Ep.1996 Mutually Beneficial Importer/ Supplier Relationship | wine2wine Business Forum 2023

The Italian wine podcast is the community driven platform for Italian winegeeks around the world. Support the show by donating at italian wine podcast dot com. Donate five or more Euros, and we'll send you a copy of our latest book, my Italian Great Geek journal. Absolutely free. To get your free copy of my Italian GreatGeek journal, click support us at Italian One podcast dot com, or wherever you get your pods. Official media partner, the Italian One podcast is delighted to present a series of interviews and highlights from the twenty twenty three one to one business form, featuring Italian wine producers and bringing together some of the most influential voices in the sector to discuss the hottest topics facing the industry today. Don't forget to tune in every Thursday at three PM, or visit the Italian wine podcast dot com for more information. So thank you very much to all of you to be here. Tonight, I'm very honored and proud to present you, Peter Mondavi junior. He's the second son of Peter and Blanche, Mondavi, and grandson of Chisare and Rosa Mondavi. The Napavalli pioneer, sir, who purchased the historic, Charles Krug winery in nineteen forty three. With this brother Mark, he's immersed in the stewardship of Charles Krug winery, and vineyards and steadfast in succession planning for the future of the family legacy. Peter Pashon is working to reinforce Charles Krueger winery as one of Napavale Premier states centering of the family tradition of innovation and quality. Peter will talk will talk about the family expansion into the import business, which started in bordeaux in two thousand and twenty. And then, in two thousand and twenty two, they added also an Italian wine producer Valdo from the very famous Bola family. He will tell us how to establish the foundation of a successful supplier importer relationship between family owned business for a long lasting and mutual beneficial relationship. And I think that this is a subject that that interests many wine producer. Because, we cannot, if we want to, to be successful worldwide, we have to consider first after our domestic market, definitely the American market. My family, my company started to export in nineteen seventy two, and it was my father who had the vision to expand the, import the the export business to the US, and then I started working in the family business in nineteen eighty three. And the American market is the one from which I learn the most. I learn to communicate. I learn how to, have a good business relationship with importers, with retailers, etcetera. So I think that the subject that that Peter will cover is very interesting for all of us. So please join me in welcoming Peter Mondavi. Thank you, Marlisa. What I'd like to do is just start with a brief PowerPoint that helps explain our complex family. I'm gonna stand up for this so you have a better view. So this is, one of our historical, state buildings that Carah giles built in, eighteen eighty one by the founder Charles Krug. But really wanna go to the story of my grandparents, Treasure and Rosimandavi, born in Italy in the Mark Day region. They got married in nineteen o eight, immigrated over to the United States. What's interesting is our family has no winemaking background in, in Italy. But they immigrated to Minnesota, did some, business in, the grocery store business, probation set in. And given that my grandparents were dealing in fresh produce in the grocery business, started to ship fresh wine grapes from California out to the area to sell to the local Italians to make homemade wines. So this was our introduction to wines. If it weren't for prohibition, I probably wouldn't be here talking about, wines. So let me go through the family tree here. My grandparents, Chesire and Rosa. I mentioned them purchased, as Marlisa said, purchased the Charles Krugweinre in nineteen forty three. By the way, Charles Krugweinre was founded in eighteen sixty one, making it the oldest Weinre in Napa Valley. My dad, Peter Senior, on the right here, and my uncle, Robert, ran the winery, together, building it up. And nineteen sixty six, my uncle, Robert, left Charles Group winery started his winery, of course, Robert Mendavy Weinre. And then, about a decade later, Robert still had ownership in Charles Krugweinre. Dad bought out his ownership. And from that point forward, Charles Krug, our winery has been wholly owned by my dad's lineage in the family. And then Robert sold the winery, in two thousand four. And Then we move on to the next generation, the third generation, in the family. I'm on the far right there. And then, with my brother, Mark, also active in the winery. And then our cousins, Tim Michael, and Marcy. Then we're moving into the fourth, generation here, which all to us, to a certain degrees are engaged and passionate about the wine, wine industry of the fourth generation, our Robert side, our fourth generation Mark and Janice have four daughters. We have, son and a daughter, Lutro and Leah. In fact, Lutro just got married a couple weeks ago on Sicily to a sicilian, girl down there, and and but is moving to the United States, and we're quite happy about that. Just to complicate the family story in in the United States with respect to wineries, once Robert's family sold the Robert Madavi winery, Tim and Marcy started continuum. Beautiful, winery up in the hills of Napa Valley. Michael started a a company called Folio, imported family wineries from around the world, focusing on Italian winery. So many of you may have heard of Folio and my cousin, Michael, from that respect, but not to be out outdone by the first, second, and third generation. The fourth generation is getting involved with the wine business on their own. Two of Tim's kids have Rain, a beautiful pin and wire series from, Snoma Coast. And then Mark of Janice's four