Having helped grow Duckhorn from $5M to $500M in revenue and the sales team from 1 to >100 people, Pete Przbylinksi, former Chief Sales Officer of The Duckhorn Portfolio for nearly 30 years, has a deep understanding of managing US wholesale markets.  In this two-part episode, Pete dives into every aspect of managing a wholesale sales team, including incentive structures and collaborating with distributors.

Detailed Show Notes: 

Duckhorn went from 50k cases / ~$5M in revenue / 14-15 employees (1995) to ~$500M revenue (2024)

The Duckhorn Portfolio

• Duck themed: Duckhorn Vineyards (1978), Decoy (2nd label originally), Paraduxx (1994), Goldeneye, Migration, Canvasback
• Acquisitions: Calera (2017), Kosta Browne (2018), Sonoma Cutrer (2024)

Keys to Duckhorn’s success

• Brand equity - focused on Merlot, which was hot in 1980s-1990s and catapulted winery
• Key assets - #1 people, #2 brand equity
• The French Paradox (1991) created big demand for red wine
• Table stakes are good scores, showing up in the market, hosting guests

Sales team grew from 1 person to >100 (~85 in the field)

• No perfect way to calculate ROI for sales people
• 1st method: too many cases & distributors to manage, needed more people
• 2nd method: quantified expected incremental sales from more people (data was full of holes)
• Final method: managed to target of 8-10% sales opex / revenue, because a KPI for SLT and Board

Sales team roles

• Regional Managers, over a series of states (50-60% of time working w/ distributors, the rest out in the market or internal analysis and reporting)
• District Managers, geographically concentrated, go into accounts you want to be in
• National Accounts, on and off-premise; a challenge to determine which accounts are national vs regional, ended up doing it case by case and assigning accounts

Distributor consolidation led to wineries needed to do the work they cannot do

• E.g. - identifying underrepresented accounts and coming up with action plan by region

Identifying top salespeople

• Look at overall contribution margin for the region
• Share of business in market (using IRI, distributor reports, account base)
• Gross Profit%, identifies amount of trade spend used
• How responsive they are, their handle on the market, their decision making
• #1 method: do they bring new ideas to the table

Incentivizing salespeople

• Bonuses must be meaningful (25-35% is meaningful), higher for higher levels
• Look at contribution margin relative to budget
• Used a curve (<90% budget - no bonus, above budget - scale increased, which helps end of year motivation)
• District Managers may have market specific goals (e.g. - increasing depletions, PODs for particular products) that are short term (3-6 months)
• Overall, incentives are difficult to manage, data can lag; make it objective
• Recognition is helpful, e.g. - unexpected gifts like a signed 3L from the CEO

Distributor collaboration best practices

• Show them a plan and explain why it makes sense (e.g. - buyers are lined up) and get mutual agreement
• Keep it simple, the info needs to be passed on to others
• Identify what you’re prepared to do in the marketplace (e.g. - market visits, funding BTG programs, incentives, etc…)
• Do monthly check-ins and more formal quarterly reviews to see progress against plan and to adjust tactics and strategies

Optimal size of sales territories

• Depends on # of distributors in region (e.g. - TN had 8 distributors = 8 days/mo of meetings)
• Try to align with target sales opex / revenue ratios (~8-12%)

Hosted on Acast. See acast.com/privacy for more information.

Building a new wine category is not something that is easy to plan.  It often is more like a startup, where belief in the product and market is just as critical as a defined strategy.  That's how Luisa Amorim, CEO of Amorim Family Estates, launched Mirabilis into being an iconic still white wine of the Douro Valley.  She outlines priority markets, views on scores and social media, and her belief in word of mouth marketing.  

