So You Want To Buy A Winery In CA.? Speak (or listen) To Carol Collison First.

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Carson Leno

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Fallon. Now it's

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wine talks with Paul K.

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Hey, welcome to wine talks with Paul Kay. And we are in studio today about

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to have a conversation with Carrot Carlitzin up in northern California.

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Introductions in just a moment. Wine talks, of course, available on iHeartRadio,

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Pandora, Spotify, wherever you hang out for podcasting. Hey, listen.

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Have a listen. Hey, listen. Have a listen. That was redundant.

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Rodolfo Tanger of the famed family tanger. He

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is the author of and the creator of French

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Bloom, this enormously successful non

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alcoholic sparkling wine from France. Incredible conversation because

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he also makes a very boutique champagne under his family

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name, Freijn, as well. Frederick J. Ryan was in

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the house, so to speak, virtually. He is the preeminent

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authority of wine in the White House. It's

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a fabulous conversation going back to George Washington and all the

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way up to current time about who poured what when and sort of the philosophy

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behind wine in the White House. Have a listen to that. But not while we're

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here. Here, talk to an old friend. I don't mean olden age. I mean old

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is, and we've been known each other for a few years now. Carol Carlson,

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welcome to the show. Hi. Thanks. I also happen to be old, but,

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well, I'm an old, old friend. So to make sure that we don't

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pigeonhole ourselves on this thing, Carol is a

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partner of global wine partners. And the reason

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I want to on the show is because we're going to talk about buying a

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winery, the concept of buying a winery, the issues with buying a

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winery, the stories behind buying a

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winery. Everybody wants to be in this industry. But tell me a little bit about

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how you got there, because you were not just in the wine trade,

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you were a investment banker by trade. No.

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Yeah, no. Global wine partners. Well, we were an investment bank.

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Now I, you know, I just, I say m

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and a as a fancy way of saying we sell wine companies. We

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are not an investment bank anymore. You know, I'm

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licensed as a real estate broker, so that's kind of how we operate. We found

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that clients really don't care as long as you can get the job done. And

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it was kind of a hassle to be an investment bank.

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So it was, the trade off wasn't clear.

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So. Well, we found each other accidentally, so to speak.

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And for the listeners, I want them to know that you orchestrated

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and moved the needle along when we sold the original wine of the month

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club, which I think we both learned a lot during that

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process. But I was looking, this show is

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about not only stories of wine. And

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as you know, there's no swirling or sniffing on this show. We don't talk about

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terroir, I mean, in the sense of soil and exchange of micronutrients

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at the tapper level, we don't talk about that stuff. We talk about the interesting

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parts of the wine business. And I was going

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to bring on a vineyard saleswoman. She was a real estate agent.

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And I go, what am I doing? I have one right here. We're

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old friends. She knows what I'm talking about here.

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And because the concept behind

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buying a winery is so romantic, how did

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you decide to get from investment banking into wine

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winery brokerage? Basically? No, I don't

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own anything and have no intention to.

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That says a lot. Yeah, no, I mean, honestly, our firm was formed

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by Vic Moto and Mike Fisher.

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They were partners in MKF, which was an accounting

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firm. And I had been in commercial

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banking before this job, you know, selling

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wineries in the wine space. So I was familiar with

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them, familiar with the industry, and I came on board. We're very much a finance

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company, but because of their background in accounting,

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my background in banking, you know, we've both seen at the

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30,000 level throughout our careers how difficult it is

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to be successful. And as defined by making money,

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you know, you can be successful and have a wonderful

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period of time owning a winery,

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but it may or may not be a financial success. So it was

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interesting to me when I joined the firm to see that, knowing what we

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know about how hard it is, none of us really

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invest in the wine industry personally or probably

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told our stock brokers not to keep us out of it,

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because it is not. Really shouldn't, shouldn't even. Well, that's a different

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story. But anyway, so, no, the partners and I are all

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really mostly finance people. And.

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Yeah, so that's kind of. That's what we do. And so

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I've avoided going into the wine business. But, you know, there are many very

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successful people, and a friend of mine gave me an opportunity to put money in

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one years ago, and I deeply regret not having done that because it

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became very successful. So

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I don't know anything at the end of the day. Well, let's catch the listeners

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up. We were talking about not only owning a

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winery and the overhead and the requirements to try and make money and brand

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build, but all aspects of the wine business, particularly now,

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are very difficult. And we're going to talk about vintage wine estates. We're going to

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talk about the people that come to you looking for a winery but

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let's just start with that. People that come to you that say,

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I want to own a winery, and this looks so much fun. I was in

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Napa Valley, we went to a tasting room, and I was so enamored that how

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can I get involved? Are they most of them rookies or are you

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brokering one winery to another? Well,

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we mostly do sell side, so we mostly represent cellars, which is

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wineries. But your audience

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is going to be some folks, folks in the industry, obviously,

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but also consumers who may be thinking about it. And we do

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occasionally have people reach out to us, but

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we keep a pretty low profile. So we don't, we have a lot of

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consumers talking to us. But what I will

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say is that one of the reasons I don't take by side engagements

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personally, some of my firm might, is because it

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does take a while to figure out what you want. Like even if you've had

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a week, you've had a weekend in Napa, you're about to retire, or Napa

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or Paso or Walla Walla,

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wherever you've had a fun time, you think,

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maybe this is where I want to do in my post career

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retirement second job.

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Many people do that, but it takes a very long time to figure out exactly

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what you want. And that's why I don't take by side, because you'll say, oh,

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I'm really interested in Napa. And then you spend a while

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introducing them to the opportunities in Napa and they go, wait a minute, that's a

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lot of money. Or it's not too

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much money. They may eventually find out that

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it's a commitment. It's a commitment to work hard.

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The wine doesn't sell itself, as you know. Yes,

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I did calculate that we sold around

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17 million bottles. And I thought, wow, you know,

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that's pretty big number on the surface. And what it took

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to do that, though. And this is, you know, you're talking about his second

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career, wanting to get in the wine business. I want to be an actor.

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So you started a podcast? I started pod. I go to acting school. I

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go to voiceover school. But the podcast, not about me,

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it's about you. So, but on the sell side,

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obviously, you sell probably many wineries and vineyards,

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amongst other winers and vineyards. In other words, something's for sale, you list it

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or you're the representing organization and somebody

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hears about it or they come to you. So those people,

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is that a different type of sale then to somebody that already knows what they're

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doing? They already have the land. They already fermented something

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before, and now they're looking to expand. Is that the typical sale?

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Yeah, that's mostly who we sell to. And it's

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most of the market for existing wineries. The folks who will

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buy winery are other wineries. And so that's really who we interact

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with and that's who we sell to. It's interesting. I was listening to your podcast

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on Moraga. Yeah, yeah, yeah. That

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was super interesting. And I can tell you a story

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about the sale of Moraga. Yeah. If you have a minute.

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All right. So we actually were engaged to sell Moraga when it

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was owned by the original owner, the founding owner. I was not involved in it.

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A couple of other partners were involved, were hired to sell Moraga. Right.

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And, you know, listeners can go to that

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interview, and it was really interesting. And you may not know that there is a

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very, very high level, high quality,

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small production boutique winery in the Bel Air hills, you

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know, and so we were engaged, we were hired to sell that

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winery. And. But here's the

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thing. It's too small and too

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specific. Too much of the property value was in a luxury

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residence for it to pencil

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out for a commercial operator. It

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just doesn't make any sense. And so we ran the traps

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on our network and really weren't

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successful. And we're thinking about JV ing with a

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luxury residential real estate broker when they decided to just fire us

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and hire them, which is fair enough.

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I have been fired before. That makes sense,

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though, doesn't it? No, totally. So this is my point is

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that Morago was not the sort of thing that we are

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engineered to sell. We're engineered to sell wineries that have a kind

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of commercial viability, because we'll sell them to another, either

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small or big winery. But the punchline on Moraga was after we spent all

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this time and all this effort, tried to sell it, they hired

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a luxury firm which advertised the

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availability publicly. See, we always do. Confidential,

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right? If we could put a sign up or run an ad in the Wall

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Street Journal, yay, that would be great. But we really can't do that. And we

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can talk about why later. But as soon as they got rid of us, they

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hired those luxuries folks. These guys put an ad in the Wall Street

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Journal and Rupert Murdoch bought it. I mean, it was that fast.

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Wow, that is really interesting.

