By Colby Smith

Michael: I love what I do, so 90% of me is my business.

My Grandfather unfortunately passed away in 1959 before Napa Valley started its renaissance, but he had the vision. In 1958 when I was 15 years old he and I were out walking in the vineyard. He picked up a handful of what I thought was dirt. And he said, “Do you know what this is?” and I said, “Its dirt.”  And he said no its soil.” And he put it right under my nose and he said, “Smell. Its clean, its, dusty, its healthy.” He said, “You know what your job is when you grow up?” And I said, “Yeah, its to make wine.” And he said “Your most important job when you grow up is to have this soil in healthier condition when its passed to your children than when you received it from your father or your Uncle.” He didn’t know Organic or Biodynamic farming. He just knew that if you respected the soil and cared for the soil that Mother Nature would be good to you. To me that was one of the real foundations for the decisions I make.

In the 60’s when we were starting the Robert Mondavi Winery, I had forgotten about that and we all had become “chemical farmers”. One day I remembered the walk in the vineyard with Grandfather. I told Robert the story of that day in the vineyards and that’s when we decided to wean away from chemical farming and get to natural farming and care about the health of the soil.

When we founded Folio Fine Wine Partners 7 yrs ago I again wanted to use this foundation.

Now Folio has really become two businesses. After going through three years of “debates” and negotiations with Constellation we’ve finally come to the agreement that we can now use our family names in business, Isabelle’s and Rob Mondavi, Jr. and mine for the Michael Mondavi Family Estate, which represents our Napa, California wines, consumer brand and image.

The second, “Folio Fine Wine Partners” (After Port-folio), is our wholesale trade business representing 22 other families in Italy, Spain, Austria, Germany, Argentina. We began exporting 2 years ago to the UK, Germany Switzerland, Austria, Benelux Countries, China, Korea, Japan and Panama (which is fun because my wife’s family is from Panama). It was important to reestablish our family name and be respected here to give strength to the brand when we started exporting our Mondavi wines.

Asia would like to buy 100% of M cab. Only 900 cases. But we can’t do that. We can’t sell to 1 emerging market. We need to be fair to those who supported us as we grew, sell to the right areas and have balance.

75% of the wineries in Napa are smaller than 1,000 cases. 95% are still family owned.

I’m convinced that the best wines in the world, whether it’s Napa, Italy France, wherever, are going to be produced by family owned companies who have a heritage and passion to produce great wine. Large corporations will make very good wines. They’ll have good economy of scale. But their wines will not compare qualitatively or stylistically to the individual family wines. And so one of the objectives with Folio is to only deal with family owned, family run wineries because first of all you look a family person in the eye, you have an understanding, you have a handshake. It’s stronger than any contract because there’s the integrity and pride of that relationship. We only deal with family owned family run wineries. We won’t deal with family owned, absentee management, because it’s the passion that the family brings to a winery to the vineyard that relates them to the soil. And they want to build it for their children and their grandchildren. Not just trying to get a quarterly return. That makes a big difference in the wine.

Colby: What do you think will happen for the next generation of family winemakers?

Michael: There are huge opportunities for family owned boutique wineries. And there are huge problems if you don’t do it the correct way. The opportunity is, where could you have a better life than to life in the wine country wherever around the world, beautiful climate, fresh air, healthy environment, you can grow beautiful gardens and it’s just a great place to grow, to live and to raise families.

However, with the consolidation of everything that takes place in the world today, whether it’s automobile companies hotels restaurants, distribution networks for wines, etc. They’re all consolidating. They’re all getting bigger. How do we, a small family owned winery in Napa, get the attention of the distributor in New York or Dallas or Chicago. They have thousands of other products and they have these big companies that come in and say, “You have to take care of my 20 different brands of wine. Don’t worry about that little guy from Napa.”

So that was the thinking that caused me to create Folio Wine Partners. Because if I go to the distributor or a hotel, like the Hilton Hotel, Hyatt hotel and say I’ve got this wonderful Oberon cab, or this wonderful M by Michael Mondavi. And they say okay, how much do you have? I tell them the limited production, and they’re thinking how to I get out of this meeting. There’s not enough if I gave them everything I produce to make them happy. But if I can go to that same person, whether it’s a wholesaler or a restauranteur, or hotelier or wine shop owner and say I’m representing 23 families and wines that are the best of the regions, from California, Napa, the Santa Maria area, and in Italy, Tuscany, Sicily, from the Veneto, from Verona, Umbria, some of the best wines there. Then go do the same thing in Spain, Germany, Austria, then we have a number of wines that will compliment their wine shop, or will compliment their wine list.