daughters have dark matter and a loft, both Napa Valley small, brands. And then we do have the fifth generation coming along with Carlos, albeit about two two years old. But nevertheless, we have the fourth or fifth generation, and, eighty years of family ownership and involvement. In the Napa Valley, California, and the and the American wine business. Are you enjoying this podcast? There is so much more high quality wine content available for mama jumbo shrimp. Check out our new wine study maps. Our books on Italian wine, including Italian wine unplugged, the jumbo shrimp guide to Italian wine, Sanjay Lambrusco, and other stories, and much, much more. On our website, mama jumbo shrimp dot com. Now back to the show. So here are our our brands. Of course, Charles Krug, the brand that we all originated with. C. C. K. Mandavy, and family started that in the late forties. That's our California Appalachian brand, much bigger in volume. Charles Krug is the luxury Napa Valley. We've recently added CKemondavi. And then you see all these others are additions to our our export portfolio ranging in in size. Some of these are domestic as well, but, Marlisa, I mentioned Valdo with the Bola family. That started, actually, the beginning of this year. French Blue from Bordeaux started in early twenty twenty. We have a a relationship in Puliac, with Phonbide, small, about three thousand bottles or so. Western Wilder is actually from the, California Oregon, Washington area of the United States, and these are actually in cans. So we're really diversifying what we're offering. So with that, I'll sit down and we get into the Q and A. So, Peter, why did your family decide to go into the import business? And, which country are you focusing in importing? You started with France, now you have Italy, you have different, wine producing area that, you are interested in. Yeah. So first of all, why did we get into importing? It's really a reflection of the US market. The US market is, I think, some of you, or many of you know, is a three tier system where we have to go through distributors. Now in recent decades, that distribution network has consolidated considerably. As an example, thirty years ago, in the San Francisco Bay Area in California, we had about fifteen or sixteen distributors covering this relatively small geographic area. Today, we have one distributor representing us in the entire state of California. That's just one example. So significant consolidation, in the distributor. So a distributor is representing more and more wineries, not only domestic, but import wineries as well. And, we need to maintain a certain mass, a certain presence in that distributor. And we've had that for years, but we want to expand that because There's also consolidation on the the larger size wineries on the supplier side. So the distributors are getting bigger, more consolidated. The bigger wineries are getting bigger within that distributor network. Yielding more power. So we need to have more mass in the distribution network, is a very important reason for us going into the import business. There's a couple other factors, as well. Very important factors. And I oh, let me call these diversification factors. Two reasons for diversification. One is diversification. I think, really, as it relates to climate change. As different areas evolve their wine styles with climate change, threats that come about, we suffered in the year, twenty twenty, significant fires in Napa Valley. So we just, as our winery and we own all of our own vineyards, all of our own grapes, we lost fifty percent of that harvest due to smoke taint, and something you can't predict, something you can't plan for. So diversification from different supply and grapes wines from different areas of the world is important there. Divcification with respect to the consumer the consumers, are looking for other wine styles, other varieties. They're experimenting. They're experiencing way outside of the wine industry, but within the wine industry, we wanna have a more diverse offering, within our portfolio. So those are kind of the three main reasons. So the, importing, business is becoming more and more competitive. And, for a wine producer, it's very difficult to get the attention of the distributor. So do you have, your own Salesforce that help and support the distributors? Yeah. That's a very important point. There. We have developed over eighty years a full distribution network relationship throughout all fifty states, in the United States, dominated by Southern Glacier one in spirits, because they are the most dominant distributor in the United States. We also have r n d c, the second, dominant distributor in the United States, and a series of others in some of the other states, but principally, with those, states there. So and we also have a full Salesforce distributed throughout the United States, that are our employees that both call on, manage the distributors, and also call on accounts, restaurants, and retail stores throughout the major markets in the United States. And, talking about the three tier system, you know, that this make the American market, the most competitive one for wine producer. So there are some producers that decide to go through importer, distributor, and retail, and some producer that, decide to go directly to the distributors. What is your feeling about that? What do you think that, which which choice is better? Yeah. There's many choices, many ways to get in the the US market. Some have more opportunities than others. I do think that, for distribution. I mean, the I think there's two ways to look at it, and this is being very generalized. You can get very small, very specific, in small geographic areas and just focus there. But that, each geographic area, whether it's New York or Miami, or or Texas, you kinda have to manage those as separate entities, and you really need to go to the smaller distributors