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Yeah. That publicity

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was required to do it because it isn't very

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big. I think it's only like eight acres planted and a total of 17 available

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or something. But wow, that's so funny. It's just,

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he probably was the first to the table, too, right? Yeah, yeah. I mean, you

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know, he reads the paper every. I mean, it was literally that fast. Literally

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that. Here's an interesting story about it, and you don't

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hear about it in the podcast, but, you know, the red wines,

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$140 or so retail, and the

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whites, I think it's like 90. You know, that's. Those are lofty

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prices for even a Napa wine. You know, people

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know they can buy silver oak Napa for that price, or they can buy a

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camus one liter for that price, or, you know, so you kind of know what

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you're getting. So we were talking about tough sells,

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and we're talking about selling a winery and the things that go with trying to

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make a dollar in this business. I'm guessing it's not

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profitable right now, at least on the quantities that they have and

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what they're making. Yeah, probably not, insofar

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as the dirt, the investment in the

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land is going to be well past anything that would make

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any sense. But, of course, if you're Rupert Murdoch, who cares? Yeah, who cares? Right.

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Did you visit? Can I have a little. I have not been there. I mean,

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as I said, I wasn't involved in the transaction or the effort to sell

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because it does feel like. A regular Napa

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style winery. It's in the hills or so. It'll be a foothill winery, something

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maybe in stag's leap or something, but

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it's a little road that goes up into a winery, and there's a tasting room

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and there's a lab and there's tractors and there's, you know, perfectly manicured

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vineyard rows. There's roosters and chickens walking

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around. He says a lot of production gets done there,

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Hollywood production, because they don't want to go to Napa to shoot it. So they

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just. Yeah, it kind of works that way,

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but, you know, kind of leads to the next section that do people, when you,

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when you get involved with selling a winery, are

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people amazed at when you explain, let's just

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say, the lack of profitability or the lack of.

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Of market share and the way

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you have to market this. And we've talked about this many times privately, but

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how difficult it is to build a brand. Are those part of the conversation or.

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No? Well, the way that things typically work is

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somebody will be referred to us. I can't recall how you found

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us, but either through an accountant or

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somebody. I don't know. We work on the Google search. Yeah, right. Or

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Google, where I don't know how good our SEO is, but yes,

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some folks will find us that way, but mostly referrals.

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And then after I've done this for 16 years,

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so I have developed my sales

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pitch from, yeah, great. This is a great brand. Let's

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go to. Okay, this is a great brand. However,

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here are the odds, and the odds are

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I did the research many, many moons ago in wines and vines,

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which is a trade. Wow, that's an

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oldie. Yeah, it's an oldie. Yeah, I did. And this was old research,

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but it's held up over the many, many years

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that there's just a lot less activity than people think there is in terms of

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successful sales. It's a lot in a lot of little. All those ducks

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00:14:04,110 --> 00:14:07,774
on the water, there's a lot of paddling going on underneath our

230
00:14:07,814 --> 00:14:11,550
little feedies. But in terms of when you get to the end, when there's a

231
00:14:11,582 --> 00:14:15,412
transaction that can be announced, that's a lot less common than people

232
00:14:15,468 --> 00:14:19,260
realize. And in fact, when I did the research, I discovered that, well,

233
00:14:19,332 --> 00:14:22,964
it's on average, 20 transactions a year, and that's along the whole coast, California,

234
00:14:23,004 --> 00:14:26,556
Oregon and Washington. It's not a lot as much as people think. And then it's

235
00:14:26,580 --> 00:14:30,380
about 100 brands that will just go away. So the

236
00:14:30,412 --> 00:14:34,228
way, so it's five to one. The way most people on five

237
00:14:34,276 --> 00:14:37,124
to one way most people will get out of the wine business is at some

238
00:14:37,164 --> 00:14:40,284
point they're like, I'm tired. Kids aren't interested.

239
00:14:41,104 --> 00:14:44,952
Let's just wind this thing down. And it works because people have

240
00:14:45,008 --> 00:14:48,744
these tremendous investments in inventory. So if they can just

241
00:14:48,784 --> 00:14:52,512
basically stop making wine, quietly sell through at normal prices, they

242
00:14:52,528 --> 00:14:55,884
can get all their investment out of the inventory and be satisfied.

243
00:14:56,384 --> 00:15:00,024
Chalk it up to a great experience and get some of their investment

244
00:15:00,104 --> 00:15:03,912
back, if not all or more, excuse

245
00:15:03,928 --> 00:15:07,758
my. Cough, on what's going on. That's all right. Well, we know already.

246
00:15:07,886 --> 00:15:11,734
In fact, they just got this huge list. I can't remember the brand.

247
00:15:11,774 --> 00:15:15,510
I wouldn't mention it anyway, but, uh, somebody just bought a winery.

248
00:15:15,662 --> 00:15:19,454
It's Napa, it's appalated. And I got a call

249
00:15:19,494 --> 00:15:23,262
from a random person that actually from my sign maker here in

250
00:15:23,278 --> 00:15:25,982
Monrovia, the guy that makes my signs when I was busy, when I was in

251
00:15:25,998 --> 00:15:29,222
business. And he's like, yeah, my buddy just bought this winery

252
00:15:29,278 --> 00:15:32,988
and would you mind selling off what he has? They said, well, send me

253
00:15:32,996 --> 00:15:36,064
the list. It was huge. I think it was, I don't know,

254
00:15:36,484 --> 00:15:39,824
3000 cases or so, distributed among

255
00:15:40,364 --> 00:15:44,204
probably ten varietals and probably ten vintages. So 100

256
00:15:44,244 --> 00:15:47,916
cases here, 50 cases there. And I. He didn't want to hear the

257
00:15:47,940 --> 00:15:50,812
reality. I said, you're going to have to sell this for pennies on the dollar.

258
00:15:50,868 --> 00:15:54,596
No one's going to take this inventory. Much of it's getting too old, and

259
00:15:54,620 --> 00:15:58,300
it's in small lots. Nobody really cares about ten cases of your 2012

260
00:15:58,332 --> 00:16:01,974
merlot. It's not that important. And he was flabbergasted at this

261
00:16:02,014 --> 00:16:05,846
idea that there's no value here. But particularly

262
00:16:05,870 --> 00:16:09,054
in today's marketplace, the industry is going through a lot of

263
00:16:09,094 --> 00:16:12,714
changes. Has that changed your perspective on

264
00:16:13,214 --> 00:16:16,114
transaction volume? Because the industry is,

265
00:16:16,854 --> 00:16:20,566
and I'll share with you a conversation I had this morning, but the industry is

266
00:16:20,590 --> 00:16:23,994
in this learning mode or transition mode.

267
00:16:24,494 --> 00:16:28,234
Well, we are in it. We have been in it before,

268
00:16:28,694 --> 00:16:32,274
and it is a cyclical business and

269
00:16:33,094 --> 00:16:36,766
so is tech. I mean, there are plenty of cyclical businesses.

270
00:16:36,910 --> 00:16:39,086
So we've been here before, but yeah, we're in a bit of a down cycle.

271
00:16:39,110 --> 00:16:42,646
It's funny, they're all different. This one is

272
00:16:42,830 --> 00:16:46,550
affecting the largest, the highest scale

273
00:16:46,622 --> 00:16:49,554
producers. And so

274
00:16:51,014 --> 00:16:54,566
it's different. I'm lucky. I tend to work on

275
00:16:54,590 --> 00:16:58,270
smaller deals. And to be perfectly honest, this is one of these

276
00:16:58,302 --> 00:17:02,006
downturns that, at least so far, hasn't really affected the

277
00:17:02,030 --> 00:17:05,510
folks working at the lower end of the scale in terms of their prospects,

278
00:17:05,542 --> 00:17:09,222
their experience, what's going on, you know, so. But

279
00:17:09,238 --> 00:17:13,038
no, it's a complicated time. And it's funny, I was just saying the other

280
00:17:13,086 --> 00:17:16,846
day, hearing this description of this guy who's bought this winery, and there's all

281
00:17:16,870 --> 00:17:20,702
this obsolete inventory, you know, I hadn't seen that

282
00:17:20,718 --> 00:17:24,114
in so long, I thought people figured out not to do that, you know.

