As a small business owner myself, I know the challenges in managing all aspects of a business. The wearing of many hats also means working with different programs to manage...
This story originally appeared in California Winery Advisor.
Adam Lee has worked in all aspects of the wine industry. He has worked at a wine store, on the floor of a restaurant in Austin, Texas, for a distributor and wrote about wine before starting his first winery, Siduri. Experience working in all facets of the wine business has provided Lee with an advantage; he knows all of the benefits and challenges the industry poses.
The biggest challenge a winery faces is selling the wine. When Lee started Siduri in 1994, he focused primarily on direct sales, with most of the sales sold on futures. Times were different then. “Pinot Noir was still in its infancy in the wine drinkers consciousness and growing a mailing list was easier than it is today,” Lee explained. Wine reviews, mailing lists, and direct sales helped his brand grow until they were large enough to work with a distributor. Thanks to a couple fortuitous events, Siduri followed this path. After a few bottles of wine, Lee was very relaxed and generously confident and left a bottle of his wine for Robert Parker, which resulted in a good review. Ferry Plaza Wine Merchant Owner Debbie Zachareas was at EOS Wine Bar at the time and began selling the wine. By 1996, Siduri grew to almost 900 cases and entered the three-tier market. “It was a lot about getting to a certain size about where you needed a distributor.”
By 2015, Lee sold Siduri to Kendall Jackson. While he remains the winemaker, the new ownership freed Lee from the business side of things. As a result, Lee gets to spend more time in the vineyard. “The growing and picking is the most important part,” according to Lee and he was thrilled to spend more time there.
With the time in the vineyard, Lee began thinking about the legacy he would leave for his children. He and his wife Dianna liked the idea of leaving them something small that would not be a burden but rather something they could choose whether or not they wanted to grow. In 2017, named after Lee’s grandmother, Clarice Wine Company was born.
This story originally appeared in Wine Industry Advisor.
Across the entire wine industry, there are significant challenges, stated Robert McMillan, executive vice president and founder of Silicon Valley Bank’s Wine Division at the recent forum of Santa Barbara’s wine industry.
Premiumization is the dominant trend, but continuing consolidation of distribution is significantly limiting wineries access to consumers. To address this issue, McMillan stressed the need for direct-to-consumer sales. While direct sales are not necessarily more profitable than through wholesalers, explained McMillan, “it is more about necessity.” However, direct to consumer sales have their own constraints and require an investment in hospitality to attract consumers and make the emotional connection.
“In the past year, I’ve seen firsthand the impact of regulations gone haywire. They are frustrating family winery owners across the country, increasing the cost of doing business and reaching the point where some of the regulations will put family-run wineries out of business. The problem can’t be ignored, and it’s not going away by itself.” McMillan wrote in his State of the Wine Industry 2017 report (p55).
