Business & Management
What Were Your Best/Worst Business Decisions?
If you're like most winery executives, you're constantly facing tough decisions. Brains, skill and instinct are usually enough to point you in the right direction, but sometimes, things just don't work out as planned. Even the most intelligent and experienced managers can take a wrong turn; the important thing is to learn from your mistakes, as well as your successes.
With this in mind, we asked six winery executives across the country to tell us about their best--and worst--business decisions.
Equipment Woes
"My worst business decisions have had to do with buying used equipment, based on price and availability," says Don Collier, president, Mountain Valley Vineyards, Pigeon Forge, Tenn. "What this did was lock me into production methods that did not constitute sound business operations."
What did he learn from this mistake? "If you're set up to do a certain thing, and the equipment is not readily available, then you must take the time to find the equipment and pay what it costs," he says. "You should not make a decision based on financing considerations as opposed to what's right for your business."
Collier describes his best decision as one in which he took a different path than other winemakers in his area. "The tendency here is to build the winery on the family farm where the grapes are grown, without accessibility to tourists," he says. Rather than follow the trend, Collier built his winery in a high-traffic area, in the resort town of Pigeon Forge. The winery is located next to a theme park and near the Great Smoky Mountain National Park, which attracts more than 9 million visitors per year. The real estate in Collier's well-traveled location did cost more (he grows his grapes in another location to keep the cost down), but he feels that it's money well spent.
Growing Pains--And Successes

Wollersheim Winery's winemaker Philippe and wife Julie Coquard, VP/marketing with Julie's parents, winery founders JoAnn and the late Robert Wollersheim.
For Wollersheim Winery, located 25 miles outside of Madison in Prairie du Sac, Wis., the company's best and worst decisions involved the purchase of an additional winery.
In 1990, Wollersheim's owners purchased Cedar Creek Winery in Cedarburg, 20 miles outside of Milwaukee. According to vice president of marketing, Julie Coquard, the additional brands added to the company's success.
"It was good timing for us," Coquard recalls. "We were already growing, and this purchase allowed us to really take off." Wollersheim produced 12 brands, and Cedar Creek 10, so production jumped from 12 to 22 brands. Thanks to the new winery and brands, the company was able to increase production from 8,000 gallons before the purchase to 170,000 today.
The downside of this growth, Coquard says, is that production soon exceeded capacity. "We always ended up (outgrowing our space) much faster than we anticipated."
Eventually, however, the company learned that it's better to overestimate, than err in the other direction. "The last thing we built was a warehouse in 2001," she says. "We built it extra big so it would last at least 10 years and we could grow into it."
Purchasing an existing winery or vineyard isn't always a good decision, however.
"Three different times I purchased an existing vineyard or vineyard parcel that I had good hopes for, and in each instance wound up completely replanting it," relates Jerry Lohr, president/ owner of J. Lohr Winery, San Jose, Calif.
The vineyards were in good locations, and in two of the three cases, the wine produced had been reasonably good. But when Lohr took over, he found the soil was not prepared for the right varietals or rootstocks. The vines, soils or rootstocks were too vigorous and simply didn't work out.
"Now, if someone is asking $20,000 an acre, I would determine the value of the land in itself, without attributing any value to the
vineyard," Lohr says. "If, by chance, the vineyard worked out, so much the better, but I wouldn't depend on it."
It should be noted, however, that in 33 years Lohr has purchased 31 different parcels, covering 3,400 acres. Of those parcels, only three have failed to work out. Not a bad record, overall.
Planting For The Market
Rudy Marchesi, president, Montinore Estates, Forest Grove, Ore., also recalls a bad varietal experience. "We got off to a (bad) start because of Chardonnay," Marchesi says. "We couldn't grow it as well as in the warmer climate of California, and there was so much competition and inexpensive Chardonnay coming out of that state, we couldn't keep up."
Marchesi reports that he corrected this situation about four years ago by converting his vineyards to Pinot Noir and Pinot Gris. "This was our best decision, for it really helped our bottom line a lot. Now we make a quality wine that has its own niche."

Rudy Marchesi, Montinore Estates, Forest Grove, Ore.
Photo: Coleen Cornish
His biggest regret, Marchesi adds, was that he waited so long to rip out the Chardonnay. "It seemed too radical at the time. Why get out of Chardonnay, when everyone else was buying it? But that was the point, everyone was buying it because everyone was making it, so the prices were cheap."
Chateau Ste. Michelle, Woodinville, Wash., had a similar experience with Chardonnay. "About eight years ago, when consumers' tastes started changing, we--along with a number of others--began ripping out our Rieslings," says Keith Love, vice president of communications. "It was the worst decision we ever made."
What put the company on the map, Love says, was the Los Angeles Times' 1974 blind tasting of Rieslings from all over the world. Ste. Michelle's wine beat them all, including the Rieslings from Germany. So, in a sense, the company's rejection of Riesling amounted almost to a betrayal of its own identity.