283
00:17:25,094 --> 00:17:28,767
You know, your best. There's an expression of finance. Your first

284
00:17:28,815 --> 00:17:32,639
loss is your best loss. Yeah. Right. And so what tends to happen is people

285
00:17:32,711 --> 00:17:36,455
in these circumstances where you find, you know, a lot of old inventory, they

286
00:17:36,479 --> 00:17:39,295
just could not, they did not have the intestinal

287
00:17:39,359 --> 00:17:43,111
fortitude to say, all right, we've made this vintage. We're

288
00:17:43,127 --> 00:17:46,231
not going to sell all this vintage in a normal commercial cycle. We'll make the

289
00:17:46,247 --> 00:17:49,927
balance go away, even if we have to take the loss. So there's that psychological

290
00:17:49,975 --> 00:17:53,550
barrier that people have, which is completely normal, but it gets

291
00:17:53,582 --> 00:17:56,966
you, especially in the wine business, it gets you into a ton of

292
00:17:56,990 --> 00:18:00,710
trouble. I can't tell you how many stories I have,

293
00:18:00,742 --> 00:18:04,278
but one in particular of somebody that came to me. Wonderful

294
00:18:04,326 --> 00:18:08,086
spanish couple. She was an anchor for one of the

295
00:18:08,150 --> 00:18:11,798
foreign language tv things. She was this pretty woman, she was out on the street

296
00:18:11,846 --> 00:18:14,806
selling wine, and they wanted to bring in some

297
00:18:14,830 --> 00:18:18,392
albarino. Not the most at that time. At least ten years ago

298
00:18:18,558 --> 00:18:22,156
wasn't the most popular grape in the world. It's a little more popular today, but

299
00:18:22,180 --> 00:18:26,012
not to this extent. They asked, you know, how to, how to do it. I

300
00:18:26,028 --> 00:18:29,092
said, well, let me get you an importer. You bring in, you know, bring in

301
00:18:29,108 --> 00:18:32,580
a couple of pallets and go sell it, and then we'll see how it goes.

302
00:18:32,612 --> 00:18:36,380
And they're like, okay, they came back in six months, and they had gone off,

303
00:18:36,452 --> 00:18:40,236
bonded a warehouse, brought in a full container, which

304
00:18:40,260 --> 00:18:44,092
for the listeners is 1200 cases or 20 pallets or

305
00:18:44,108 --> 00:18:47,410
so. And they wanted, let's just say they

306
00:18:47,442 --> 00:18:51,274
wanted $160 a case wholesaler, you know, puts on the street

307
00:18:51,314 --> 00:18:55,026
for $20 or so. I said, no, I

308
00:18:55,050 --> 00:18:58,810
go, it's too expensive for what it is. And you're gonna have a hard time

309
00:18:58,842 --> 00:19:02,082
selling Alberino here to show. Then they came back in six months. They go, now

310
00:19:02,098 --> 00:19:05,666
it's 120. I don't think they ever sold through the

311
00:19:05,690 --> 00:19:09,186
container. Oh. And they just didn't want to listen

312
00:19:09,250 --> 00:19:13,044
to the logic because it's so romantic and so fun and,

313
00:19:13,194 --> 00:19:16,804
and we had positive encouragement from the people that tasted it.

314
00:19:17,224 --> 00:19:20,776
But when it comes to opening the wallet up and having to go sell it,

315
00:19:20,800 --> 00:19:24,224
when it's not being supported by any other means except your own hand

316
00:19:24,264 --> 00:19:27,684
sell, it's a tough business.

317
00:19:28,704 --> 00:19:32,484
And you said it's affecting the larger organizations. And let's say these,

318
00:19:33,464 --> 00:19:37,224
we know a bunch, right? But when sales

319
00:19:37,264 --> 00:19:40,976
are off 20% and you've manufactured

320
00:19:41,040 --> 00:19:44,608
wine to fulfill would have been 20% more than what you

321
00:19:44,656 --> 00:19:48,256
actually sell. You're sitting on quite a bit. I mean, it doesn't seem like a

322
00:19:48,280 --> 00:19:51,864
big number, but the margins are so narrow that you just

323
00:19:51,904 --> 00:19:55,592
chunked up all your profit for almost the rest of the 80%

324
00:19:55,648 --> 00:19:59,432
by not having a sale for the 20%. Yeah, I

325
00:19:59,448 --> 00:20:03,256
mean, hopefully the math is, at the higher levels, a little bit

326
00:20:03,280 --> 00:20:07,096
better. Hopefully the margins are, yeah, 20% doesn't

327
00:20:07,120 --> 00:20:10,848
take all the margin away. But, but no, I mean, that's the thing.

328
00:20:10,976 --> 00:20:14,672
If you're doing small volumes, it's a lot easier to make it go away,

329
00:20:14,728 --> 00:20:18,416
if you need to make it go away than if you're. I think you mentioned

330
00:20:18,440 --> 00:20:22,136
vintage wine estates, and you

331
00:20:22,160 --> 00:20:25,688
were, I don't recall where they sort of peaked in terms of

332
00:20:25,696 --> 00:20:29,424
volume, but, you know, ten. I think that the word

333
00:20:29,464 --> 00:20:33,232
at the end of last year was it was off 9%, but, you know, the

334
00:20:33,248 --> 00:20:36,824
shipments and yeah, no,

335
00:20:36,864 --> 00:20:40,672
9% of a million cases is a lot of wine. That's a lot

336
00:20:40,688 --> 00:20:44,360
of wine. So we'll talk about that since it's a public company. Yeah. And

337
00:20:44,392 --> 00:20:47,440
this for the listeners. I mean, I was trying to play with it the other

338
00:20:47,472 --> 00:20:51,280
day. I couldn't find their market cap, but apparently it was

339
00:20:51,312 --> 00:20:55,004
somewhere around 210 or $220 million when they came out.

340
00:20:55,464 --> 00:20:59,088
Only, what, three years ago, four years ago publicly, for the stock

341
00:20:59,136 --> 00:21:02,812
at $13 a share. And there's quite a

342
00:21:02,828 --> 00:21:06,292
few public wine companies around, and they were doing

343
00:21:06,348 --> 00:21:09,384
250 million. So it seems rather stable

344
00:21:09,924 --> 00:21:13,664
in what might be just considered an unstable industry,

345
00:21:14,044 --> 00:21:17,540
not on a regular basis, but today the stock was at

346
00:21:17,572 --> 00:21:21,292
$0.26 yesterday. Well, that

347
00:21:21,308 --> 00:21:25,092
is an absolute shellacking. And the response

348
00:21:25,148 --> 00:21:28,760
is to sell off all their direct to consumer

349
00:21:28,792 --> 00:21:32,640
stuff, which is what they're building as part of their platform to

350
00:21:32,672 --> 00:21:36,264
go forward, was the direct to consumer. We'll talk a second about

351
00:21:36,304 --> 00:21:39,968
that. But they're selling off all the stuff they bought along

352
00:21:40,016 --> 00:21:43,768
the way. Yeah, no, I don't have

353
00:21:43,816 --> 00:21:47,284
visibility into it, and I'm too busy to pay that much attention.

354
00:21:47,664 --> 00:21:51,424
I got nothing but time, Carol. Well, sometimes,

355
00:21:51,464 --> 00:21:55,070
trust me, I have nothing but time. But right now, thank God I'm

356
00:21:55,102 --> 00:21:58,742
busy, because I'm self employed. But, yeah,

357
00:21:58,798 --> 00:22:02,310
you know, shortly after they went public,

358
00:22:02,502 --> 00:22:05,846
there was an announcement that had something had gone wrong in their

359
00:22:05,870 --> 00:22:09,454
accounting and that the adjustments that were required

360
00:22:09,534 --> 00:22:12,994
to correct the accounting, I mean, it was

361
00:22:13,294 --> 00:22:16,438
kind of a perfect storm of problems at the exact wrong time.

362
00:22:16,606 --> 00:22:19,554
So they,

363
00:22:20,314 --> 00:22:24,026
and I know Pat, I sold him clopagos back a

364
00:22:24,050 --> 00:22:26,694
while ago. Did you really do that? Yeah.