Detailed Show Notes: 

Luisa’s background: hospitality, marketing; started in the family business at 23; spent 3 years in a global rotation program

Amorim Family Estates

• 3 regions in Portugal (Douro, Dao, Alentejo)
• Each property has its own winery and team and does hospitality with a culture and food component
• Division of bigger Amorim cork company and family

Mirabilis (part of Quinta Nova)

• Produced white wine from the beginning (2000)
• First an unoaked white, then a reserve, then Mirabilis (Latin for “marvelous”)
• White was not popular in Portugal at the time, production processes were not set up for whites
• Took 2 years of experimentation, 1st vintage 2011 (2,000 bottles)

Whites still have pricing barriers vs reds

Douro white differentiation: close to Atlantic, schist soils, native grapes, and blending

Introducing Douro whites: older people were harder to get on board, younger were more open to exploration

Need to have belief in product and its viability over having a detailed marketing plan

Marketing focus has been on teaching Portuguese wines (including culture and traditions)

Geographic focus for Mirabilis

• Portugal 1st - need to be well respected in the home country
• Switzerland, Benelux (lots of Michelin Star restaurants)
• Not Scandinavia (targeting higher end of the market)
• Brazil (speak Portuguese)
• USA, Canada

5 people, based in Portugal, work internationally; travel 3-5x/year to each market

While design and packaging, price positioning are important, the sales team and their relationships are critical in the wine industry

Having a good wine is more important than press or reviews, people are paying less attention to reviews

Consumers now look at peers and friends for recommendations and they need to trust the wine producer

Social media - “should be doing more” - hiring younger people into marketing

Wine marketing needs to capture the “soul” of the wine

• Make things simpler, less technical talk
• More provocative, “sexy” vs saying the same thing all wineries say

Has not done any paid advertising

Relies on word of mouth (people taste, buy, and talk) and partnerships

Hosted on Acast. See acast.com/privacy for more information.

With 30 generations in the wine business, the Frescobaldis have a long-term view of the wine business.  This mindset has enabled Ornellaia to become a global icon.  Lamberto Frescobaldi, President of Frescobaldi, discusses how Ornellaia established and maintained its status as a global icon. 

Detailed Show Notes: 

Background: grew up in the Italian countryside, studied at UC Davis, learned the wines of the world working at Corti Bros in Sacramento

Frescobaldi family

• 30 generations in wine
• Now in Tuscany, Northern Italy, Oregon, & Sicily
• Focused only on wine

Ornellaia overview

• Cabernet Sauvignon, Petit Verdot, Merlot based
• Bolgheri not historically known as a wine region, not good for Sangiovese
• Sassicaia, Orenellaia, & Masseto put Bolgheri on the map
• From year 1, quality was consistently good
• Founded by Antinoris, Mondavis invited Frescobaldis to partner (Feb 2002), when Mondavi sold to Constellation (2004), Frescobaldi bought out Ornellaia (April 1, 2005)
• Frescolbaldis have long-term view, have owned Castiglioni since 1052

Distribution is mostly allocated due to limited quantities

• Consistent in giving allocations to people who bought the year before
• Grew distribution globally to maintain scarcity
• Focused on top restaurants first, get in the right accounts

3rd party validation (wine critics, famous artists, top restaurants) key to building reputation

Vendemmia d’Artista

• Great artists interpret the wine
• Each vintage given a name (e.g. - power, elegance)
• Partnership w/ the Guggenheim globally introduces wine to art collectors
• Artist label on large formats and 1 bottle of each 6 bottle case

Ornellaia Blanco

• 1st planting by Antinori was Sauvignon Blanc
• Cooler, north facing site, small amount produced
• Aged same amount of time as red, not aromatic, but complex

Monitors secondary market to help learn about wine’s age ability, if prices dropping, implies inability to age

Not sure if people buy Ornellaia from seeing it on social media, but allows winery to connect directly to customers

Negative macro market conditions and trade wars not impacting Ornellaia much, 3rd wine (Le Volte) more susceptible, but haven’t seen impact yet

Hosted on Acast. See acast.com/privacy for more information.

With over 40 years of managing some of the top names in wine (Opus One, Mondavi, Baron Philippe de Rothschild), David Pearson, President of Joseph Phelps, has developed a distinct point of view on how to build a globally iconic brand. Ultimately, it comes down to relationships and the effort required to maintain them. From focus and prioritization to spending upwards of 65% of time on the road, David hopes more wineries will follow in his footsteps to build the category of Napa and American wines globally.  