to have a presence in that distributor, but that does limit one's exposure, in the marketplace. From our perspective, because we have a relationship, a very strong relationship with our distributors, and they're eager to take on more offerings that we may bring to the table for them. So it's much easier for us to import a wine and bring it into the Southern Glacier's distribution network. Before we embarked on this program a number of years ago, we sat down with the the owner's executives of Southern Glacier and and posed this idea of our increasing, our distribution with with, imported wines, and they are very excited about it. And, do you think that in the future, the market will go back to some small regional distributors, or we will be in the hand of this big giant that have, big books, and very difficult to have the focus, for, for Yeah. I think, we've already seen some of the development in the sense that the big are getting bigger. And it's much more difficult for smaller wineries to get into that large distribution network. So with that, smaller distributors have started to pop up in key markets around the United States. So, which I think is good. It gives the opportunity for smaller wineries to have an introduction, but it does it's highly restrictive on where they where they, are represented geographically and also where they're selling to within that market. They have a much more limited exposure, to restaurants and retail stores But it is it is an avenue for smaller producers. So I think you see the market. Let's call it bifurcating. The small distributors, and then you got the big ones. And, what do you think makes a successful supplier importer business relationship? So, to be successful, I think, in any partnership is, open communications, and, understanding of both parties and expectation that is shared between both parties I'm not gonna mark it by, you know, are the sales up or down? If if they if if the expectation, it's a challenging market and sales may be down. If both parties go into that year, understanding that may be an outcome and communicate that in advance. I think that's good when the, expectations are misunderstood or misaligned is when you have difficulties. So it's very important to have the same vision, to have the same, approach to the business, and to share the values. Yeah. Exactly. The the same vision, but very, specifically the values. We have a some of our values are based around sustainability. That's been mentioned many times in the conference, today, but that's an important thing for us as sustainability. We like, values that that are shared with us. And some of those values, I was referring to those as passion, which has been mentioned again multiple times at the conference, but I went to another seminar unrelated to the wine business but it it's it I think it's more grit. And what I mean by that is passion and perseverance because this business, I think as many of you know, and we've been at for eighty years, you know, four generations, you there's you have to pursue this thing. It's not e. There's time many times when it's not easy, and you have to be able to get through that, though, those times. And, what is for a wine producer, the biggest challenge when starting the the import exporting to the US? So, let me address that from our perspective representing, a potential, well, a new, a new import business. I think there's there's It's just in a logistical challenge. If it's an existing, and we've experienced this several times, if it's an existing brand that has some level of footprint or import into the United States, understanding the inventory position where their product is sold currently being sold or it has been sold in the United States and the various markets. The pricing structure in the various markets We've actually been quite surprised in in that the the supplier winery, the winery from Italy or from from France or wherever it might be. Has very little knowledge of this detailed information, which, you know, we consider very important. And, you know, we take the approach of being more transparent and engaged with our partners so they understand you know, you know, where the inventory is, where the wines are being sold, the pricing. So, and so it that's a challenge in the in the transition. It takes quite some time to move through those inventories and figure out where they are and, you know, what vintages they are. It's just a logistical transitional problem. And, sometime business relationship between, importer and the producer fail. Do you have an idea what is the main reason why this thing happen because, the value is not, share the same, in the same way. So far, we are relatively new in the import business starting in in twenty twenty. So we have not actually crossed that, that path yet. We hope we don't, but, it it probably, you know, maybe inevitable we'll see. But I I do think and this is something we strive for. I think it's it's a lack or a breakdown in communication, and that's a common theme I'll be saying here. Communication and expectation between the two parties. It's a partnership, and you have to understand, you know, the expectations. Both parties have to be unified on that. And when they diverge from that, that I think is when you get problems, divergent cannot reconcile. That's when you get these problems. So it's very important to have a very good communication before and to have the expectation that, is agreed between the parties. Yeah. That's that's very important to have that. And the other thing we look for is for wineries, suppliers to be come over, work with us, work in the US market. So they have a, and it was mentioned, I think, earlier, in one of the presentations about ambassadors. So it's a form of, of how they get knowledge of, of the marketplace. In addition to sitting down on regular quarterly meetings, things like that. And I think you mentioned earlier We started