Family-owned wineries have long dotted the California landscape, spanning multiple generations and industry changes over time. In response to consumer demand and increased competition, some have created new forms of ownership—not necessarily better or worse, just different. Others have managed to remain family held. This is the story of three such wineries. One is noted for its philosophy of family ownership and operation, another for humble beginnings and homerun product hits, and another for its resilience and extreme longevity. Their stories illustrate that hard work, family loyalty, perseverance and the ability to change over time are key to long-term success.
Mondavi: It’s all in the family
The Charles Krug Winery was originally founded in 1861 by Prussian immigrant Charles Krug. On this early June morning in 2008, its serene grounds and buildings couldn’t help but impress with their massive scale and separation, and sense of historic place. This impression contrasted sharply with the construction activity conspicuously underway.
“My grandparents bought the winery in 1943,” says Peter Mondavi Jr., the third-generation Mondavi proprietor. Included in the deal for the winery were the Charles Krug brand and 150 acres, including the vineyards and historical buildings (from the 1800s) that still stand on the property.
When the Mondavi brothers took separate directions in 1966, Peter Sr., always the interested winemaker, took over as president of Charles Krug, while Robert, who leaned toward marketing, founded his own winery in Oakville. To many, the Mondavi name conjures images of the Robert Mondavi Winery’s familiar tower and arch. Part of the reason some consumers might be more aware of the Robert Mondavi Winery than Charles Krug is simply that it bears the family name—and it’s very visible from Highway 29, the main artery in the valley.
But more than anything else, stresses Peter Mondavi Jr., the Charles Krug Winery is about family ownership. Leaning forward over his desk, he states with emphasis, “Family ownership, for us, is crucial. First and foremost, what’s given us our success is that we’re owned, held and operated by family. I can’t overemphasize how that’s contributed to our longevity, probably more than any other factor. We aren’t absentee owners. Family ownership provides the control—and therefore the longevity—of our wine business. Dad’s philosophy has been, ‘You really have to control your own destiny.’”
Mondavi explains that direct control means controlling everything, including operations, winemaking and vineyards. You might think the family ownership philosophy stemmed from Peter’s degrees from Stanford University (he has a BS, an MS and an MBA), but they’re really just icing on the cake.
Peter Jr. is well aware of what can happen when a privately held company goes public and issues stock for financing reasons. “Unfortunately, public markets are far bigger than we all think, as far as the influence there,” he says, no doubt referring to his uncle Robert’s winery going public and becoming part of the giant Constellation Brands, and his cousins, executives Michael and Tim Mondavi, eventually leaving the winery.
When Peter Jr.’s grandparents purchased the Charles Krug Winery, sweet wine (like ports, sherries, and fortified wine) were a majority of the market. And many California wineries shipped unbranded wine to the East Coast in bulk, where distributors bottled it under their own labels. Peter Jr. explains, “In the meantime, we were developing the CK Mondavi line.” These wines were low-priced red and white blends in the vin ordinaire class. Some were called Chablis and Burgundy, while some Italian-style blends sold in larger format and gallon containers.
“That was key to the survival of the business,” says Peter, explaining the past products. Today, wineries are surviving on success in the higher-end wines after that market was developed over many decades. The Charles Krug Winery was no exception, growing over the years to a size unimaginable by its founders. In 1980, a significant industry downturn took place, which dwindled CK Mondavi’s more than 1 million case production. By the late 1990s, Japanese money had entered the industry. Yet while some wineries sold out, Charles Krug remained family owned.
In 1985, the CK Mondavi brand evolved from vin ordinaire into a varietal portfolio in 750 mL bottles and magnums. Chenin Blanc and Cabernet Sauvignon were the first two varietals, but the number grew quickly. In 1995, Peter Jr. and his brother, Marc, initiated a radical strategic change. They decided to concentrate the Charles Krug portfolio on Napa Valley red Bordeaux varietals and eliminated half of its huge portfolio to focus on those under the Charles Krug label. Half the volume was gone, but not half the revenue, because the Bordeaux reds were priced higher.
Starting in 1997, the brothers separated the two brands of CK Mondavi and Charles Krug completely. They hired a new winemaker for the Bordeaux reds, while winemaker John Moynier continued on with the CK Mondavi line (David Galzignato is the current Charles Krug winemaker). The Mondavis believed this separation was essential from the standpoint of winemaking, production, vineyards and the marketplace—even to the extent of family involvement. Today, Peter Jr. oversees the Charles Krug line, while Marc is responsible for the CK Mondavi label. In 1995, one-third of production was Bordeaux reds, while today fully two-thirds is.