Detailed Show Notes: 

David’s background: started as a winemaker (Europe, SoCal), sensory evaluation for Hublein (now Diageo), post-MBA marketing job with Baron Philippe de Rothschild, Mondavi in France (see Mondovino movie), managed Byron, then CEO of Opus One, now President of Joseph Phelps

The goal is to create personal relationships and care about mutual success and partnership with accounts

“Focus is the hard part” - at Opus, initially London, Hong Kong, Japan; then emerging markets, Mainland China, Dubai; Phelps also prioritized Korea

• Singapore distributor told him, “We’ll see you in 5 years, the French come every year.”
• Track people who buy wine and meet w/ them - 80/20 rule, focus on the top 20% of trade accounts
• After the top 20%, do second tier of accounts, then collectors
• Travelled ~65% at Opus One
• Budgets ~20-30% of marketing expenses for building relationships
• Opus One 1st 10 years - went to Asia, Canada, Europe every year, then put someone in Tokyo and Hong Kong
• Sends ~400-500 handwritten holiday cards to partners with specifics about their last visit
• Travel team includes a winemaker if they like it and are good at communicating, and a marketing team to better understand the market
• Please don’t make it feel anonymous, but give the meetings and message personality
• At Phelps, focused on Insignia and current vintage, show older wines to show aging potential

The goal is to expand export to ~30-40% in 10 years vs. 12-13% of Insignia today

Brands need to think deeper about what’s unique and also where they are going

• Get alignment between the story, the wine in the market, and where you’re going

The winery owner had three objections to export:

1. sell all the wine to US customers, don’t want to take any away from them
2. don’t know who to sell to
3. don’t want to spend the time and money to go there

Larger volume wines have different commercial relationships, same elements (knowing your partners, need to build), but margins tend to get squeezed

Believes that if the category is successful (e.g., Napa), everyone will be more successful

Negociants (La Place) respond to existing market demand well and are efficient distributors, but it is not in their DNA to build brands

Phelps uses the LVMH distribution network to build the brand and deliver directly to the core accounts

Measures quality of relationships w/ initial feeling, but then seeing the wines go to the market, need to see forward momentum

Tracks Liv-ex pricing a lot, seen upticks in Insignia

Other marketing elements: relationships happen over multiple channels now, need to do more social media, and be part of the discussion

The pricing goal is to have trade and consumer connect the innate value of the wine to the price

The current neo-prohibitionist environment recalls the 80s and the “Mondavi defense” of wine as a potential solution

Hosted on Acast. See acast.com/privacy for more information.

Pairing their need for a complex substitute for wine, for both pregnancy and professional network, Maggie Frerejean-Taittinger and friend Constance Jablonski enlisted Maggie’s husband, Champagne and Cognac winemaker Rodolphe to found French Bloom.  With four years of R&D prior to launch and constant refinement since, French Bloom aims to redefine the alcohol free premium sparkling wine space.  Maggie & Rodolphe delve into the creation of French Bloom, exploring its core markets, target customers, and the factors that have drawn them in.  

Detailed Show Notes: 

French Bloom overview

• 500k bottles (2024)
• Created a premium NA sparkling category
• Focused on sparkling to create complexity, can play with layers
• LVMH minority investor

4 years of R&D to get the desired quality

• De-alc process loses 60% aroma (was 90% in 2021), removes the backbone of the wine
• Built NA wine like Cognac, needs an undrinkable base wine
• Focused on the South of France (warmer, higher alcohol and body) for stronger wines, more body, Languedoc (more organic 40% vs 3-4% in Champagne)
• Limoux is the best place for NA sparkling, 300m high, Chardonnay and Pinot Noir, a temple of natural wine
• Base wine is a bit oxidative, very acidified (used to add lemon juice, now naturally from wine), oaky (new oak, foudre), no sulfites, more tannin
• Create blends of different reserve wines

Extra Brut (0% abv, 0 sugar) has a base of 30% reserve wine from 2 years, aged in new oak barrels to give more structure

Better to make adjustments before de-alc vs after

Use voile to protect wine from oxidation (like Jura)