However, when sales dropped, th e company changed course. Its traditional Riesling was Johannesburg, which Love describes as "close to off-dry, but slightly sweet." The company hired famed German winemaker Ernst Loosen to evolve a new Riesling. The first vintage was the 1999 vintage, which was bottled in 2000 as Eroica.
"Eroica has led the Riesling renaissance," Love says. Eroica is now at 15,000 cases, placed on Wine Spectator's top 100 list and selling for $20 per bottle. Love projects sales to total 25,000 cases for 2005. Meanwhile, Johannesburg is projected to reach 500,000 cases by the end of 2005.
Aside from bringing Ste. Michelle's focus back to Riesling, the company's best decision, Love says, can be summed up in one word: "Merlot." In 1994 the company brought out Northstar, with the intention of making "the best Merlot in America." The Merlot, which retails at $50 in many restaurants, sold about 2,800 cases in 2005. Love says, "We sell it all out."
Marketing And Brands
In terms of marketing-related decisions, Jerry Lohr says his biggest mistake has been listening to others' advice on the color and design of labels. "I've more or less said, 'OK, try them out,' on labels I was not comfortable with before I withdrew them and started again from scratch," he says. "Now, instead of living with those labels for a few years before they've been proven inferior in the marketplace, I wait until I'm happy with them before they're used."
José Femandez, CEO of Canandaigua Wine Company, says one of his best decisions was trimming the company's U.S. brands from 55 down to 22 in 1994.
"Those 22 brands represented more than 85% of our business," Fernandez says. "By focusing on those strong brands such as Paul Masson, Inglenook and Covey Run, we've seen solid growth and really nice dividends."
Rather than dropping the remaining brands, the company basically restructured itself into two different divisions, the second called North Lake Wines. "These are very promotion-oriented wines, and we market them very pragmatically, region by region," Fernandez says. "So, by creating a different portfolio for these wines and having a dedicated group working on them, they are doing much better."
The company's worst business decision, Fernandez recalls, also involved the North Lake division. "When we created North Lake Wines, we decided on a name on three different occasions, and got pretty far down the track with logos, stationery and everything else, before we found that there was another wine company with the same name.
"A small company doesn't have to register its name to have it trademarked," Fernandez explains, adding that the company did its due diligence through a trademark attorney. "So these were small wineries that just came to our attention at the last minute."
On the fourth try, Fernandez finally found a name that wasn't already being used by another winery.
But that's just the way it goes sometimes: You make mistakes, you figure out what went wrong, you try something different next time. And if you can learn from the mistakes of others, that's even better. As John Luther once said: "Learn from the mistakes of others--you can never live long enough to make them all yourself."
(Thomas G. Dolan is based in Washington state, and writes on a wide variety of subjects, specializing in food and beverage. He can be reached through edit@winesandvines.com.)
With this in mind, we asked six winery executives across the country to tell us about their best--and worst--business decisions.
Equipment Woes
"My worst business decisions have had to do with buying used equipment, based on price and availability," says Don Collier, president, Mountain Valley Vineyards, Pigeon Forge, Tenn. "What this did was lock me into production methods that did not constitute sound business operations."
What did he learn from this mistake? "If you're set up to do a certain thing, and the equipment is not readily available, then you must take the time to find the equipment and pay what it costs," he says. "You should not make a decision based on financing considerations as opposed to what's right for your business."
Collier describes his best decision as one in which he took a different path than other winemakers in his area. "The tendency here is to build the winery on the family farm where the grapes are grown, without accessibility to tourists," he says. Rather than follow the trend, Collier built his winery in a high-traffic area, in the resort town of Pigeon Forge. The winery is located next to a theme park and near the Great Smoky Mountain National Park, which attracts more than 9 million visitors per year. The real estate in Collier's well-traveled location did cost more (he grows his grapes in another location to keep the cost down), but he feels that it's money well spent.
Growing Pains--And Successes

Wollersheim Winery's winemaker Philippe and wife Julie Coquard, VP/marketing with Julie's parents, winery founders JoAnn and the late Robert Wollersheim.
In 1990, Wollersheim's owners purchased Cedar Creek Winery in Cedarburg, 20 miles outside of Milwaukee. According to vice president of marketing, Julie Coquard, the additional brands added to the company's success.
"It was good timing for us," Coquard recalls. "We were already growing, and this purchase allowed us to really take off." Wollersheim produced 12 brands, and Cedar Creek 10, so production jumped from 12 to 22 brands. Thanks to the new winery and brands, the company was able to increase production from 8,000 gallons before the purchase to 170,000 today.
The downside of this growth, Coquard says, is that production soon exceeded capacity. "We always ended up (outgrowing our space) much faster than we anticipated."
Eventually, however, the company learned that it's better to overestimate, than err in the other direction. "The last thing we built was a warehouse in 2001," she says. "We built it extra big so it would last at least 10 years and we could grow into it."
