Relationship with Wine Makers

Before we get onto the customer lifecycle, how did the relationship with the wine maker work, in terms of the contract or the terms you sign and the relationship with the individual?

It changed all the time. The purpose and heart of it never changed but the execution of it changed. That changed more as governance became important. At a very simple level, basically, we would agree to pay the wine maker in three installments. We would then say, great, here is your first installment; that gets you off and running. Here’s your second and here’s your third. Generally, we would be paying for all the costs of the wines and then, built into all of the wines, was a wine-makers fee. The wine maker was getting paid his or her fee and then all of the production costs were covered. They didn’t have capital costs.

If you talk to wine makers, I think the thing that they will tell you is that, not only was it good to get that, but the biggest thing a wine maker wants is not just those installments, but they want to know that their wine is going to sell. If their wine is going to sell, they don’t have to factor in costs of marketing and of wine shows and things like that. They also don’t have to factor in costs of depreciation where they have to write wine off. Just making a commitment to a wine maker that we would take X amount of wine from them, was huge for them. Then to say, we’ll pay you in installments for it, completely changed the way they approached it.

I’ll tell you a quick anecdote. Very early in the piece, one of the well-known wine makers just wasn’t getting it. I actually flew down to see him and, for 45 minutes, sat with him as he brought wine samples out. I kept saying to him, that’s not what we’re looking for here. What we want you to do is to tell us what you want to make and we’ll make it with you. He sat there and looked at me, and it was as if he had something in his head but he didn’t know if he should take the chance of telling me. He said, down the road, there is Grenache and we’re not known for Grenache around here. But it’s on a 100-year-old vine and they’re going to pull it up and replant Cabernet there. He said, I could make something amazing out of that wine, but we’re not known for Grenache. He asked if that was the sort of thing we were talking about. I said, that’s exactly what we’re talking about. What we want you to do is to make the wine that you would be passionate and proud of. Then he said, all right; I’ve also always wanted to make this, this and that. Then we had to talk through the commercials.

The heart of your question was, tell me about the interactions with the wine makers and I think you are talking about the commercial end. But it wasn’t just the commercial interaction. It was actually shifting them from, hey, I’ve got juice and I can do it at a good price; is this what you are looking for and I kind of know that everybody wants Chardonnay from this region and, therefore, here’s a Chardonnay. What we were saying to them is, no, that’s not what we want. What we want you to do is to make something that you are going to put your name on. After you have made it and put your name on it, people who have drunk it are going to come back and rate it and actually ask you and talk to you about it. We want you to make something that you are going to be proud of. Being able to help them get their heads around that was pretty cool.