Flash pasteurization is used b/c no abv, sulfites to protect the wine

NA market

• Wine, beer, spirits - $10B (2020), $20B (2025), believes $30B (2030)
• Premium NA sparkling - $0.5B (2025), could double next 5 years
• Holy grail is quality NA still wine, not there yet
• Best distributors are wine / Champagne distributors, Thailand/Belgium have NA-focused distributors

French Bloom customers

• Biggest markets are Champagne markets (France, US #2, UK, Japan, Australia, Belgium, Germany)
• Younger (25-45), skew female, appreciates both alc and NA sparkling wine

Sells 20% DTC globally

2024 NielsenIQ study on NA purchase behavior - #1 driver - for conscious hosting (aligns w/ French Bloom’s ethos of not excluding anybody); #2 health & wellness; #3 driving

Marketing is digital first, leveraging Constance as a tastemaker and key opinion leader

More partnerships - Coachella, French Open, just signed F1 (10-year partnership, 1st ever official NA sparkling wine, Moet Chandon on podium; F1 new fans are 75% female, 50% Gen Z from Netflix series)

Most effective marketing has been the founding story and authentic storytelling (i.e., Maggie’s pregnancy, Constance’s need for moderation while networking)

Marketing through top-tier restaurants, hotels, and shops (e.g., Michelin-starred; became the #1 wine sold at Erewhon in 1 week)

Michelin-starred restaurants have 50% non-drinkers at lunch, 20% at dinner

No sugar, no additives, organic messaging plays well in California, less on the East Coast

Uses the term “alcohol free” vs. “non-alcoholic”

NA trends around NA wine & food pairing, including “moderate pairing” (wine & NA wine/drinks as part of pairing); mirrored cocktails (3 versions ofthe same cocktail - NA, low, full)

Hosted on Acast. See acast.com/privacy for more information.

Selling the very rare, collectible wines of the world, Adam Bilbey, SVP, Global Head of Wine & Spirits for Christie’s, has a unique view into the state of the wine collector. Adam maps the thought processes and changes in attitude of buyers and sellers of rare wine globally, and he is seeing “green shoots” in the market by mid-2025.  

Detailed Show Notes: 

Adam’s background - started w/ Berry Bros out of high school (2000) at Heathrow Airport shop, moved to Hong Kong in 2010 w/ Berry Bros, Sotheby’s in 2015, Christie’s in 2021

Christie’s is known for fine art, and wine is part of the luxury group (jewelry, handbags, cars), which is 20% of sales, and wine is 10-20% of luxury sales

2025 wine auction market

• Christie’s up 2x YOY Aug YTD, big single-owner sales (e.g., Bill Koch)
• Challenging market mid 2022-2024, newer vintage prices dropping more, more supply available
• In a downturn, buyers’ price expectations fall faster than sellers’
• “Green shoots” in 2025, pricing bottoming out

Burgundy has taken share from Bordeaux last 5-6 years, Champagne came up and leveled off, Italy is strong in the US but not in Asia, Burgundy is strong in Asia, but leveled off

Interest in more mature vintages, particularly Bordeaux, is still valued there

Focus on provenance, people won’t bid on poor provenance anymore

• 2-tier pricing, people paying for a premium for a great collection, single-owner sales, they like the story of who owned the wines

With a more global market than ever, people buy from anywhere

• The US has a broader selection
• Everyone buys from the UK
• Asia tends to need more focus (e.g., Burgundy)

Liv-ex shows -10% pricing last year, -20% last 2 years; auction prices move gradually, often lots don’t sell

More Millennials and Gen Z customers (45% 2025 from 30% 2022)

Female customers have been consistent last 4-5 years, a slight dip in the US, and growing in Asia

Younger generations are drinking younger wines, they like the security of younger wines, have a fear of disappointment in older bottles

Online auctions require ease of use

• Christie’s does 2x online auctions vs live
• Live auctions for key moments, key collections
• Various owner sales in online auctions

Provenance is improving with more communication (e.g., purchase & storage records), people working together (merchants, auction houses), and technology (digital microscopes, UV light, carbon dating)

Provenance is critical, as people remember the bad bottles sold to them over the good ones

Believes China will make a comeback in the next 2-4 years

Hosted on Acast. See acast.com/privacy for more information.