365
00:22:27,554 --> 00:22:31,002
Well, me and Vic Motto, my business partner at the time

366
00:22:31,058 --> 00:22:34,826
and said, no, I'm a bit, I've known him for years, and

367
00:22:35,010 --> 00:22:38,174
I know his dedication to direct to consumer. So I'm sure

368
00:22:38,714 --> 00:22:41,922
if that is what they're doing, kind of offloading the

369
00:22:41,938 --> 00:22:45,426
DTC, that's rough. But the problem

370
00:22:45,490 --> 00:22:49,114
is, if they have to sell the DTC

371
00:22:49,274 --> 00:22:52,634
model is there's a lot less of a market for it

372
00:22:52,674 --> 00:22:56,426
than the wholesale stuff. So that may be, if that's what they're doing,

373
00:22:56,490 --> 00:23:00,202
that's why they're doing it. Well, since you were involved with the sale of

374
00:23:00,218 --> 00:23:02,614
why the month club, and we've saw,

375
00:23:03,834 --> 00:23:07,354
we consider very fortunate to have found the buyer

376
00:23:07,394 --> 00:23:11,106
that wants to take advantage of smaller companies like

377
00:23:11,130 --> 00:23:14,548
ours was. I keep reading on the web and I'm reading all these

378
00:23:14,596 --> 00:23:18,404
pundits, and maybe you have seen some of this. If people are talking

379
00:23:18,444 --> 00:23:22,228
about the industry, not only is the DTC side down and

380
00:23:22,356 --> 00:23:26,036
direct to consumer, for the consumers, for the listeners, is something that you

381
00:23:26,060 --> 00:23:29,508
buy online, direct, shipped to your house, whether it's from a winery or a third

382
00:23:29,556 --> 00:23:33,184
party tasting room or club. Yeah, right. Yeah,

383
00:23:33,844 --> 00:23:37,044
that sales are off. There's too many

384
00:23:37,084 --> 00:23:40,780
choices. There's, you know, there's a club came

385
00:23:40,812 --> 00:23:44,660
out last in December called Cheapo. Vino. No, Vino.

386
00:23:44,692 --> 00:23:47,804
Cheapo. Sorry, I had backwards. Why would you join Vino

387
00:23:47,844 --> 00:23:51,236
Chippo? But the point is

388
00:23:51,260 --> 00:23:55,052
that, and I was thinking about this a lot over this

389
00:23:55,108 --> 00:23:58,676
last couple of months when I started doing this with my

390
00:23:58,700 --> 00:24:02,260
father, it was truly the opportunity to

391
00:24:02,292 --> 00:24:05,944
find these odd lots, much like Trader Joe's

392
00:24:05,984 --> 00:24:09,696
foundation, of how they started the business, where they're finding. And they would

393
00:24:09,720 --> 00:24:13,440
tell you, in the fearless flyer, we bought the last 2000 bottles. And

394
00:24:13,472 --> 00:24:16,968
so you get it while you can. And wine of the month club was really

395
00:24:17,016 --> 00:24:20,824
that same outlet for wineries that had made good wines under their

396
00:24:20,864 --> 00:24:24,552
brands ready to sell. The consumer, you

397
00:24:24,568 --> 00:24:27,328
know, had to get the stuff off the floor because the next vintage is coming

398
00:24:27,376 --> 00:24:30,980
in and we would take advantage of that. Well, those, those don't

399
00:24:31,012 --> 00:24:34,508
exist as much, as nearly as much as anymore because people have learned

400
00:24:34,556 --> 00:24:38,236
better logistics and better manufacturing. And so now what you're

401
00:24:38,260 --> 00:24:42,108
getting for those prices are really bulk wines from middle of Europe

402
00:24:42,156 --> 00:24:45,372
at kind of thing. And the

403
00:24:45,388 --> 00:24:49,188
values doesn't seem to be there anymore. I'm not categorically saying

404
00:24:49,236 --> 00:24:52,964
that. I'm just saying. Right. And you throw into that the mix

405
00:24:53,004 --> 00:24:56,740
of marketing and the ability to send a

406
00:24:56,772 --> 00:25:00,252
message immediately. You know, in a second I can get a message to

407
00:25:00,268 --> 00:25:04,116
all people on Instagram, Facebook, to say, hey, I've got

408
00:25:04,140 --> 00:25:07,824
this special deal going on. It's congested, everything.

409
00:25:08,484 --> 00:25:12,148
So when you sell a winery, then, like, how do you

410
00:25:12,196 --> 00:25:15,796
approach this part of this? How do you approach this idea that brand building is

411
00:25:15,820 --> 00:25:19,220
tough? You know, marketing on the web is even harder.

412
00:25:19,332 --> 00:25:23,048
What is it come up even? Well,

413
00:25:23,136 --> 00:25:26,968
you know, you and I had this conversation at one point in time because

414
00:25:27,016 --> 00:25:30,784
I think, you know, I sell, as did you, for all your career. So we

415
00:25:30,824 --> 00:25:34,344
were both salespeople. But

416
00:25:34,464 --> 00:25:38,016
the sale, I said, I think, I said, I don't, I can't sell

417
00:25:38,080 --> 00:25:41,744
snow to the Eskimos. I can sell the Eskimos warm shoes.

418
00:25:41,784 --> 00:25:45,204
And I've recently been told I'm not supposed to use that phrase. So I apologize.

419
00:25:46,424 --> 00:25:50,084
Inuit or native Alaskan.

420
00:25:50,804 --> 00:25:53,824
But anyway, I'm 61. So come on,

421
00:25:54,364 --> 00:25:58,036
give us old people a little grace to adjust. You can say

422
00:25:58,060 --> 00:25:59,704
it. At any rate,

423
00:26:02,164 --> 00:26:05,964
I tell the story in a very straightforward way

424
00:26:06,044 --> 00:26:09,812
because I'm selling to knowledgeable buyers so I don't have to

425
00:26:09,828 --> 00:26:13,332
put a lot of spin on the ball. If a knowledgeable buyer

426
00:26:13,428 --> 00:26:16,596
is going to be buying what I'm selling, it's because, for

427
00:26:16,620 --> 00:26:19,974
example, they have excess capacity

428
00:26:21,314 --> 00:26:24,970
and they want another brand to kind of fill the capacity or

429
00:26:25,122 --> 00:26:28,562
they want a different varietal.

430
00:26:28,618 --> 00:26:32,018
They're doing well in Cabernet and

431
00:26:32,066 --> 00:26:35,898
they curious about Pinot. Let's buy a pinot brand. So

432
00:26:35,946 --> 00:26:39,650
it's really more top level stuff. I don't get.

433
00:26:39,802 --> 00:26:43,454
That's kind of what sells it is these broad categories and

434
00:26:43,494 --> 00:26:47,062
growth, growth helps. Profitability

435
00:26:47,158 --> 00:26:50,486
is excellent, but not necessary because I

436
00:26:50,510 --> 00:26:54,326
actually, we're selling the top line because our buyers will bring

437
00:26:54,350 --> 00:26:58,110
their own cost structures. So yeah, so

438
00:26:58,222 --> 00:27:01,754
somewhere educated, a buyer. And somebody that

439
00:27:02,734 --> 00:27:06,274
I was talking to, somebody in Europe who sells the villa,

440
00:27:06,734 --> 00:27:10,346
the villa experience the lifestyle of being in Italy in a villa.

441
00:27:10,470 --> 00:27:14,258
And it's probably a different conversation. How do

442
00:27:14,266 --> 00:27:17,970
you parse out or how do you deal with the idea

443
00:27:18,002 --> 00:27:21,266
that a Dow selling for a billion dollars or Schaefer for

444
00:27:21,290 --> 00:27:25,074
$250 million from foreign entities, so to speak,

445
00:27:25,154 --> 00:27:28,374
did that fuel the fire for people to sell

446
00:27:28,834 --> 00:27:32,490
or people that come into it to think that they're going to flip their winery

447
00:27:32,562 --> 00:27:36,350
in 20 years for numbers like that? Yeah, no,

448
00:27:36,382 --> 00:27:39,918
I do think it gets everybody's attention. And if you have a very

449
00:27:39,966 --> 00:27:43,654
successful winery and you point to those transactions

450
00:27:43,694 --> 00:27:47,038
and say, I want what they got. But it is very

451
00:27:47,086 --> 00:27:50,910
much, it's a moment in time for that when deals of that

452
00:27:50,942 --> 00:27:54,510
nature come together and it's not part of the normal

453
00:27:54,542 --> 00:27:58,374
everyday, so you can find the right buyer. One of the things I always

454
00:27:58,414 --> 00:28:02,070
say is that in my line of

455
00:28:02,102 --> 00:28:05,880
work, what you need is a motivated buyer. A

456
00:28:05,912 --> 00:28:09,760
motivated seller will not get you anywhere. You have to find the

457
00:28:09,792 --> 00:28:13,124
motivated buyer. So. Wow, how counterintuitive.

458
00:28:13,504 --> 00:28:17,264
Yes. Always the motivated seller, the real estate guys always have I got a motivated

459
00:28:17,304 --> 00:28:20,872
seller, you know, like, okay, great, so I'll jump in. But a motivated

460
00:28:20,928 --> 00:28:24,524
buyer? Yeah, the headwinds the conversation. What?