We now are the scale that we can focus on individual style and wines and families. And our job is to represent the family and their personality and bring the family members to the customers in an efficient way. And when we do that the sales person has more information about that family and that wine to sell to their customer. We the small family businesses are independent and that gives us our strength, however our marketing and sales strength is in not being independent but interdependent with other families’ wineries so you can market and sell it. So I think that small groups of wineries having their diverse style, different heritage, different personalities working together to market and sell their wines is amazing.

It goes back to “The flying Circus” in the early 70’s. We would fly as a group of 4 to 6 winery owners, wine makers covering 4 cities a week. And together we would have a luncheon with the local media. Together we would host a wine tasting for the trade, waiters, waitresses, staff of the retail stores. And in the evening we would try to work at some art gallery, or museum and together host a charity fundraiser for consumers. And we did those three separate events in these three or four cities.

NVV is doing this kind of thing now.  And I think in addition, particularly wineries who are friends with each other there’s tremendous synergy. If I go to a market, or another individual winemaker goes to a market and holds a tasting it’s kind of “ho hum”. There are over 300 winemaker visits a year in New York City. You get tremendous RSVP’s and you get 40 to 50% no shows because they’re so jaded. However, if you have half a dozen key winemakers, they’re going to go,  “Whoa this is worth my time.”

Colby: Would there be value when you are doing these trips to etch out time to do a tasting for the local Concierges?

Michael: Not only would it be good. If we didn’t we would be foolish. They become the teachers and the communicators to others. By doing that we’re teaching the teachers. It’s extremely important.  Especially in the wine country.

If the Concierges know the different personalities then in their conversations with the guests they’d be able to say, “I think you’d have a ball if you went to see the Heitz winery, or Sterling.

Colby: Downstairs the Family has a wonderful selection of not only their Napa Wines, but the imports from Tuscany, Piedmonte, Spain, Alboreno, Sicily.

Michael: A lot of our visitors know about European wines. It is important to know how California wines compare to a Burgundy, Bordeau, Tuscan. One of the things I insisted on was that all of our marketing dept, sales people visit each of the properties we represent in Italy. They’ve met the people. They’ve walked the vineyards. They’ve tasted barrel samples. So they have a personal perspective and talk about the wines from their heart. I think it’s terrific that CANVAS is proactively increasing the professionalism of the Concierge through education. We would love to host tastings and seminars for your Concierges.

I had a Skype wine tasting this morning with sales reps from Boston with M Cabernet 2007, Oso Vineyard Emblem, both 100% cabernet and very similar winemaking. The wines were totally different stylistically because of the soil in which they were grown. And that was the purpose, to educate them about the difference, about a soil that is deep full of clay and veluvial matter, vs rocky, volcanic, no organic matter.

Pricing on most wines has a direct relationship from the cost of the vineyard and the price of the grapes. The other factor that goes into it is what I call the “snob appeal”, the sizzle. If there’s a big demand for the wine the price will go up proportionately. It doesn’t cost Chateau Mouton Rothchild $100 to make a bottle of wine, but they’re selling it for $700 a bottle. To me, wine is still a beverage.

If the vanity wines have a good following nationally & internationally even in this recession they’re doing well, but they’re the exception. If it’s a wine that doesn’t have the foundation in the consumer’s and the trade’s mind they’re going to say, “I’m going to wait 6 months and buy it for $100 less a case. “

The problem we have in representing a lot of the different producers is that the restaurant says I was just buying these at ½ price why should I buy from you at half price? So we say, “This has a better continuity of quality and demand and if all you do is buy wines that are being closed out you’re not going to please your customer long term. So buy less, but keep it on the wine list. So we’re not competing with people lowering prices. We’re saying to the store owner or restaurant, “Take advantage of these deals, but then with your higher imaged wines, make sure that you still offer those to your customers. And their not doing bad. Restaurants only make 300% on those and 600% on the ones they buy at ½ price.

Take Chiarello at Bottega for example. Instead of doing the normal 300% mark up he did 1.5. So you could buy Opus as an example at his restaurant for about ½ the price you’d pay at the French Laundry. Same exact wine. People would look at his restaurant and say, “Wow, I could buy this here” and have dinner for free, compared to the price somewhere else. So Michael was able to trade people up even though his percentage was less his dollars per table went up.