Making wine is capital-intensive. Making traditional method sparkling wine is even more so. From less juice from the grapes to double fermentation to more expensive bottles and taxes, Weston Eidson of recently launched Westborn Wine describes the differences in sparkling production.  

Detailed Show Notes: 

Weston’s background: >10 years winemaking in Napa (Silver Ghost), family are wine collectors, interned w/ Jason Moore at Modus Operandi (2012), and acquired extra Chardonnay from Steve Matthiasson

Westborn was founded in 2018, taking “Grand Cru” or single vineyard level fruit for sparkling wine (e.g., Heintz, Ritchie, Durell vineyards)

Partnered w/ Russell Bevan (mentor) and Nathan Reeves (made sparkling in Margaret River)

The goal is to start with high-quality wines and layer on complexity with traditional method aging

Took 4-5 years to find a stride & hone the winemaking process

Initially thought it would be 3 years aging vs 6 for 1st release (2019 1st release; 2018 1st vintage just disgorged mid 2025)

SKUs: vintage, Blanc de Blanc, Rose, Non-vintage

Luxury priced - $100+

Solera method perpetual reserve program, late disgorged release, lead to a lot of capital in inventory

2018: 500 cases; 2025 ~1,000 cases; target ~2,000 cases

Sparkling production costs vs. still wine

• Fruit costs the same (growers love it: less shrivel, gets fruit off earlier - less pest/disease pressure; spreads out the work)
• Press cuts important, ~25% less gallons/ton vs still wine, as they don’t take taille
• Need to make the wine twice: initial fermentation (vin clair), secondary fermentation (bottled with yeast and sugar)
• Custom crush costs are slightly more expensive due to double fermentation
• Bottles are more costly and need to be bought earlier (~$0.15-20 for a standard bottle; ~$1 for sparkling)
• Taxes higher: $2.40/gallon for sparkling wine, $0.07/gallon for still wine <16% abv
• Storage and financing costs are higher

Financing is combined with other brands, which may make it hard to start a sparkling brand as a stand-alone entity

Look at the business plan over 20 20-year time horizon, projecting cash flow positive in 2027 (9 years from founding)

Trends underpinning Westborn strategy: following Michael Cruse w/ grower CA sparkling wine, premiumization, sparkling doing relatively well, sparkling being used beyond celebrations

Take inspiration from Bereche, De Souza (lees stirring in bottle to amp up umami), and Selosse

People looking for experiences have a tasting at The Art Collective Napa Valley

Hosted on Acast. See acast.com/privacy for more information.

It’s a cycle that has been happening since the late 1800s. The need for agricultural labor in California is a cycle of bringing in labor and then deporting them when they become too visible. Elaine Chukan Brown, wine writer and author of recently published The Wines of California, describes the history, current situation with new regulations and deportation, and the tension put on vineyard workers’ wages in California and their impacts on the labor market and vineyard workers.  

Detailed Show Notes: 

The Wines of California covers 3 sections: 

• How we got here - the history and what context allowed things to happen
• Where we go - the growing regions and key producers
• What we’re facing - marketing challenges, climate change

Interest in farmworkers started with Salud, a medical program for vineyard workers and their families

• Has mobile and physical clinics
• Successful because it provides care for workers and their families

CA is the largest farm region in the US

• Exports 40% of ag production
• Became nationally relevant in the 1900s, which led to the need for farm labor

Sources of farm labor (in chronological order)

• Indigenous people (until smallpox outbreak and reservations)
• China - exchanged labor for citizenship, after 10-15 years, expelled Chinese with the Chinese Exclusion Act
• Japan
• India
• Black sharecroppers from the South (small group)
• Mango (Philippines)
• Mexico (post WWII) - led to the current H2A program

When labor populations grow and get too big, they are expelled, which has been in ~20-year cycles

H2A Program - temporary work visa program

• Cannot be extended or transferred to another employer
• Employers must provide housing & transportation
• Biases towards big business to deal w/ compliance