our formal relationship, importing Valdo for the Bola family starting January of this year. The son Matteo Bola actually lives in, Miami, and works the US market, for us. So he's dedicated, for us, but he's also a direct link to the family. He is family. So, that's I think an extreme example of of coming over the United States and working with it. We don't expect that, but, it it's an interesting relationship we have with Ebola's. So for a wine producer, I remember before the COVID, it was, very common for me, but for many others to come to the US, I don't know, five, six, seven times per year to promote the property, to promote the wine, to talk with the trade, but also with the consumer. After the COVID, with the COVID, we experience that the conference call can also be effective. Do you think that it's important to come back, again, and to have this relationship with final consumers, with collectors, with the retailers. Oh, absolutely. I think face to face is essential that does not mean we've stopped the Zoom meetings. We still do, Zoom meetings as well, but I think that face to face interaction, it's difficult to replace that. In fact, as we embark on new partnerships here in in Italy. My wife and I spent a couple weeks here, some months ago, visiting, prospective, partners and we did that because we wanted a face to face interaction, sit down over wine, break bread, see the facilities, see the passion behind it. And so I yes. Those are coming back. And, I know that in your, property, you have a beautiful hospitality business. Do you think that, for an Italian wine producer, is also very important to develop this part and to invite, customers, of course, from all over the world, but, especially the Americans that are big travelers. Yeah. I think, well, us and Napa Valley, I think we have a few years head start on the the the visitors coming. It's it's quite a vibrant, business for us. And for many of the people, many of the wineries in Napa Valley. I see our experience here in Italy in recent visits in recent years is there are parts of Italy starting to embrace this bringing customers in. And, you know, I think, you know, I know that the Italian market is is a very, important destination for American travelers. And food and wine are, I think, integral to most of those visits. So I do think the, you know, that is an important aspect, but I think, in some more of the remote areas, there's still more infrastructure to be put in because it in some areas, as gorgeous as they are, takes more effort to to visit. I know that you're coming from Sicily because your son got married there. And there was this movie that recently came out that attracted many Americans. So I think that each region should develop some interesting thing to have more and more visitors because my opinion is that when they come to our wineries, they they come as a consumer. And when they go away, they are friends, and so it's important to develop this part of the business in the company. Yeah. And I think you bring up a very good point there it's not just a tasting. What we in Napa Valley have evolved to and what you're doing as well is an experience. So visitors come in They don't walk up to the bar and get two glasses or three glasses of wine, try them, and then leave. It's Napa Valley is pretty much, and it was going this direction, and then COVID COVID forced at this direction. But it's pretty much, mostly, by appointment only. And when you come to NAFTA Valley to a winery, you make your appointment, you know, you can expect to spend an hour, two hours there with a much more in-depth, experience typically often, you know, one on one with someone from the winery. And that's what, people are looking for, especially the younger people are looking for a very authentic experience. And I know the wine regions of Italy can definitely deliver that. When you can, do you take personal care of some customers? Oh, sometimes from time to time. We were covering before the subject, of the, new consumer. So, the younger generation. You have a very historical winery. Alegrene is also a historical winery. And, we have, our consumers. We have, our, collectors that every year purchase our wines, But one of the big question is how can we approach the new generation of consumers in your family, in your company, in your market, do you have a suggestion to all of us? I wish I did have a complete, suggestion on that. That that's one that the industry is, struggling with. But in our portfolio, we have Westin Wilder, which is in cans, which does skew more towards the the younger group. French blue. It's kind of a fun Bordeaux Rosay and a Bordeaux White. Now we have a Bordeaux red in there, moderately, priced, but it's a fun, easy, pronounceable name. So that that kind of draws in the younger generation as well. There's no silver bullet. No one thing we can do. I think it's a it's many things like these two examples I just threw out that that many wineries have to do to entice the younger generation in, and we're really struggling with, the, many options that they have for adult beverages. And Danny this morning, went through that have a very good example of that is is the choices they have today are far far more than we had a few decades ago. And they're experimenting with with all these choices. So we need to figure out how to, you know, put the wines back into their experimenting portfolio. I think part of it is the examples I did here. I think also some of the interesting, varieties from Italy that have been here for, well, generations, yet they may be new to some of these more, younger consumers who are looking for something interesting, something different. Okay. I don't know if, from the audience, there are some questions for Peter. So my question is, what does a very small boutique winery here in Italy do that's new, to break into the American market. And I understand this is a seminar about