In today’s economy the consumers are aware of pricing. They know what it costs retail. And you’re charging them 2 ½ to three times more retail, and they’re frustrated. So why not do what Michael or Cindy Pawlcyn are doing. One person I know is doing this, wines up to $30 a bottle suggested retail pricing, they will mark up 2 ½ times. Wines from $30 to $60 they mark up 2 times, and wines over $75 they mark up 1 ½  times. So for the more expensive wines. They’re still getting more dollars per customer. They understand a customer can only drink so much. Do you want to put $5 dollar an ounce in their tummy or do you want to put $15 an ounce in their tummy. You don’t pay your employees in percentage, you don’t pay your rent in percentage you pay in dollars. You get higher net dollars from your chair. And the property shows better net results.

Colby: Outside of your business and family what are your other interests?

Michael: It is true, find something you like to do and you’ll never work a day in your life. In addition, I’m trying to learn to play a little golf. What I like about golf is the camaraderie with the two or three others that you play with, time to talk with each other. I enjoy fly fishing. And I try to swim periodically and I try to get just good daily exercise. We’re in a business where it would be easy to weigh 300 lbs. Now we really focus on portion control. In a restaurant I eat about half of what’s on my plate and take the rest home. Whatever I bring home I have for breakfast the next day and it’s really kind of fun. I had Petrale sole and some rice for breakfast today. I do it because I feel better, not as sluggish as when I’m at a higher weight. My father’s side of the family all lived fairly long. I love Dean Martin’s comment, “If I’d known I was gonna live this long I’d have taken better care of myself.” I plan on being here for another 30 years or so.  I’m trying to focus on “quality time remaining”.  Not how long will we live, but how long will we live where we have enough energy and good health to do the things we want to do.

Colby: What are the important things you’ve learned along the way?

1)    Don’t believe your own press
2)    Always maintain your integrity
3)    Don’t expect to get credit for what you do or believe you do, and that’s okay.

Colby: What don’t most people know about you?

Michael: I was the one who created Woodbridge. We were making bulk wine for three very large wine companies (Almonette, Paul Mason, Geyser Peak) and that was about 60% of our volume. And we were making the Robert Mondavi wine. We were just struggling in ’72, ‘73 to pay our bills. Geyser Peak winery, in November cancelled a written contract. So we had 200,000 gallons beautiful Napa Chardonnay and Sauvignon Blanc that we had made for them. We built it into our cash flow and we were going to go broke within the next six to nine months if we weren’t able to sell that. I thought about how my father and uncle had Charles Krug. CK was their jug wines. It paid the bills and Charles Krug was their higher end wine and it built their image and stature. So in 1973 the largest single container of wine was a ½ gallon of wine with a handle and a screw cap. And it was Burgundy and Chablis. I said we’ve got to upgrade that. So we got a magnum and I adjusted the foil and label slightly and put red table wine or white table wine. We started selling that in February, and from February to December we sold 125,000 cases that first year, and then went to a quarter of a million the next year. And five years later we bought the Woodbridge winery and then we converted the “Robert Mondavi red” and “Robert Mondavi white” wine to Woodbridge by Robert Mondavi which helped differentiate it from the Mondavi brand and preserve the Robert  status. When we sold the company we were selling about 10 million cases of Woodbridge.

And most people don’t know that I was the winemaker at Robert Mondavi from 1966 through the mid ’70’s. People always look at me as the marketer/businessman, but I had the luxury of making the first wines that gave us our reputation. And now I get to do that again. I’m the winemaker for the “M” cabernet.  (925 cases to maintain the quality.) That’s my baby. Rob and Tony Coltran, the winemaker I’ve worked with for 30 years are the winemakers on the other wines.

Colby: What has been most gratifying about your life.

Michael: Working with my children and having them major partners in my company. That’s a joy. Followed by the extended family. I mentioned Tony Coltrain. He went to work for me at Robert Mondavi when my son, Rob, was three years old. And when we sold Robert Mondavi and started our new company I asked Rob, who was in his mid 30’s and had great experience, to run the vineyards and the winery of our new company. He said, “If we can get my mentor and teacher, Tony, to join us I’ll do it.” So we called Tony and he said, “What time do I start.” It’s the people you work with, that’s what’s rewarding. It’s the people who helped build the businesses, watching them grow like a rosebud and develop and become their own person and then seeing them reflected in their children. To me that’s the exciting part. And this business gives us that opportunity.

My father Robert had three children, myself, my sister and my brother in that order. My Uncle Peter has three children, Peter and Marc, Siena.

Now that we’re not in business together we’re better brothers and sisters. It’s a joy to be their brother and not their business partner. My son Rob and Angelina, who is Mark’s daughter and a very good winemaker, are making wine together, about 150 to 200 cases. It’s called Forth Leaf for the forth generation. It’s neat, after my father and uncle had their big battle and lawsuit, to see their grandchildren working together on a project that they started just because they liked each other and wanted to do it.

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