Purchasing an existing winery or vineyard isn't always a good decision, however.
"Three different times I purchased an existing vineyard or vineyard parcel that I had good hopes for, and in each instance wound up completely replanting it," relates Jerry Lohr, president/ owner of J. Lohr Winery, San Jose, Calif.
The vineyards were in good locations, and in two of the three cases, the wine produced had been reasonably good. But when Lohr took over, he found the soil was not prepared for the right varietals or rootstocks. The vines, soils or rootstocks were too vigorous and simply didn't work out.
"Now, if someone is asking $20,000 an acre, I would determine the value of the land in itself, without attributing any value to the
vineyard," Lohr says. "If, by chance, the vineyard worked out, so much the better, but I wouldn't depend on it."
It should be noted, however, that in 33 years Lohr has purchased 31 different parcels, covering 3,400 acres. Of those parcels, only three have failed to work out. Not a bad record, overall.
Planting For The Market
Rudy Marchesi, president, Montinore Estates, Forest Grove, Ore., also recalls a bad varietal experience. "We got off to a (bad) start because of Chardonnay," Marchesi says. "We couldn't grow it as well as in the warmer climate of California, and there was so much competition and inexpensive Chardonnay coming out of that state, we couldn't keep up."
Marchesi reports that he corrected this situation about four years ago by converting his vineyards to Pinot Noir and Pinot Gris. "This was our best decision, for it really helped our bottom line a lot. Now we make a quality wine that has its own niche."

Rudy Marchesi, Montinore Estates, Forest Grove, Ore.
Photo: Coleen Cornish
Chateau Ste. Michelle, Woodinville, Wash., had a similar experience with Chardonnay. "About eight years ago, when consumers' tastes started changing, we--along with a number of others--began ripping out our Rieslings," says Keith Love, vice president of communications. "It was the worst decision we ever made."
What put the company on the map, Love says, was the Los Angeles Times' 1974 blind tasting of Rieslings from all over the world. Ste. Michelle's wine beat them all, including the Rieslings from Germany. So, in a sense, the company's rejection of Riesling amounted almost to a betrayal of its own identity.
However, when sales dropped, th e company changed course. Its traditional Riesling was Johannesburg, which Love describes as "close to off-dry, but slightly sweet." The company hired famed German winemaker Ernst Loosen to evolve a new Riesling. The first vintage was the 1999 vintage, which was bottled in 2000 as Eroica.
"Eroica has led the Riesling renaissance," Love says. Eroica is now at 15,000 cases, placed on Wine Spectator's top 100 list and selling for $20 per bottle. Love projects sales to total 25,000 cases for 2005. Meanwhile, Johannesburg is projected to reach 500,000 cases by the end of 2005.
Aside from bringing Ste. Michelle's focus back to Riesling, the company's best decision, Love says, can be summed up in one word: "Merlot." In 1994 the company brought out Northstar, with the intention of making "the best Merlot in America." The Merlot, which retails at $50 in many restaurants, sold about 2,800 cases in 2005. Love says, "We sell it all out."
Marketing And Brands
In terms of marketing-related decisions, Jerry Lohr says his biggest mistake has been listening to others' advice on the color and design of labels. "I've more or less said, 'OK, try them out,' on labels I was not comfortable with before I withdrew them and started again from scratch," he says. "Now, instead of living with those labels for a few years before they've been proven inferior in the marketplace, I wait until I'm happy with them before they're used."
José Femandez, CEO of Canandaigua Wine Company, says one of his best decisions was trimming the company's U.S. brands from 55 down to 22 in 1994.
"Those 22 brands represented more than 85% of our business," Fernandez says. "By focusing on those strong brands such as Paul Masson, Inglenook and Covey Run, we've seen solid growth and really nice dividends."
Rather than dropping the remaining brands, the company basically restructured itself into two different divisions, the second called North Lake Wines. "These are very promotion-oriented wines, and we market them very pragmatically, region by region," Fernandez says. "So, by creating a different portfolio for these wines and having a dedicated group working on them, they are doing much better."
The company's worst business decision, Fernandez recalls, also involved the North Lake division. "When we created North Lake Wines, we decided on a name on three different occasions, and got pretty far down the track with logos, stationery and everything else, before we found that there was another wine company with the same name.
"A small company doesn't have to register its name to have it trademarked," Fernandez explains, adding that the company did its due diligence through a trademark attorney. "So these were small wineries that just came to our attention at the last minute."
On the fourth try, Fernandez finally found a name that wasn't already being used by another winery.
But that's just the way it goes sometimes: You make mistakes, you figure out what went wrong, you try something different next time. And if you can learn from the mistakes of others, that's even better. As John Luther once said: "Learn from the mistakes of others--you can never live long enough to make them all yourself."
(Thomas G. Dolan is based in Washington state, and writes on a wide variety of subjects, specializing in food and beverage. He can be reached through edit@winesandvines.com.)
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