Uncorking a Dose of Reality
by Lisa Allen
Chief Wine Officer, Wine Insite

When you think about wine, where does your mind take you?

Maybe you escape to the beauty of wine country with vineyards as far as the eye can see. Or do thoughts of wine place you "virtually" in the store staring at a sea of 1000’s of different labels. Or it could be that when you think about wine, you immediately envision yourself any time, any place with a glass of your favorite red or white.

And that’s exactly where a lot of wineries want you to be, making their wines a part of your daily lifestyle. In fact, this is so important to many wineries that they have coined a new term: “lifestyle wines”, which is used to describe the wines that many of us pick-up at the store on any given night when we want something of good quality, and at fair price to sip on.

Wine is part of the great culinary upgrade that is sweeping the United States, and wineries with a lifestyle portfolio play a big role in this trend.

But not too long ago, when the market-environment for wine started getting tougher as the dot-com bubble burst, many in the industry took comfort in calling it part of another agricultural supply cycle. Cycle or not, though, the industry is now seeing permanent changes throughout the supply chain that range from globalization to consolidation of retailers and wholesalers as well as a fundamental shift in consumer demand. But the permanency of this shift is in the fact that some consumers that traded down to less expensive wines when the economy went south are not very eager to trade back up. That's not to say the above $15 per bottle category will see a permanent decline or that this sea change in the industry means diversified wine companies should dump their Napa assets. (See what Jerry Shriver of USA Today says about the Lodi area.)

The entrance gate. Twenty-five years ago, having put California wine on the map, Robert Mondavi returned to his hometown of Lodi to establish a "lifestyle wine", naming the winery for the same small town in which it resided: Woodbridge.

But that is just what one venerable US wine company is considering for its future. The Robert Mondavi Corporation has decided to divest its luxury brands such as Opus One, Byron, and Arrowwood so that it can better focus on the portfolio of lifestyle wines such as Woodbridge. (Of all the "what is Mondavi doing" stories I've found this to be one of the easiest to understand)

In recent months, the wine company has been investing in advertising for Woodbridge, the leading wine brand sold in 1.5 liter bottles. Woodbridge is a prime target for competitors but president and CEO of Robert Mondavi Winery Greg Evans expects Woodbridge to continue to grow. Mondavi just introduced some Woodbridge brand extensions such as a single serving 187 ml bottle and a "Select Vineyard" series in 750 ml bottles. The new products will help the Woodbridge brand stay competitive in the “lifestyle” wine segment.

This high volume, popular priced segment of the US wine industry is defined by E&J Gallo, Canandaigua Wine Company (42 million cases) and The Wine Group-companies selling more than 30 million cases at average wholesale case prices in the $20 range and by a second tier of wine companies positioned in the five-to-10 million case range (Mondavi, Beringer-Blass and Trinchero Family Estates being the largest) with average wholesale case prices in the $40 range.

Leaders of these large US wine companies believe per-capita wine consumption in America will increase substantially because younger people appear increasingly interested in wine. "My own belief is we are going to keep seeing growth," Franciscan Estates president Jon Moramarco said. "The market will keep growing as people make wine part of their everyday life. It will get better and we will go into better times."
In fact, the market for wine in the USA has seen significant growth over the past five years (1998-2003) with an average annual growth rate of 4%.

If the industry leaders are right, then we will see more wine consumers join the ranks. Currently, just 12.5% of Americans drink 86% of the wine consumed domestically, and most of that imbibing occurs on the coasts. (Based on anecdotal evidence, I estimate about 1.25% of it happens with my friends around the dining room table.)

One reason Woodbridge is so strong is because of the positive image attributes that come from its association with Robert Mondavi's luxury wines. It is difficult to separate the two portfolios, luxury and lifestyle, from each other. Maybe Mondavi's leaders think the company has been a jack-of-all-trades but a master of none. Management seems to have reached the conclusion that breaking the company up will allow the new Robert Mondavi to focus on what it does best for shareholders – create value for all of its stakeholders.

As Evans told employees in a recent internal announcement in October, "It is important to recognize that our current lifestyle portfolio accounts for more than 80% of our revenues and profitability. The reality is that we have been a lifestyle company for a long time."