FDR (1930s/40s) - Labor Protections Act created worker protections, but excluded agriculture

United Farmworkers (1975) - 1st farmworker protection legislation

Association of Farmers - farm wonders banded together to have more leverage against workers

Ever-growing CA labor regulations create large compliance requirements that end up favoring big business

Current system sets up farm workers’ wages as the only lever for farm owners to maintain profit margins and be economically viable (w/w/o gov’t subsidies)

New CA farmworker overtime pay law - 8 hours/day, 40 hours/week before overtime

• Derived from an office worker’s perspective
• Does not match the seasonal work of agriculture
• Employers have small margins, can’t afford overtime rates
• Workers make less money and need to get 2nd or 3rd jobs
• If workers get injured at 2nd job, workers’ comp does not cover wages of the main job
• Employers need to find more workers to do the same amount of work, and lose the experience and skills of the current workforce

Many crops (e.g., strawberries, peaches) need manual labor and can’t be mechanized

ICE raids & deportations: not a new thing, but what’s new is people with documentation (visas, amnesty recipients, citizens) are being detained and deported

• Creating fear, workers not showing up to work (some regions report a 70% drop in workers)
• Workers not going to farms on main roads (too visible)
• Families choose 1 member to go ot work, the other stays home to take care of the kids
• Historically, when the safety of workers is an issue, workers don’t respond to higher pay

US tariffs increase prices to consumers, decreasing sales; it may take decades for consumers to substitute for domestic wines

Hosted on Acast. See acast.com/privacy for more information.

With a large domestic market for wine, US producers often don’t focus a lot on exports. Honore Comfort, VP of International Marketing for Wine Institute, lays out the benefits and challenges of exporting wines globally. She covers the top markets for US wine globally, the role Wine Institute plays in helping US exports, and the potential impacts of the current trade war.  

Detailed Show Notes: 

Wine Institute overview

• Members are CA wineries (>1,000)
• Public policy organization focused on legislation (e.g., DTC shipping)
• Member dues are a sliding scale (based on prior year revenue & volume), baseline is a few hundred dollars

CA is the 4th largest wine region in the world after France, Italy, and Spain

• Largest market in the US
• The US market is 75% domestic (80% from CA), 25% imports
• Export is 4% (by value), 95% is CA
• Traditionally lower-priced wines, now a barbell (both low and high, but not mid-priced wines)
• Other countries have high taxes, duties, and tariffs on imported wines (int’l pricing often 2-3x US retail, 10x for India)

Cost to produce is high in CA (heavily regulated - environmental & labor force protections; land costs high)

Goal to showcase the diversity of CA wine globally, but only a sliver is available 

Key int’l markets - Canada (#1 until Feb 2025; ~30% of US exports - premiers took all wine off shelves as part of trade war); Europe #2 (Germany is hard w/ strong domestic, low priced market; Scandinavia big); UK #3 (punches above its weight as oldest wine market, lots of wine writers, critics, traders; one of the broadest selections of CA wine); China, Japan, Korea, Mexico

Wine Institute has active programs in >30 countries for CA wines

Benefits of exporting wine: importers sell wine for you (no 3-tier system like the US), build brand visibility, position wines next to other great wines of the world

Challenges of exporting wine - takes investment, needs face-to-face storytelling

Small Napa producer (<5k cases) now exports 15% of sales working w/ Wine Institute

IWSR creates an index ranking all wine markets globally on attractiveness (2024 - US #1, Canada #2, Switzerland #3 - a small country, but strong wine culture and high value wines)

EU subsidies are pervasive (e.g., bottling line, materials subsidies, marketing support (Italy $150M/year), buying excess bulk wine), but hard to get complete info

The US has less support for alcohol (USDA has $8M/year for CA wine); wine is the highest value US export, but low in total value

