"I can certainly see that you know your wine. Most of the guests who stay
here wouldn't know the difference between Bordeaux and Claret." John Cleese
as Basil Fawlty in the British TV comedy Fawlty Towers.

The Wine World Changes

Winery Insight Featured Article - October 2004 by Timothy O. Rice

History repeats itself, but it is never the quite the same.

As September ended and October began, Robert Mondavi Corporation announced
that it was restructuring to focus on large volume production of wines that
sell for $15 or less per bottle. The premium estates will be sold along
with the high-profile partnership interests, including the 50% interest in
Opus One shared with Château Mouton-Rothschild. Roughly one-third of the
company’s employees, 360 permanent and part-time workers, would be laid off.
Michael Mondavi and his children, Dina and Rob, left the company in
September. Michael, who stepped down as chairman earlier in the year to
become vice chairman, says he was forced out; the company says he resigned.
Michael’s brother Tim remains with the company as vice chairman, but the
speculation is that he will soon depart. Robert Mondavi, 91, remains with
the company that bears his name as chairman emeritus.

Decades ago, the Mondavi family faced a similar challenging situation with
their Charles Krug Winery in Napa. Robert was the sales manager and his
brother, Peter, was the winemaker. A dispute of legendary proportions arose
over future directions, finally erupting in a famous fistfight at a family
picnic. Robert left Charles Krug after that, and in 1964 started Robert
Mondavi Corporation with his two sons. Robert, following his vision for
premium quality wines, was one of the driving forces in the building of the
California wine industry. Peter Mondavi and his family continue to run the
successful Charles Krug Winery to this day.

One major reason for the triumph of Robert Mondavi was this vision of
California as a rival of the great wines of Europe, and particularly France,
on quality. He insisted that Americans would buy premium California wines
if only the wineries produced them. His drive and passion for this mission
brought his winery to the peak of success and made the Mondavi name known
worldwide.

Now the company that bears his name is turning away from that vision. Faced
with difficulties in the 1990s when the need for modernization and
expansion, plus the need to replant vineyards following some disastrous
infestations, the Mondavis decided to take the company public in order to
raise funds. Now they are faced with the limitations and restrictions of a
public corporation, the compromises and consensus building that seems
antithetical to their passionate drive for excellence in wine. As the boom
of the late Nineties receded and the California wine glut struck, the
Mondavi move into “life style” businesses seemed to stagnate. Growth seemed
to be in the under-$15 segment of the market. We can only speculate that a
struggle ensued for control of the direction of the business.

Earlier this year, Robert Mondavi said that they had concentrated too much
on the $7-to-$8 per bottle wine, and were now too well known for that
instead of for their premium wines. In effect, the Corporation has split
over this. The surviving public company will keep lines like Woodbridge
that are successful in that segment. The other interests, including the
original Mondavi winery at Oakville, will be sold off. The Rothschilds seem
likely to end up with complete ownership of Opus One in Napa. Interests in
Viña Seña in Chile and Ornellaia and Luce della Vite in Italy will be sold
off. Arrowood Winery founder Richard Arrowood was said to be negotiating to
get control of his winery again. Major international conglomerates such as
Allied Domecq, Beringer Blass, Constellation and Diageo were said to be
nosing around, interested in acquiring these properties and others.

But to me, the most intriguing rumor is that the Mondavis want their
original Oakville winery back, and will be bidding to buy the property and
take it private. There we see the history of the wine industry repeating
itself, the Mondavi family rededicating themselves to quality and the
premium wine market. What wonders may they lead us to as a new generation
takes hold?

Maybe all this was inevitable. The drive for excellence above all often
requires a harsh dedication that is difficult to maintain while meeting the
needs of volume businesses. It is an old story, the saga of the winemaker
as artist. In the end, I think this is the best for us. The corporation
will give us the good, low-priced wine we want – and the family will give us
the special wine we admire.

We can only wait and see.