461
00:28:24,904 --> 00:28:28,592
Well, it's because, you know, it's difficult to do as you know. I

462
00:28:28,608 --> 00:28:32,230
mean, even though, you know, you had a friendly relationship with the bit

463
00:28:32,312 --> 00:28:35,954
business owner that you were in

464
00:28:36,034 --> 00:28:38,454
discussions with and eventually did a deal with,

465
00:28:39,874 --> 00:28:43,714
you know, there's a lot of hiccups. There's, you know, questions that come up. There's,

466
00:28:43,754 --> 00:28:47,426
you know, issues that have to be overcome in

467
00:28:47,450 --> 00:28:50,294
the due diligence process. And, you know,

468
00:28:51,154 --> 00:28:54,946
it's easy for a buyer to get buyer's remorse and walk away. That's the

469
00:28:54,970 --> 00:28:58,602
easy decision, the hard decision is to go past all

470
00:28:58,658 --> 00:29:02,294
these, all this difficulty and all these hurdles and the

471
00:29:02,334 --> 00:29:05,514
negotiations are complex and sometimes contentious.

472
00:29:06,334 --> 00:29:09,710
The buyer has to get past all that. So your

473
00:29:09,742 --> 00:29:11,834
seller wants to get out. So

474
00:29:13,494 --> 00:29:17,034
they're going to roll with it a lot. Yeah. There you go.

475
00:29:19,814 --> 00:29:23,094
That's it. So are we pitching

476
00:29:23,254 --> 00:29:26,972
EBItda for the listeners? Are we pitching a factor of

477
00:29:27,158 --> 00:29:30,520
the profitability? Are we pitching the brand

478
00:29:30,592 --> 00:29:34,056
placements? I mean, obviously the Dow sale just for the

479
00:29:34,080 --> 00:29:37,284
consumers, the Paso robles based winery, who's

480
00:29:37,664 --> 00:29:41,456
a great story from immigration to America. The two brothers

481
00:29:41,520 --> 00:29:45,284
fled Beirut, shrapnel in their shoulder kind of story,

482
00:29:45,784 --> 00:29:49,296
and sell for a billion dollars. And I think everybody in the industry

483
00:29:49,360 --> 00:29:52,848
knows that the metrics that didn't conform to the typical

484
00:29:53,016 --> 00:29:56,448
selling metrics and that, you know, one of them would be

485
00:29:56,616 --> 00:30:00,248
a factor times your profitability. Earnings before

486
00:30:00,296 --> 00:30:04,096
income tax is that you talk about those things when you're selling

487
00:30:04,120 --> 00:30:07,936
or they're just ancillary to the piece of property, the vineyards,

488
00:30:08,080 --> 00:30:11,760
the brand. Well, I mean, this gets back to the, you know, I don't believe

489
00:30:11,792 --> 00:30:15,480
I can talk anybody into a multimillion dollar investment.

490
00:30:15,592 --> 00:30:19,122
I think they talk themselves into it. So, you

491
00:30:19,138 --> 00:30:22,970
know, it's got to be what, what they need. And that might be,

492
00:30:23,162 --> 00:30:26,914
I think typically what's going to drive it is growth, for sure, gets everybody's

493
00:30:26,954 --> 00:30:30,794
attention. And I think that's part of the Dow

494
00:30:30,834 --> 00:30:33,854
story. I wasn't involved, don't know anything about it. But I think it was very,

495
00:30:34,434 --> 00:30:37,306
I wish I were you and I would not be talking right now. I'd be

496
00:30:37,330 --> 00:30:41,090
sipping a cocktail with a little umbrella in it on a beach.

497
00:30:41,242 --> 00:30:43,614
That's a dow on the little umbrella. Right.

498
00:30:45,074 --> 00:30:48,294
Instead, I'm still humping wineries.

499
00:30:49,474 --> 00:30:53,242
Now. I love the work. So growth can be a

500
00:30:53,258 --> 00:30:56,014
factor. So yeah, you tell that story. But

501
00:30:57,194 --> 00:31:00,898
profitability, again, it's a nice to have, not a need to have, because the buyers

502
00:31:00,946 --> 00:31:04,650
typically like treasury that bought Dow. It's

503
00:31:04,802 --> 00:31:08,514
going to wipe out all the basic overhead expenses that Dow

504
00:31:08,594 --> 00:31:12,234
was related to, its bottom line, its

505
00:31:12,274 --> 00:31:16,084
net income. True. And then it always depends what

506
00:31:16,124 --> 00:31:19,652
confuses everything and is vineyards. If there are

507
00:31:19,668 --> 00:31:23,476
vineyards in a transaction, I mean, what

508
00:31:23,500 --> 00:31:27,220
is valued by multiples of revenue or EBITDA

509
00:31:27,252 --> 00:31:29,224
or gross profit or whatever

510
00:31:30,924 --> 00:31:34,300
is the brand inventory and

511
00:31:34,412 --> 00:31:37,664
operating assets or the brand inventory. Winery or

512
00:31:38,564 --> 00:31:42,366
the vineyards are valued separately. So that's what can kind of muddy

513
00:31:42,390 --> 00:31:45,486
the waters a little bit. You know, you see this, you know, if something has

514
00:31:45,510 --> 00:31:48,354
a lot of vineyard, and I believe Dow had quite a bit

515
00:31:49,214 --> 00:31:52,054
that could sort of muddy the waters. And people just look at the simple math.

516
00:31:52,094 --> 00:31:55,174
Oh, they got this for that? Well, no, you have to take the value that

517
00:31:55,334 --> 00:31:59,086
the vineyards out of the discussion before you really look at what they

518
00:31:59,110 --> 00:32:02,726
sold it for. So. So you said earlier that we're in

519
00:32:02,750 --> 00:32:06,598
it. We were in it. And I've had this conversation a little bit. One

520
00:32:06,606 --> 00:32:09,486
of the things that bothers me a lot, they see on the, on the, on

521
00:32:09,510 --> 00:32:13,008
the web with some pundits, and at some point, particularly our

522
00:32:13,056 --> 00:32:16,832
complicated historical industry, it's as complicated

523
00:32:16,968 --> 00:32:20,044
and it's got romance and it's historical

524
00:32:21,064 --> 00:32:24,400
that people coming into the fray of this industry

525
00:32:24,472 --> 00:32:28,160
that don't know all the history, that don't understand it, but

526
00:32:28,192 --> 00:32:31,672
learn something new or see something in the industry, and they say, oh, you know,

527
00:32:31,688 --> 00:32:34,312
it's ready for change. It's ready for innovation. It's ready for this, ready for that.

528
00:32:34,328 --> 00:32:37,648
It's like you don't even know. You don't even know what that means. And I

529
00:32:37,656 --> 00:32:41,280
was. I've been trying to figure out what innovation means in our

530
00:32:41,312 --> 00:32:45,088
industry right now. Is there such a thing? Do you have any idea what they're

531
00:32:45,136 --> 00:32:48,080
talking about? Does it make sense? Do you mean disruption? Are you trying to say

532
00:32:48,112 --> 00:32:51,816
disruption? Oh, disruption, too. That's a good favorite.

533
00:32:51,920 --> 00:32:55,440
You know, it's this thing that everybody sounds very fancy and high

534
00:32:55,472 --> 00:32:58,984
flying and techie. Folks like to use it. I don't know where it came from,

535
00:32:59,024 --> 00:33:02,776
but disrupting. Nobody's going to disrupt a multi. I mean, you know more

536
00:33:02,800 --> 00:33:06,054
than anybody else how long the history of the wine industry

537
00:33:06,134 --> 00:33:09,454
is. And so sort of, it's. The

538
00:33:09,494 --> 00:33:13,150
disruptability of this industry is probably

539
00:33:13,262 --> 00:33:17,038
limited. Yeah, but, yes, of course.

540
00:33:17,086 --> 00:33:20,834
I mean, new innovations. And I was talking to.

541
00:33:21,494 --> 00:33:25,238
Hey, everybody, can I plug my podcast? Yes, please. Do I have a

542
00:33:25,246 --> 00:33:28,846
podcast? It's called small fortune. It's about the business of wine. And I was

543
00:33:28,870 --> 00:33:32,574
speaking with Alex Sokol Blosser. Do you know the Sokol blosser brand

544
00:33:32,614 --> 00:33:36,274
of Oregon? Yeah, yeah, of course.