Trade war impacts

• Market uncertainty has many importers not wanting shipments on the water
• Cost of input materials (e.g., steel, oak barrels) up
• Prior administration not interested in addressing trade disparities, potential to open up other markets (e.g., India - 150% tariff on alcohol, #1 whiskey market, #5 beer market; Vietnam; Thailand)
• Attitudes towards the US impact business (e.g., Denmark dislikes threats on Greenland, reducing US purchases; China is not a factor; Vietnam and Korea are positive on US products)
• Hong Kong’s move to 0% taxes on wine led it to be a hub of CA wine in Asia
• In 2019, China's tariffs on US wine plummeted business

Wine Institute promotes “0 for 0 tariffs” - keeping wine out of trade disputes

Major policy priorities: US dietary guidelines (on alcohol), getting wine back on the shelf in Canada, Ingredient & nutritional labeling, CA bottle bill on recycled glass, and environmental regulations

“Share Wine” program - building understanding, community, and engaging with wine consumers, focusing on 25-45 year olds, centering on relationship w/ technology

Hosted on Acast. See acast.com/privacy for more information.

As one of the major players in value wine, owning Charles Shaw (aka “Two Buck Chuck”), Bronco Wine Co.’s new CEO, Dom Engels, believes that the wine industry needs more innovation and focus on creating new entry points for younger consumers. From packaging to labels, Dom discusses how he’s navigating Bronco through the turbulence of a shrinking market for value wine from both the cost and innovation side.  

Detailed Show Notes: 

Bronco - Top 15 winery, owner of Charles Shaw (aka “Two Buck Chuck”)

• Has its own CA distribution
• House of >200 brands
• Large winery in Modesto, bottling in Napa, a boutique winery in Santa Rosa
• Owns ~40k acres, ~30k acres vineyards, but farming <10k today
• Owns Bivio, a logistics company

Charles Shaw

• No created by Bronco, acquired by Fred Franzia (co-founder of Bronco)
• Was a successful, premium, luxury Napa brand, 1st vintage 1978
• Went bankrupt in the 90s, Bronco bought the trademark in 1999
• 1st product in 2022 - $1.99 for good quality wine
• Low pricing enabled by low margins and Fred Franzia’s “genius” in bulk wine trading
• Partnership w/ Trader Joe’s through shared belief in creating accessibility and substantial cultural overlap

Believes the industry needs more good entry-level wines to get younger generations a start in wine

• The ethnic makeup of younger people is not the same as that of older generations
• “Not your father’s Cadillac” - young tend to rebel against what their parents did
• 11,400 wineries in the US create a diffuse set of interests, a lack of clear messaging (e.g., craftsmanship, agriculture) to separate wine from alcohol
• Accessibility could be driven by the right packages (including formats) and labels; good labels drive trial, good liquid drives repeat sales
• Significant marketing spend is difficult due to low margins
• Industry covers the right price points (e.g., Charles Shaw $3.49 in CA), but needs other elements, not a lot of great innovation or marketing at low price points (some pockets of innovation, e.g., XXL focus on high ABV)
• Need more transparency - ingredients, nutrition, ownership, provenance - Bronco is adding more back stories to brands

Enhancing social interactions is important; e.g., Jack Daniels’ ad that getting together with other people is healthy too

• New Bronco company motto, “better times at every table,” similar to Pernod Ricard’s “conviviality”

Believes dislocation of restaurant price vs retail is a core driver of wine industry decline, $14 IPA and $25 cocktails make people drink less

Navigating lower volumes requires being more efficient, sees opportunity in winemaking (most capacity utilization at wineries now <50%), distribution (reduce inventory), and retail

Likely too many brands in the US and too much shelf space in retail

Mothballing a lot of vineyards due to oversupply

• Can’t bring back in 1 year, but can in 2-3
• Cut buds down so vines don’t produce fruit
• Still requires some maintenance costs
• Vineyards in less optimal areas are to be pulled first, and he does not believe there will be an overcorrection

Competing in value vs international

• Can’t compete on labor
• Need to compete on quality, provenance, and taste
• Even tariffs won’t solve the cost gap
• EU subsidies help democratize wine

Tariff impacts

• Some input cost increases (e.g., China for glass)
• A good thing overall for the US industry, which will lead to more US wine being consumed
• Likely no structural change

Hosted on Acast. See acast.com/privacy for more information.