The brothers spared no effort for the Bordeaux red program and built a new, small-lot crush and fermentation facility exclusively for it in 1998. The grapes were also crucial, as Peter Jr. notes, “For the Charles Krug line, 100 percent of the grapes for the Bordeaux-style reds comes from our own vineyards. At this caliber of winemaking, the quality of the grapes is paramount.”
In the late 1990s, the family began an aggressive replanting program for two reasons. First, some vines had simply reached old age, and their yield had decreased. Second, the varietal restructuring initiative required the elimination of grapes like Johannesburg Riesling and Chenin Blanc. Of the 505 acres currently under vine, 450 have been replanted within the past 10 years. Today, 50 percent of Charles Krug vineyards are certified organic, with plans for that number to reach 85 percent by the 2010 harvest. However, Peter Jr. is emphatic when discussing the replanting: “We did not replant due to phylloxera.”
He explains that, in the early 1970s, his father considered replanting with AXR rootstock, which was being highly touted by UC Davis at the time. But, he continues, “My father couldn’t get UC Davis’ assurance the AXR was pest resistant—there remained some doubt.”
So Peter Sr. continued using St. George rootstock, which did prove resistant to the tiny, aphid-like insect; many vineyard owners who had replanted with AXR paid the ultimate price.
Peter Jr. proudly explains, “We’re really going through a tremendous phase of recasting our business, especially as it pertains to Charles Krug.” The Mondavis have successfully transitioned into the Bordeaux red portfolio and have almost completed their replanting plans. Winemaking, production and cellar equipment have been installed in the past few years, including a fruit-sorting system that gently moves grapes to permit hand selection, new crushing and pressing equipment, upgraded fermentation tanks and high-tech environmental controls to simulate a steady cave atmosphere in the barrel room during aging, which decreases losses due to evaporation. An aggressive barrel purchasing program was put in place to procure 1,000 French oak barrels each vintage at a cost in excess of $1 million annually. Last but not least, Charles Krug’s Carriage House and Redwood Cellar, two newly restored national historic landmarks on the property, have been renovated and earthquake-retrofitted.
One way to acquaint yourself with the changes at this historic winery is to attend its annual Tastings on the Lawn, which occurs each September, and sample its wines in the oldest outdoor public wine tasting in the Napa Valley (now in its 57th year). Asking Peter Jr. what to taste, he suggests, “Taste the Sauvignon Blanc and Generation.” Witness the enthusiasm and energy yourself, which is perhaps best exemplified by Peter Mondavi Sr., who’ll celebrate his 94th birthday in November and still comes to work almost daily, including Saturdays.
Trinchero: There’s more than gold in those hills
Last summer, the new Napa Valley winery of Trinchero Family Estates, two miles north of St. Helena, was bustling with construction activity. Arriving at the appointed spot for my meeting with Bob Torres, the son of Vera Trinchero Torres, I found construction workers pouring over blueprints. Asking his whereabouts, the reply came, “Torres? No idea. He must be out on the grounds with the crews.”
I finally found him as suggested, deeply involved with the builders. He graciously led the way back to a quiet room in a large construction mobile facility. Torres explained that this new winemaking facility (which opened in time for this year’s harvest) would be dedicated entirely to Trinchero luxury-class Napa reserve wines, and began recounting the family’s history.
“In 1948, when we first started, we were making a lot of dessert wines, and that was really the taste of the public back then. This trend continued into the 1960s.” Although table wines were made in those days, they were lighter than wines today and not made in the dry, intense Bordeaux style. In addition to the sweet wines, Trinchero also made sherry vinegar and red wine vinegar. Delving deeper into the winery’s history as well as the family tree, Torres describes patriarch founder Mario Trinchero, “He was the marketing guy because he spoke English!”
Torres explains how his uncle, Louis “Bob” Trinchero, the current Trinchero chairman of the board, pointed the winery in a new direction by forming a relationship with Darryl Corti, a man with international wine experience and a respected palate. Corti convinced Bob to adopt the classic Château-style model, where a winery focuses mainly on one grape variety or blend. In 1967, Corti introduced Louis to a vineyard in Amador County that would impact Trinchero’s future. The old Zinfandel vines on the Deaver Ranch produced very small grapes with intense flavors. The vineyard was 1,400 feet above seal level on decomposed, red granite soil.
