. Steve,

    You may have me stumped there on an example, the ones I racked around in my head maybe didn’t completely “burn out” but maybe better put faded away. When I worked at Kendall-Jackson they acquired Freemark Abbey out of bankruptcy and quickly rebuilt the winery/brand as a whole, but like you were suggesting maybe thats not burning out completely but rather losing your footing in the market place.

  22. Donn Rutkoff says:

    I would add that to make the major league, a winery has to be marketing properly and persevere in marketing. And that means more than just supplying lots of samples for sales calls. Advertising, promos, wine dinners, hitting the road, many many ways to market, pick yours and work at it.

  23. Maximum reward for maximum effort. Love it.

  24. How? First of all, concentrate on making great artisanal wine from great grapes, consistently & without fail – Quality first & always, without ever compromising that principle. Be very careful & calculated how you price your wines today & going forward. Last, but in no way least, find like minded partners on the sales side with the right local market knowledge & contacts(you need to look hard, but we are out there & you can’t do it alone) who share you passion & vision – get out every day, hit the pavement popping corks & making friends…rinse & repeat. Be persistent & patient.

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