545
00:33:36,314 --> 00:33:39,946
So he was talking, everybody in the industry is talking about

546
00:33:40,050 --> 00:33:43,330
this little moment we're

547
00:33:43,362 --> 00:33:47,090
in. And he said that it reminded him not of the

548
00:33:47,122 --> 00:33:50,534
08910 that was driven by the financial crisis, but

549
00:33:50,994 --> 00:33:54,794
by some, possibly some real changes

550
00:33:54,834 --> 00:33:58,226
going on in consumption. And he said

551
00:33:58,330 --> 00:34:01,746
that his recollection, the family's experience, was at a point in the

552
00:34:01,770 --> 00:34:05,202
nineties, there was this sort of sliding, sliding

553
00:34:05,258 --> 00:34:08,938
consumption, and then it got reversed by, at the time, the french paradox

554
00:34:08,986 --> 00:34:12,746
story. Right. Oh, it turns out it's healthy for you. And so

555
00:34:12,770 --> 00:34:15,698
we're kind of a bit. It may be the case that we're in a bit

556
00:34:15,706 --> 00:34:18,834
of a slide for a variety of reasons, in terms in demand, and that, of

557
00:34:18,874 --> 00:34:22,498
course, is going to shake out. It's a shrinking pie. It's probably

558
00:34:22,546 --> 00:34:25,654
shrinking pie for a minute, and then it's

559
00:34:26,474 --> 00:34:30,003
somehow or other we're going to. And maybe, to your point,

560
00:34:30,193 --> 00:34:33,919
maybe instead of waiting for a miracle, like the french

561
00:34:33,951 --> 00:34:37,203
paradox, you can't control. Or COVID.

562
00:34:37,703 --> 00:34:41,535
Or COVID, which, I mean, if, you know, some people were

563
00:34:41,559 --> 00:34:45,335
hurt, but many did great. At

564
00:34:45,359 --> 00:34:49,111
any rate, maybe we'll find some way to

565
00:34:49,247 --> 00:34:53,023
disrupt that trend and maybe some innovator

566
00:34:53,063 --> 00:34:56,675
will come in. But for the most part, you know, it's a

567
00:34:56,699 --> 00:35:00,331
multi thousand year industry, so, yeah, we'll be all right.

568
00:35:00,507 --> 00:35:03,019
I don't get it. Yeah, I mean, it's going to ebb and flow on its

569
00:35:03,051 --> 00:35:06,451
own and, yes, zero eight and zero nine was a bad year for the wine

570
00:35:06,467 --> 00:35:10,211
of the month club. The worst year I'd had up until that point. We kind

571
00:35:10,227 --> 00:35:14,059
of broke even, and that was purely financial. The people weren't

572
00:35:14,091 --> 00:35:17,691
buying, they just didn't have the means. Now, it's a much more complicated

573
00:35:17,747 --> 00:35:21,475
problem, and not the least of which is, you know, Internet marketing and all the

574
00:35:21,499 --> 00:35:25,164
things, all the messaging that people are waiting. I tell people when I consult

575
00:35:25,204 --> 00:35:28,700
with them, you have to understand, you're not competing against other wine

576
00:35:28,732 --> 00:35:32,412
companies. When you're socially marketing on the Internet, either Google

577
00:35:32,468 --> 00:35:35,860
or Facebook, Instagram, etcetera, you're up against Kim

578
00:35:35,892 --> 00:35:39,580
Kardashian and the rest of the influences of the world. They're taking their

579
00:35:39,612 --> 00:35:41,944
eyes away from what you want to tell them.

580
00:35:43,124 --> 00:35:46,940
But I think this is such a slow moving industry.

581
00:35:47,092 --> 00:35:50,846
You only get one chance a year to make the product. It's

582
00:35:50,870 --> 00:35:54,510
got a life cycle to it. It doesn't last forever, as explained by

583
00:35:54,542 --> 00:35:57,830
the dumping of all these wines that I saw the other day.

584
00:35:57,982 --> 00:36:01,514
So it's tied to a lot of other factors that

585
00:36:01,974 --> 00:36:05,702
we can't control. And to say you're going to disrupt it,

586
00:36:05,798 --> 00:36:09,342
or that it needs innovation. I mean, what does

587
00:36:09,358 --> 00:36:13,006
innovation mean? That we have an augmented reality label where some

588
00:36:13,070 --> 00:36:16,478
prisoner tells a story? I mean, that's not innovation, that's just

589
00:36:16,566 --> 00:36:20,194
packaging. That's. Yeah, and that's. That part also sort of

590
00:36:20,934 --> 00:36:24,554
gets under my skin a little bit. But, you know, packaging is not, in itself,

591
00:36:25,014 --> 00:36:28,846
diversification of the product. Right. The product is still what

592
00:36:28,870 --> 00:36:32,670
it was 10,000 years ago. Tastes a little

593
00:36:32,702 --> 00:36:36,366
better, hopefully. Actually, I just read somewhere that the roman

594
00:36:36,470 --> 00:36:40,134
wines in their amphora actually are probably pretty good. Yeah, I saw

595
00:36:40,174 --> 00:36:42,918
that. So they did some kind of test and came away going, you know what?

596
00:36:42,966 --> 00:36:44,514
These guys knew what they were doing.

597
00:36:48,114 --> 00:36:51,842
But that's the part that's interesting to me. I guess I just had

598
00:36:51,858 --> 00:36:55,162
a really interesting conversation with a woman. She's going to be on the show and

599
00:36:55,178 --> 00:36:58,642
she's coming up with a new product. She's raising a lot of money to develop

600
00:36:58,698 --> 00:37:01,626
this new product. And I looked at it and I go, you know, it's interesting,

601
00:37:01,690 --> 00:37:05,506
but, man, to throw all your chips in a basket like that and think

602
00:37:05,530 --> 00:37:08,538
that we're going to come up with a new method. I'm not a new method.

603
00:37:08,626 --> 00:37:11,884
A new fermented grape juice

604
00:37:12,384 --> 00:37:15,284
that's going to change the way the world looks at

605
00:37:15,584 --> 00:37:19,384
wine. I just, I just don't see how that, how

606
00:37:19,544 --> 00:37:23,240
that works. God bless everybody who

607
00:37:23,272 --> 00:37:26,840
takes a big swing, right? That's kind of what my,

608
00:37:26,912 --> 00:37:30,480
my podcast is. You need to know that. Yeah, entrepreneurship, you know,

609
00:37:30,512 --> 00:37:34,224
and I worked with business owners my whole career, and I have

610
00:37:34,384 --> 00:37:38,224
great respect for those, you know, taking these big swings and, you know,

611
00:37:38,264 --> 00:37:42,106
sometimes, sometimes it works like the. Is it was

612
00:37:42,130 --> 00:37:45,794
it, Underwood was the brand up in Oregon that really kind of took, said, oh,

613
00:37:45,834 --> 00:37:48,494
we're going to put wine in cans, and everybody's like, what?

614
00:37:49,514 --> 00:37:53,298
And off it went. And of course, that settled out for a variety of reasons.

615
00:37:53,346 --> 00:37:57,010
But so, you know, there's, there's still innovation to be had.

616
00:37:57,082 --> 00:38:00,174
I, you know, you joined my podcast,

617
00:38:01,274 --> 00:38:04,266
wine talks listeners. If you want to hear what he had to say on my

618
00:38:04,290 --> 00:38:07,960
podcast, go, go look for it. One of the things that I came

619
00:38:07,992 --> 00:38:11,672
away from that conversation with is that it may be the case,

620
00:38:11,728 --> 00:38:14,912
at least on the selling side. Right to your point, you know, you're consulting with

621
00:38:14,928 --> 00:38:18,264
people on social media. It's a very complex and

622
00:38:18,424 --> 00:38:22,096
frankly, degenerating medium as we speak. You know, in terms of the

623
00:38:22,120 --> 00:38:25,684
crowding and the. Anyway, it's just a lot of noise.

624
00:38:26,304 --> 00:38:30,136
I came away wondering if it's time to go back to basics. Right. You talked

625
00:38:30,160 --> 00:38:33,902
about your dad and you building the business through

626
00:38:33,998 --> 00:38:35,874
person to person contacts

627
00:38:37,254 --> 00:38:40,774
at various shows throughout the country.

628
00:38:40,854 --> 00:38:44,446
And maybe it's time to go back to more person to

629
00:38:44,470 --> 00:38:48,054
person stuff, then maybe set the

630
00:38:48,094 --> 00:38:51,514
social media side a bit, or at least do both.

631
00:38:52,494 --> 00:38:56,006
I think that's entirely accurate. And I've had a lot of

632
00:38:56,190 --> 00:38:59,908
head nodding on that when I bring it up. And that is, I

633
00:38:59,916 --> 00:39:03,204
don't think that the value of the glass of wine ever will

634
00:39:03,244 --> 00:39:06,924
change as it sits on your dinner table. It's

635
00:39:06,964 --> 00:39:10,660
always going to have that ethereal value, what you drink is up to you.