It may seem unlikely these days, but there was a time when Amador County made more wine than Napa. Italian immigrants settled there during the Gold Rush days and made wine for the miners. Torres continues, “Long story short, my uncle tried homemade wine crafted from those Zinfandel vines that, even back then, were 100 years old. Uncle Bob contracted for the Zinfandel grapes and produced the 1968 Amador Zinfandel, made in the Bordeaux style. It really kind of turned the critics on their ears, because up until that time, Zinfandel had been used as a bulk wine grape.”
Only a few wineries produced Zinfandel at the time—and not in every vintage nor in the same style. It was more like a cottage industry of home winemakers, many from outside Amador County. “We were pretty responsible for the resurgence of not only grape growing, but winemaking up there,” explains Torres.
In some cases, there was a bit of competition between Zinfandel producers. “In other words, who could make it the biggest, blackest, heaviest, highest in alcohol; you know, we were trying to ‘out Zin’ each other,” recounts Torres. To make the Zinfandel more intense, some of the grape juice was bled off before fermentation to increase the remaining juice-to-skin ratio. Uncle Bob fermented that “free run juice” into wine. In the 1974 vintage, the fermentation stuck, leaving 1.5 percent residual sugar. Cordi suggested this slightly sweet wine be bottled and called Oie de Pedrix (“Eye of the Partridge”).
However, the Bureau of Alcohol Tobacco and Firearms regulators didn’t take kindly to non-English descriptors, so Trinchero called it “Oie de Pedrix: A White Zinfandel Wine.”
Torres says proudly, “Within 10 years, we went from this little Zinfandel house that had some White Zin to one of the biggest wineries in the valley, the state and the country. We went to 2 and 3 million cases very, very quickly.”
“There were a lot of growing pains because we were getting so big,” continues Torres, who, as principal and senior vice president of operations for Trinchero, can appreciate growth. Over the years, Torres has worked at all jobs in the winery, which, he believes, gives him a solid foundation for decision making. What’s more, beginning in the 1970s, his mother Vera worked in the administrative office, and uncle Bob became winemaker following the retirement of his and Vera’s uncle John Trinchero. Torres thinks all this togetherness has taught family members to listen carefully and work collaboratively.
Eventually, the winery needed a professional sales team. Working under the direction of Roger Trinchero, that first hire, Jim Miller, put a four-person sales force together that traveled nationwide and, outside of California, worked with state distributors in the three-tier system. The growing pains and rapid expansion leading to today’s staggering 14 million case production can be summed up best by a statement from uncle Bob: “You know how big we are now? We’re so big, we wouldn’t hire us!”
Indeed, Trinchero’s array of products is huge. More than 25 distinct brands span the market today,
including Sutter Home, which has produced many wines under a California appellation, including Amador Zinfandel and White Zinfandel varietals. Trinchero was one of the first to market 187 mL airline wine bottles, which now sell more than 2 million cases annually. And a partnership with actor/philanthropist Paul Newman’s Newman’s Own brand (which sells Trinchero wines under its own label) claims another quarter million cases.
We completed our morning by walking to the newly constructed fermentation and barrel room, where Torres’ degree in architecture from UC Berkeley slipped out of hiding as he showcased the nearly complete facility. He pointed out his portion of the design, an expansive signature ceiling that’s reminiscent of a European train station. Its dramatic black iron supports are strikingly different from the typical wooden beams found in many California wineries. The adjacent barrel and fermentation rooms are impressively high-tech, equipped with mist humidifiers and electronic controls including a display indicating individual tank fermentation temperatures.
From humble beginnings, this “little” winery has taken quite a trip—from dessert wines to Amador County to millions of cases of White Zinfandel and far beyond. And as the new winery facility unfolds, the “beyond” part continues to expand into the distance. Stay tuned.
Gundlach Bundschu: In the beginning…
Few California wineries can claim an anniversary party like the sesquicentennial event Gundlach Bundschu is celebrating—2008 marks its 150th year in business. Survivability and longevity: isn’t that the name of the game? And Gundlach Bundschu has survived in the wine business for six generations (since 1858), despite some formidable obstacles. For some heritage wine families, selling became the only option. But Jeff Bundschu, the sixth-generation proprietor and president of Gundlach Bundschu, believes keeping a business small is sometimes the key to reaching and maintaining your goals.