Because of the current market success of the Woodbridge wines, there is a lot riding on the future so a lot of care goes into the making of the wines at the Lodi winery. And after a trip to Wine Country, it's hard not to become enthusiastic about wine – learning how the wine is made and maybe even meeting the creative forces behind it. On a recent tour of Woodbridge Winery in Lodi, CA, I met several people who are part of the creative force responsible for making the most popular “lifestyle” wines in the US.

At Woodbridge, as on almost any winery tour, you hear that great wines are made in the vineyards. This shows how important it is to place tremendous care in the handling of the grapes. The care of the vineyards is provided by a team of dedicated people and sophisticated equipment that allows the grapes to be harvested quickly when the vineyard manager and winemaker agree that the grapes have reached optimum ripeness. Once the decision to pick is made, the clock starts ticking. There is a preferred window of time during which the grapes need to arrive at the winery.

Using small winery traditions, most wine will see time in oak barrels. The "chai", partially underground, sports a proud 70,000 barrels. The delicious smell of oak & wine is intoxicating.	Even small winery traditions must give way to mechanized prowess when you are bottling 8 million cases of wine. This line is filling magnums of Cabernet Sauvignon.
One of the more enjoyable aspects to our visit was evaluating four "select vineyard series" wines with essences. It is a great way to ferret out even the faintest aromas in wine.	Again, efficiencies are different for wine-making on this scale, chiefly storage concerns. This view only scratches the surface of huge tanks storing wine, yet to be racked off into barrel or into 100 year old redwood fermenters.

Using a fleet of trucks and special crushing equipment, the grapes are brought to the winery and processed. And while the facility at Woodbridge is certainly state-of-the-art, the wine making process follows centuries-old traditions that include small oak barrel aging for many of the wines. For me, there is nothing better than the smell of wine in the barrel room. The aromas of oak and wines mingle in the air and tempt your nose every step of the way. Of course, when you are done with the tour, the next logical place to go is the tasting room. After all, I went to Woodbridge for the wine. In the tasting room you can taste samples of the current vintage of the same wines that are currently being made in the winery.

As much as Woodbridge is in the wine business, they are in the people business. The team of people in Lodi makes the winery a special place. They work hard to make good wines, which results in great success in the marketplace with consumers.

Grape growing and wine making is the same process in Lodi or Bordeaux with the same basic principles in place that have simply evolved with each generation of grower and winemakers. So whether you are making 800 cases or 8 million cases the processes are the same but just take more repetition when you are a super-sized winery. So, why work that hard when you are selling wines for $5 per bottle? Well, to borrow some words, “It’s the economy stupid.” We, the wine consumer, want wines that fit into our lifestyle, which means they have to taste good and be priced affordably. Robert Mondavi Winery is smart to invest in the Woodbridge brand. It should be an investment that provides the management with a good lifestyle of their own.

About the Contributing Writer
Lisa Allen, Chief Wine Officer, founded Wine Insite in May 2001 after earning her MBA. An introduction to the wine industry came through a position with the Texas Wine and Grape Growers Association. While at the association, Ms. Allen learned the wine industry from vine to wine. This industry knowledge allowed her to direct marketing, education and legislative efforts for this statewide organization. From there, Ms. Allen took a position with eatZi's Market & Bakery in Dallas, TX. Ms. Allen consulted on pricing models, product mix, merchandising, POS, and shelf sets. Additionally, she developed and implemented customer-service training program for 50 employees, including upper management, retail staff and culinary professionals. With trade and retail experience, Ms. Allen accepted a brand management internship with Beringer Wine Estates in Napa, CA. Now, Lisa leads Wine Insite in bringing a knowledge and love of wine to restaurants, retailers and wine lovers nationwide.

Article Credits
Insight & Opinion: The World Has Changed. Is Robert Mondavi Ahead of the Curve? By Cyril Penn, September 17, 2004
The Top 30 US Wine Companies, Wine Business Monthly, February 2004
The Top 30 US Wine Companies, Wine Business Monthly, February 2004
Wine in the US to 2008 published by Datamonitor
Thursday, October 14, 2004 (SF Chronicle)Wineries proliferate in the United States, study says by Carol Emert
Thursday, October 14, 2004 (SF Chronicle)Wineries proliferate in the United States, study says by Carol Emert
Insight & Opinion: The World Has Changed. Is Robert Mondavi Ahead of the Curve? By Cyril Penn, September 17, 2004