636
00:39:10,692 --> 00:39:14,420
But the idea that you're drinking it when you drink it, is the experience

637
00:39:14,532 --> 00:39:18,144
that you're hoping for. And I often, during the day,

638
00:39:19,004 --> 00:39:22,628
not dream of, but look forward to something

639
00:39:22,676 --> 00:39:26,438
in particular. I might be looking, granted, we do this every day, so I'm in

640
00:39:26,446 --> 00:39:30,046
the business. So people probably don't have this experience all the time, but they certainly

641
00:39:30,070 --> 00:39:32,526
have the experience of saying, I can't wait to get home, I have a glass

642
00:39:32,550 --> 00:39:36,118
of wine. Yeah. Now I go home. I can't wait to have a burgundy or

643
00:39:36,126 --> 00:39:38,958
a burdo or whatever, but that's. A little bit more la di da. At the

644
00:39:38,966 --> 00:39:42,646
same time, you know, you still feel like, I can't wait for that

645
00:39:42,670 --> 00:39:46,390
to happen. And there's not too many beverages like that. And

646
00:39:46,422 --> 00:39:50,166
I think that experiential part of wine is what you're, what you're

647
00:39:50,190 --> 00:39:53,860
talking about going back to those. It's funny you said that,

648
00:39:53,892 --> 00:39:57,700
because the woman I was talking to this morning, not only is she releasing a

649
00:39:57,732 --> 00:40:01,316
brand, it's coming with this destination in

650
00:40:01,340 --> 00:40:04,184
Italy. Oh. So it's part of

651
00:40:04,924 --> 00:40:08,692
the money she raises not only to launch the brand, but it's to launch a

652
00:40:08,708 --> 00:40:12,468
facility to go visit and to hang out and be part of

653
00:40:12,476 --> 00:40:15,824
it. And I think that has a chance because

654
00:40:16,644 --> 00:40:20,332
until you, till you have a reason to drink something

655
00:40:20,388 --> 00:40:23,972
or see something or you feel something from going to Napa and having a

656
00:40:23,988 --> 00:40:27,836
tasting room experience and going home. Why do you think wine clubs from the

657
00:40:27,860 --> 00:40:31,704
wine, the winery side of things are so popular and so,

658
00:40:32,364 --> 00:40:35,852
so much an important part of the revenue stream of a

659
00:40:35,868 --> 00:40:39,524
winery, because I went to the winery and I was with

660
00:40:39,564 --> 00:40:43,236
my girlfriend, boyfriend, whatever. Right. And I had this glass of wine and

661
00:40:43,260 --> 00:40:47,084
we shared it. And now I joined the club. And every time I get that

662
00:40:47,124 --> 00:40:50,560
box, it reminds me of that moment. Yep,

663
00:40:50,752 --> 00:40:54,484
that's it. Yeah. That's tasting rooms and your sales.

664
00:40:54,824 --> 00:40:58,480
Most of the, do most wineries have tasting rooms? Most, but

665
00:40:58,512 --> 00:41:02,128
not all. Yeah. Most wineries will have a retail presence, but, but

666
00:41:02,256 --> 00:41:05,976
not all. But, yeah, no, that's a thing. And interesting. I read

667
00:41:06,000 --> 00:41:09,456
in the trade, some trade publication that there's Lawrence wine

668
00:41:09,480 --> 00:41:12,944
estates, they bought Heights and Stony

669
00:41:13,024 --> 00:41:16,864
Hill and et cetera, et cetera. Yeah, yeah, yeah,

670
00:41:16,904 --> 00:41:20,486
yeah. Kajing recently now. Yeah. Over the last couple of years now as a

671
00:41:20,510 --> 00:41:24,094
fellow, he's a big, successful

672
00:41:24,254 --> 00:41:27,654
ag, industry investor, and he

673
00:41:27,734 --> 00:41:31,534
got involved and has acquired a number of things. But they

674
00:41:31,574 --> 00:41:35,234
recently announced they're going to have some very high level club

675
00:41:35,854 --> 00:41:39,606
like they have in the big cities in San

676
00:41:39,630 --> 00:41:43,374
Francisco, New York, they're the private clubs of some sort, and that they're

677
00:41:43,414 --> 00:41:46,714
going to create that private club experience for their

678
00:41:47,534 --> 00:41:50,486
people who they're going to let in, and then they're going to pour all these

679
00:41:50,510 --> 00:41:54,054
fantastic wines and, you know, so that's an innovation. I mean, that's an interesting

680
00:41:54,094 --> 00:41:57,846
concept that hasn't been tried before. So, you know,

681
00:41:57,870 --> 00:42:01,006
I hope that it works for them. And then, you know, maybe there'll be one

682
00:42:01,030 --> 00:42:04,422
or two more. You can't have too many fancy private clubs in

683
00:42:04,438 --> 00:42:07,862
a, you know, a two horse town like Napa. I mean,

684
00:42:07,998 --> 00:42:11,838
look, I love Napa, but come on, it's, it's. It's really

685
00:42:11,886 --> 00:42:13,834
a small. John Charles.

686
00:42:15,764 --> 00:42:18,824
Yeah. Yeah. He's another reliable

687
00:42:19,444 --> 00:42:22,784
innovator and acquirer in the industry. He's great.

688
00:42:23,444 --> 00:42:26,820
I did have a conversation with a guy who started a club, but it's more

689
00:42:26,852 --> 00:42:30,100
than just the club. He has

690
00:42:30,132 --> 00:42:33,908
relationships throughout the world. And so you get a chance to

691
00:42:33,956 --> 00:42:37,024
make your wine and you pick the location.

692
00:42:37,644 --> 00:42:41,396
I forgot how much it was. I didn't think it was that exorbitant, considering

693
00:42:41,420 --> 00:42:45,092
that you are literally, you know, hands on part of the winemaking

694
00:42:45,148 --> 00:42:48,548
process of your preferred location in the world. Could be Italy or France,

695
00:42:48,676 --> 00:42:52,364
Bordeaux, Burgundy, whatever. And I thought, okay, that's kind of a cool

696
00:42:52,404 --> 00:42:56,100
experience. Logistical nightmare, but

697
00:42:56,252 --> 00:42:59,884
an interesting aspect of it. Well, the banker in me is like, yeah, great

698
00:42:59,924 --> 00:43:03,420
idea. How are you going to make money? I mean, God bless them. I,

699
00:43:03,612 --> 00:43:07,060
again, taking big swings. Keep, keep doing

700
00:43:07,092 --> 00:43:10,860
it. Sometimes they connect with some

701
00:43:10,892 --> 00:43:13,984
wood and off you go. So let me get colloquial. So

702
00:43:14,884 --> 00:43:18,412
is it true if you want to make a billion dollars in the wine business,

703
00:43:18,468 --> 00:43:21,344
I mean, a million dollars in the wine business. Start with a billion.

704
00:43:21,804 --> 00:43:25,252
Well, no, it ain't that bad, but you may

705
00:43:25,308 --> 00:43:29,028
shave. You might shave a zero off if you. That was a Kevin O'Leary comment,

706
00:43:29,076 --> 00:43:32,612
which everybody knows, of course, that we. That we. Well, I mean, that's the, that's

707
00:43:32,628 --> 00:43:35,588
why my podcast is called small fortune because it's this old joke, you know, what

708
00:43:35,596 --> 00:43:38,588
does it take to make a small fortune in the wine business with a large

709
00:43:38,636 --> 00:43:42,356
fortune? So that's a common. Right now you're working on a

710
00:43:42,380 --> 00:43:45,836
project? Yeah, I've got a couple. Yeah, I'm working on a few

711
00:43:45,860 --> 00:43:49,620
things. Yep. So exciting. Yeah. No, I'm glad. I mean,

712
00:43:49,652 --> 00:43:53,388
all but one of them are at the lower level in terms of the

713
00:43:53,476 --> 00:43:56,964
prospective buyers. So it's the one that I have to talk to the big boys

714
00:43:57,004 --> 00:43:59,904
about because of the scale of the project,

715
00:44:00,604 --> 00:44:04,260
you know, that one's a bit of a question mark just because there's just

716
00:44:04,292 --> 00:44:08,014
so much froth, but it's an excellent asset,

717
00:44:08,054 --> 00:44:11,246
so I'm sure we'll find a home for it. And the

718
00:44:11,270 --> 00:44:14,646
fires, recovery from the fires in Napa, have you seen

719
00:44:14,830 --> 00:44:17,474
activity from that or growth or.