“The business has looked a little different in each successive generation, mostly in response to external elements in the industry,” says Bundschu, before explaining how each family generation has contributed something new to the Gundlach Bundschu brand. The first two family generations to reside in California—Jacob Gundlach and, next, his son-in-law Charles Bundschu (who married Jacob’s daughter, Francisca)—were instrumental in the most unbridled growth of the family farm, from the 1850s to 1906. Back then, grapes were grown at the estate in Sonoma Valley, which shares its property lines with the borders of Napa County and Carneros, then crushed and shipped by barge to San Francisco, where the family resided. The wine was aged in French barrels and redwood tanks there and then distributed.
The great jolt of the 1906 earthquake destroyed the Gundlach Bundschu winery, the family’s wine business and its residences in San Francisco. All that remained was the Sonoma County property. The third generation, brothers Walter and Carl Bundschu, restarted the business in time for the next great obstacle, Prohibition. Soon, Gundlach Bundschu was only able to sell its winegrapes as fruit to home winemakers and, sometimes, to those who made sacramental wine for churches.
Fourth-generation Towle Bundschu (Jeff’s grandfather) inherited the Sonoma property, which, at the time, had no operational winery, although Jeff is quick to point out, “The vineyards were always productive.”
From the late 1930s to 1980, Jeff’s grandfather “[kept] the farm viable without making wine, which was very hard to do. He tried cows and pears in addition to winegrapes, but ultimately decided with the help of his son—my dad—that making wine again was the way to go. It was really my dad who saw the opportunity for premium wine.”
Jeff’s father, Jim Bundschu, the winery’s current director of viticulture, is the fifth generation, spanning 1969 to the present. Jeff has been at helm of the family business since 2000.
From the beginning, the Gundlach Bundschu business has been challenged by a location with sparse soils, which are ideal for growing premium winegrapes with intense, fine fruit quality…but low yields. Gundlach Bundschu farming costs have always been similar to most other growers, but the pounds of fruit produced and associated revenue were much lower. Thankfully, the price per ton eventually rose for high-quality winegrapes.
Back when Jeff’s grandfather was tending the vines (with no winery of his own), he catered to the sometimes fickle market by cultivating a number of winegrape varietals. Jacob Gundlach originally planted grapevines on the estate in 1858, but all the vines on the family farm were replanted under Towle’s watch during the late 1960s to the early 1970s. In the mid-1990s, a second, more strategic overhaul occurred. The family purchased a neighboring property and planted it to winegrapes and also surveyed its own vines and replaced those that weren’t contributing and/or didn’t fit Jeff’s long-term vision for the winery.
Today, Gundlach Bundschu farms the property in 60 distinct blocks that are diverse in their soil, exposure and slope; each is planted to specific varieties and farmed using specific techniques suited to each site. The family’s vineyards cover 320 acres and span a vertical drop of nearly 400 feet, with hillside aspects that face various directions, receiving more or less direct sun and creating a variety of microclimates. “We’re able to achieve quality across a fairly broad spectrum,” Jeff explains about the diversity of grapes.
This is an area of Sonoma Valley that traditionally supports Chardonnay, Merlot and Pinot Noir well, but, Jeff says, “We really believe in our Cabernet and have for 30 years. It makes intense, ripe, earth-driven wines, despite the fact we’re in what people would traditionally call a cool climate.” About 80 percent of the winery’s production is in Cabernet Sauvignon, Merlot, Pinot Noir and Gewurtztraminer. Most of the remaining wines produced are exclusively sold at the winery and to club members. Gundlach Bundschu wines use 95 percent estate grown grapes today.
Asked if he’s been able to take advantage of the 150 years of viticulture experience on his particular site, as vintners in Europe claim to, Jeff responds positively: “Where those vines are planted and what rootstocks were used, is all based on the success and lessons we’ve had in the past, plus a little bit of outside knowledge. That tends to be the way I try to manage today.”
Jeff’s plans for the winery are more about his family lifestyle than they are centered on financial rewards, so the plan is to keep the business small enough—and intact—to keep it in the family, with no plans to sell. When he says, “Respect the next generation,” he means that values evolve and directions change from one generation to the next. Acknowledging the present generation’s success in structuring the business allows descendants to change course so the next incarnation of the business can emerge.
Now there’s some solid advice for any family business.
