Davis, Calif.—Michael Mondavi and his son, Rob Mondavi Jr., shared their experiences working in the wine industry and bridging the past with the future during a presentation about generational changes and family wineries during a lecture May 17 at the University of California, Davis. They pointed out that some of the major changes and innovations in the California wine industry have come about as a result of government regulation, new technology, evolving market opportunities and the need to be creative when facing challenges.

Their talk was part of the Walt Klenz Lectureship Series sponsored by Treasury Wine Estates and named in honor of former Beringer Blass CEO Walt Klenz, who introduced the Mondavis. Begun in 2006, the series is presented by the Robert Mondavi Institute (RMI) and the University of California, Davis, Department of Viticulture and Enology to feature wine business leaders who share insights and experiences with students, faculty and industry attendees.

Background
With his legendary father, Robert Mondavi, Michael Mondavi co-founded the Robert Mondavi Winery in 1966 and helped establish and build the reputation of the Napa Valley wine industry. In 1999, with wife Isabel and children Rob Jr. and Dina, Michael’s family purchased land on Atlas Peak above Napa Valley to establish a vineyard, thus founding a new winemaking company: Michael Mondavi Family Estate. Michael Mondavi has been honored with numerous awards, and he was named the 2015 Person of the Year by Wine Enthusiast magazine. He is a member of the Honorary Board of the RMI at UC Davis.

Rob Mondavi Jr., now 44, joined the Robert Mondavi Corp. in 2000 and held positions as sales director and director of marketing. Since 2004 he has held the position of president of winemaking for Michael Mondavi Family Estate.

In 2004, Michael Mondavi and Rob Mondavi Jr. started Folio Fine Wine Partners to market and sell their own family wines in addition to importing, marketing and selling fine wines produced by family owned and operated wineries in other countries. Their first partner was the Frescobaldi family in Italy that has produced wine for centuries. Folio’s portfolio now includes 32 labels from seven countries. Mondavi Jr. said the goal is to bring families together who are producing some of the best wines in the best growing regions and bring these world-class wines to U.S. consumers. Michael Mondavi said, “They want us to do a better job of direct-to-consumer (DtC) sales to high-end collectors in the U.S.”

A history of change
“Government and regulations have had more impact on the wine business during the past 100 years than agriculture,” Mondavi said. After repeal of Prohibition, the three-tier system dictated how wine was marketed and sold, and there were few national brands. Wine produced in California was largely sold as a commodity and commonly shipped by tanker car or truck and bottled for regional sales. Distillers would also buy bulk wine and turn it into a higher priced product. Frustrated with the inability to get higher prices under the system, Michael Mondavi’s father, Robert Mondavi, wanted to convert their wine from a commodity to a consumer product. The family bought Charles Krug winery in 1943 for $75,000. According to Michael Mondavi, “My father said, ‘I think I can sell Napa Valley Cabernet Sauvignon for 25 cents a bottle.’”

He told another story of how change occurs. In the 1960s, about half of Robert Mondavi Winery’s production was sold in bottles, and about half was sold in tanker trucks to other producers. The winery had a written contract with Joseph Schlitz Co. (then owner of Geyser Peak Winery in Sonoma County) to sell them 300,000 gallons per year. In the early 1970s, there was a surplus of wine, and Schlitz/Geyser Peak told Michael they were going to break the contract. The Mondavis considered legal action. Their legal counsel said they would probably win in court, but it would take so long to go through the system that it could potentially lead to bankruptcy.

In retrospect, Michael said, “I thank God that Joseph Schlitz broke that contract, because it led us to create the Woodbridge brand and winery (in Lodi) that turned into one of our most profitable operations.” He observed, “Some of the best turns that occur in the industry happen when times are tough and we have to get creative.” 

Generational change and cooperation
Mondavi expressed his admiration and awe of families such as the Frescobaldis, who have produced world-class wines as a family-owned and operated business for centuries. “Our family has only been in the wine business four generations, and we’ve had trouble just keeping the same brand,” Mondavi said. One reason he partnered with other winemaking families through Folio was so families could learn from previous generations and do things different to better succeed.

Mondavi observed: “Wine families like ours today realize we can’t just do what mom and dad did. Part of this is letting the younger generation be creative. Food and lifestyles are different today, and how younger people approach wine is different.”

Michael Mondavi Family Estate produces four brands with price ranges and styles to appeal to different generations and palates. The Emblem brand, now with eight wines, is a collaborative project by Dina and Rob Mondavi Jr. with a focus on approachable, more affordable Napa Valley Cabernet Sauvignon for younger people. “This wine is robust and modern, but with softer tannins,” Mondavi Jr. said. “It’s a wine you can drink by itself while cooking and continue to drink it with your meal,” he added.

Other brands are Animo, a more classic Cabernet priced at $85 per bottle and up, and M by Michael Mondavi, an elegant Cabernet inspired by Bordeaux reds and Napa Valley Reserve Cabs that is sold on allocation. More recently, Mondavi Jr. created the “Isabel” brand, named for his mother, with a rosé of Cabernet, and a Chardonnay and Pinot Noir sourced from Carneros.

Changes in direct shipping laws, media and technology
Mondavi Jr. left Robert Mondavi Corp. in 2004 to work full-time with the family business. He said, “Distributor consolidation was occurring, and it would be more difficult for a small wine company like ours to do business in the three-tier system.” He cited the impacts of regulatory changes that opened shipping across state lines to sell wines DtC in more U.S. states, and the importance of FedEx delivery service and its electronic shipment-tracking system. “This made it possible for high-tier wines to get directly into the hands of collectors across the country, and it made it possible for smaller production, high-tier producers to exist in Napa Valley,” he said. The younger Mondavi also noted, “This has changed the way we need to communicate with consumers and collectors.”

Regarding changes in wine media and electronic and social media, Mondavi Jr. said, “Consumers are demanding information beyond what the traditional critics provide.” He added, “Younger people want a more thoughtful discussion about wines rather than just a numeric score.” He believes there will still be individuals who take center stage as wine authorities, but the wine media is evolving, and he thinks communication will become more personal, between media and consumers, and between wineries and consumers. 

Napa Valley future predictions
Michael Mondavi observed: “Napa Valley is great for producing Cabernet, but some (Napa) Valley locations are not as great for Cabernet as others, and I think there is potential to grow other stellar varieties. Younger consumers today are looking to try other varieties, and there are opportunities there.”

He discussed the growth in the number and the character of Napa Valley wineries since he began in the 1960s. He estimated there are as many as 370 “lifestyle” wineries in Napa County today, started by people who bought into the high-end Napa Valley wine lifestyle to own “trophy properties” that are commonly on 10 acres with vineyards to support production of 500 to 1,500 cases. He believes many of these will not have a second generation that is interested in owning a winery business. “I think we will see a tremendous turnover of these small, very expensive lifestyle wine properties in the next few years,” Michael Mondavi said.

Mondavi Jr. noted that Napa Valley is one-fifth the size of Bordeaux, and with its complex geology, soils and topography, it is rare among the world’s wine regions. While he doesn’t think many new vineyards will be planted in the future, he does believe Napa Valley will evolve to produce even more interesting and creative wines than it produces today. He concluded, “To me, the future looks incredibly bright, and I think the industry will again be focused on farming and vinification.”

Michael Mondavi summarized, “The wine industry in California is never static, and that’s what makes it interesting.”