720
00:44:19,854 --> 00:44:23,638
Daddle, at least at the vineyard

721
00:44:23,686 --> 00:44:27,406
level? The vineyards did fine. There have been wineries that have had to be

722
00:44:27,430 --> 00:44:31,118
replaced. The day to day of the business

723
00:44:31,206 --> 00:44:35,006
has not been affected by it, except for nobody in Napa Valley had a

724
00:44:35,070 --> 00:44:38,578
2020 cabernet. So it was a huge

725
00:44:38,666 --> 00:44:42,346
challenge from that standpoint. I

726
00:44:42,370 --> 00:44:45,842
think that going forward, the challenge is going to be insurance.

727
00:44:46,018 --> 00:44:49,786
And that's a national, across all industries

728
00:44:49,890 --> 00:44:53,002
and individuals. Problems in

729
00:44:53,018 --> 00:44:56,866
California? Yeah, well, everywhere. I mean, there's. Nobody is

730
00:44:56,890 --> 00:44:59,094
safe from fires and floods anymore.

731
00:45:00,714 --> 00:45:04,344
But, yeah, I think the insurance

732
00:45:04,504 --> 00:45:08,080
has to be figured out. They're talking about 2023,

733
00:45:08,112 --> 00:45:11,832
and I sort of say it's tongue in cheek, because maybe

734
00:45:11,848 --> 00:45:15,648
it's just pr, but they're saying 2023 in Napa is going

735
00:45:15,656 --> 00:45:19,408
to be one of the most incredible vintages worldwide for wine,

736
00:45:19,456 --> 00:45:23,256
period. The quality and the level and the sophistication, the complexity

737
00:45:23,280 --> 00:45:26,976
of the wines from 2023 are going to rival the best

738
00:45:27,000 --> 00:45:30,704
vintages of Bordeaux or Burgundy or whatever. Well, it wouldn't be great.

739
00:45:31,204 --> 00:45:35,020
I have not heard that. I, you know, I operate at the

740
00:45:35,212 --> 00:45:37,744
numbers level, not the tasting level.

741
00:45:39,124 --> 00:45:42,228
We got to break you out. We got to get to. One of these days,

742
00:45:42,276 --> 00:45:45,524
I swear, I'll learn how to. How to taste. I mean, I enjoy it. Of

743
00:45:45,564 --> 00:45:49,380
course. I'm not a complete dummy, but. But, no, no, I hadn't heard that,

744
00:45:49,412 --> 00:45:53,180
and I'm glad to hear it. I remember going to the Napa Valley barrel auction.

745
00:45:53,212 --> 00:45:56,972
It's the one Napa Valley auction event I go to because it's locals and owners.

746
00:45:57,028 --> 00:46:00,798
It's a little bit better from a business perspective, which is

747
00:46:00,806 --> 00:46:04,390
why I'm going. And I remember, not last year, must have been the year before

748
00:46:04,582 --> 00:46:08,222
walking in, kind of. I think it was 22. And I'm like, why are

749
00:46:08,238 --> 00:46:11,974
there 21 cabs here in this barrel tasting? I don't get it.

750
00:46:12,054 --> 00:46:15,750
I forgot, you know, they didn't have a vintage, you know,

751
00:46:15,782 --> 00:46:19,390
in 2020. So if we can have a 2023

752
00:46:19,502 --> 00:46:23,174
for which there's incredible demand and people can take a little price,

753
00:46:23,254 --> 00:46:26,526
yay. I mean, that'd be great. I guess I should have bought those two pallets

754
00:46:26,550 --> 00:46:29,674
of 2020 Cabernet from the. Oh,

755
00:46:30,654 --> 00:46:33,734
I don't know if it was coming your way. It was probably smoke tainted. I

756
00:46:33,734 --> 00:46:37,478
don't know. Who knows what's going on out there? Well,

757
00:46:37,526 --> 00:46:41,310
we're almost. We're actually out of time, which is unbelievable. Okay, well, good.

758
00:46:41,382 --> 00:46:45,126
Edit. Edit out that, my dumb eskimo comment. I can do that if

759
00:46:45,150 --> 00:46:47,754
you want. I don't care. It's up to you.

760
00:46:49,454 --> 00:46:53,246
Fascinating conversation. We have more to talk about when we read. We do

761
00:46:53,270 --> 00:46:56,742
this again, and we got flip side of some of these deals and want to

762
00:46:56,758 --> 00:47:00,448
peel them back a little more, a little more granular without mentioning

763
00:47:00,496 --> 00:47:03,960
names, just so people understand, you know,

764
00:47:03,992 --> 00:47:07,204
the emaciations of doing this,

765
00:47:07,824 --> 00:47:11,360
because, you know, it's interesting industry. It's not just marketing stuff like my

766
00:47:11,432 --> 00:47:14,920
niece is starting, and she wanted to start a salad dressing

767
00:47:14,952 --> 00:47:18,576
company. She's 19. She's produced.

768
00:47:18,720 --> 00:47:22,244
She's produced it. She's gone through the whole rigmarole of food

769
00:47:23,504 --> 00:47:27,252
science and the packaging, which is interesting just

770
00:47:27,308 --> 00:47:31,084
to highlight something. The packaging

771
00:47:31,124 --> 00:47:34,884
that they got sent to the co packer when they were putting the salad dressing

772
00:47:34,924 --> 00:47:38,740
finally in these pouches, they're single served pouches. It was

773
00:47:38,772 --> 00:47:42,420
determined later that the wrong food grade lining had

774
00:47:42,452 --> 00:47:46,180
been used, and so the acids in the salad

775
00:47:46,212 --> 00:47:49,868
dressing had eaten away, so they had to repackage them. And I thought for a

776
00:47:49,876 --> 00:47:53,418
moment, you know, it's interesting because right now they don't have a food grade

777
00:47:53,466 --> 00:47:57,050
lining for wine cans that can last more than

778
00:47:57,082 --> 00:48:00,778
nine, six to nine months. And it's. I.

779
00:48:00,906 --> 00:48:03,562
So now we're getting to. And I was talking about the moving parts of the

780
00:48:03,578 --> 00:48:07,290
wine business. That's a moving part, too. You know, we're not just talking about selling

781
00:48:07,322 --> 00:48:09,874
wine like you want to put in a can. Uh, you better make sure you

782
00:48:09,874 --> 00:48:13,450
have the freight food grade lining, because that it's gonna be worthless in so many

783
00:48:13,562 --> 00:48:17,170
months. And the same food grade lining that

784
00:48:17,202 --> 00:48:20,704
lines a Coke cannot. Wine. Wine can.

785
00:48:21,084 --> 00:48:24,868
Yeah, no, I saw it different. Yeah, I know that they're trying to

786
00:48:24,876 --> 00:48:28,564
figure that out. Yeah. Too many pieces. So it's not just

787
00:48:28,604 --> 00:48:31,772
like I'm going to be in the wine business. I'm a brand and I'm. I

788
00:48:31,788 --> 00:48:34,644
have friend of my house. We're going to look at the Vista over Napa Valley

789
00:48:34,724 --> 00:48:36,704
floor and look at John Charles property.

790
00:48:39,764 --> 00:48:43,452
Yeah, no, it's. It's a lot of work and it's a lot of decisions,

791
00:48:43,508 --> 00:48:47,272
and it's. But it's fun. It is fun.

792
00:48:47,408 --> 00:48:51,104
That's the part that, that brings you back is it's fun. It's like that

793
00:48:51,224 --> 00:48:54,272
really clean golf shot. I'm going to come back because I think I can do

794
00:48:54,288 --> 00:48:58,104
it again. Such a pleasure to see you. Next vintage. Yeah.

795
00:48:58,144 --> 00:49:01,152
Great to see you. Say hi to Sandra. I will do that. And thank you

796
00:49:01,168 --> 00:49:04,144
for being on the show. And we'll send you all the credentials when it's ready.

797
00:49:04,184 --> 00:49:07,944
But fabulous conversation. Thanks for having

798
00:49:07,984 --> 00:49:08,564
me.

799
00:49:17,024 --> 00:49:20,400
Thank you for listening to wine talks with Paul Callum, Cary. And don't forget to

800
00:49:20,432 --> 00:49:23,584
subscribe because there's more great interviews on their way.

801
00:49:23,744 --> 00:49:27,064
Folks, have a great time out there in the wine world. Cheers.