JimmyV
Central Connecticut
Wine Connoisseur
Posts:5112
 | | 02/11/2008 12:45 PM |
| | Link to an interesting article of the lack of succession planning for family wineries and the pitfalls that accompany the lack of said planning. | |
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j1mmy
Grape Truck Driver
Posts:36
| | 02/11/2008 8:00 PM |
| Real interesting, thanks! Actually applies in a lot of "relationship" oriented small businesses.
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JimmyV
Central Connecticut
Wine Connoisseur
Posts:5112
| | 02/11/2008 10:11 PM |
| Posted By j1mmy on 02/11/2008 8:00 PM Actually applies in a lot of "relationship" oriented small businesses.
True. But as the article states, over 80% of today's wineries date back to at most, 1975. One would be hard-pressed (outside of the dot.com circle) to find an industry so heavily weighted toward first generational ownership. I suppose one could look at the Mondavi family as the [less than] perfect case study. A seeming dynasty that couldn't pass the baton past from the first generation to the second. | |
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Eric White
San Ramon, CA
Advanced Sommelier
Posts:9257
| | 02/11/2008 10:42 PM |
| I'd post something, but apparently this thread is only open to "Jimmy"s.
Wait, oops! | | | |
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jaimetown
DC area
Wine Labeler
Posts:3504
| | 02/12/2008 12:08 PM |
| Yeah Eric, what are you doing here? Interesting article, thanks. | | | |
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Stefania Wine
San Jose, CA
Grape Puncher
Posts:725
| | 02/12/2008 1:43 PM |
| The truth is farming is hard, hard work, and winemaking is a high risk, low return business. Very few 2nd generation's want anything to do with it. They've seen their parents work hard for little reward and they've lived the 'lifestyle' themselves. "Let'em be doctors and lawyers and such", as it were.
We've had a number of wineries here that have either closed, are for sale, or went defunct as none of the children were interested in taking over the business. A succession plan wasn't needed, because no one wanted the business. Cronin would be a perfect example. All the family wanted to do was get the old stock out of their garage. The Algrehen's had every kid in the family try and run the business and none stuck. The winery has been for sale for 3+ years.
Finding someone to keep the business going is a huge challenge and winery owners often turn to those outside the family to continue the business. I know this first hand of course. | |
Paul Romero - Owner/Winemaker Stefania Wine
www.stefaniawine.com | |
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Daniel Bailey
Grape Puncher
Posts:731
| | 02/12/2008 1:51 PM |
| No one with any heart would wish their offspring to become lawyers... | | | |
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JimmyV
Central Connecticut
Wine Connoisseur
Posts:5112
| | 02/12/2008 1:58 PM |
| So Paul, what are you saying? That not all second generation wine producers are like "The Todd"? Say it ain't so! The picture you paint is no doubt true, and does not bode well for the industry. The funny thing is, that very often people here (and elsewhere on the consumption side) are wary of the "newcomers". But if the older wineries fold their tents, newcomers are all we will be left with. And then you have situations like WesMar that sort of spring forth from Williams-Selyem, instead of the second generation taking over that already-existing winery. | |
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Daniel Bailey
Grape Puncher
Posts:731
| | 02/12/2008 2:17 PM |
| | Jimmy, the Santa Cruz Mountains is a significantly different area than other areas in California like the Napa Valley. Successive generations taking over Napa wineries isn't much of a problem imo (see Shafer, Montelena, Schramsberg (despite the ugly lawsuit about money), etc - even the Mondavis walked away with boatloads of cash). Selling out is always an option but selling out as an option isn't endemic to only California or for "family wineries" (oftentimes just a marketing term). | | | |
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MTPockets
Grape Puncher
Posts:951
| | 02/12/2008 9:45 PM |
| So this begs the question of what the financial returns of being the typical producing winery are? I suspect it largely falls into the old farming adage: "live poor, die rich". Considering the market value of the underlying asset (the land) plus some premium for the brand and inventory, I suspect most family wineries in America yield sub-standard returns for the capital invested unless: they become a cult or there is an event (such as a sale). Stated another way, the money would enjoy better returns invested in other instruments. Succession in a family winery is no different than any other family business: nobody can ever agree upon valuation especially for those involved in the business versus those that aren't. In the New World, we always seem to be able to plow up new land to vines. Perhaps the old world has an advantage in valuation here in the sense that they're not plowing up new land for vines but relying upon excellence of the product to boost valuation since ages have already shown what land is suitable for wine and what is not. | | | |
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yhn
Grape Destemmer
Posts:59
| | 02/16/2008 2:39 PM |
| Posted By MTPockets on 02/12/2008 9:45 PM In the New World, we always seem to be able to plow up new land to vines. Perhaps the old world has an advantage in valuation here in the sense that they're not plowing up new land for vines but relying upon excellence of the product to boost valuation since ages have already shown what land is suitable for wine and what is not.
But, a lot of our historic vineyards have been plowed under and are now housing and shopping malls. New vineyards pretty much have to be remote to stay away from urban encroachment.
France has too many vineyards. There's a huge glut of wine. Something like 2/3 of the wine produced doesn't sell to consumers. The government buys it and dumps most of it (some is made into brandy). So, there isn't much need for new plantings. Though, there are some in the south, which do sort of parallel new plantings here.
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