importer relations. But if we were to import wine, we we, my wife and I have a new winery in Alto Kimote. We're from we're from Connecticut in the States. So what do we do to break into the market, get wines exported, and have an importer and a distributor pay attention to us when we're only gonna produce ten to fifteen thousand bottles a year. Yes. That that's a big, big challenge. I think as I kind of alluded to earlier, first of all, you have to kinda carve out your your niche. What and as mentioned in one of the seminars earlier, what is your differentiation point? Versus, some of the other wineries in your region. What's the story behind it? What's legacy, things like that? What really differentiates you? What's the authenticity there that will separate you that, from the others in both the consumers and also the buyers of, you know, I'm sure you'd probably be more fine wine stores and and, fine restaurants as well. So differentiation is important. I think that's the first thing you wanna do is define that that that selling story there. And then from there, you seek out, I mean, you know, you know, we we have kind of a ready made distribution system, but you can seek out specific markets, that through research, you think are more, have more opportunities for your wine, for the style of wine. Obviously, I would think, you know, where there's heavy Italian concentrations, Italian New York would be an obvious one, Chicago would be another one, others in the United States. And then probably seek out a a small distributor that you have a bigger presence in but be forewarned that smaller distributors, can be more financially precarious. So just use that, you know, you have to look at their history, their portfolio, their success, so on and so forth, to get a comfort from that, that region, you know, that aspect. But I think with small production, you know, cherry picking some key markets that have the potential, and then seeking out unique importers slash distributors in those markets. So Peter, I don't want to flood your inbox. It's DB. Right here. Okay. But I'm assuming you're going to expand your portfolio because you've just started as an importer. Is that correct? Yes. So what in the perfect world? What kind of Italian wine producers are you looking for? So we are looking for, Italian wine producers that share, share our passion, our grit, as I talked about earlier, have a legacy, have a, something unique in their area. Quality wine as a given. Yeah. We need that, in there. But a family is that's truly engaged like our family is, like the Ebola family is. And then we're also looking for complimentary wines to our portfolio. So with representation around various parts of Italy, because Italy has a myriad of wine growing areas to represent. So looking for kind of a broader broader spectrum throughout Italy. When when, I mentioned my wife and I went to or traveled Italy, we were in, Sisley, Marque, Tuscany, Pulia, Dimonte in a, you know, week or so. I mean So I'm looking So as an example Yeah. I'm assuming you're interested in those market as well. Yes. Yes. Okay. What about quantity? Like, because, I mean, of course, Valdde, it's they produce a large quantity in terms of volume. Are you looking for other producers who are fairly large in size? This this really looking at the the spectrum. ValDA was interesting because, prosaico, their family history is parallels ours. But the Preseco is obviously, very explosive in the United States. So that's, you know, very, very interesting. Generally, we're looking for price points that are in the upper teens and and up. Volume wise, we really don't have the constraints on volume size. As an example, the Puliac property is about three thousand bottles. And so in our the distribution network and let me talk to Southern Glacier principally because they represent about sixty percent, a little over sixty percent of our sales in the United in the United States that excludes direct to consumer. They have multiple divisions within a given state or a given market. And the smaller wines will most likely find their way into their their elite division. They have different names, but essentially the elite, division, whereas if it's a larger production Valdo is an example of of a larger production they would go in the more commercial book or sales team. Okay. Great. Are there any other questions? Okay. You're pretty close. So, regarding the wines, in cans, like, for the brand, West Wilder, I suppose there are wines that, follow more, more, modern, trends like the the decreasing of carbon footprint. So for those type of wines and cans, do you, what I'd like to know if, if you consider also the buying of, bulk wines that, for the transport, they decrease the carbon footprint. So do you, do you just consider, portrait wines, or do you consider also possibility to to to import, bulk wines Currently, everything is imported bottled. However, I I push our management team that as when when you get to the volume and the opportunity looks looks good, we have a very modern, Italian bottling line that, does an exceptionally good job of of getting the wine into the bottle, you know, minimal oxygen pickup. And so it's an exceptional bottling line. And I'm pushing our team to get to the point where we can start to bring in, wine and bladders in bulk and do the bottling at the winery. I think for two reasons, one, quality and carbon footprint as well. Okay. Are there any other dire questions? Okay. Great. We're gonna wrap it up. Let's give it up for Peter Mondavi and also Marilisa Allegarini. Listen to the Italian wine podcast wherever you get your podcasts. We're on SoundCloud, Apple Podcasts, Spotify, email, IFM, and more. Don't forget to subscribe and rate the show If you enjoy listening, please consider donating through Italian wine podcast dot com. Any amount helps cover equipment, production, and publication costs. Until next time, chi qin.