In a cruel twist of fate, the success of the premium wine industry is bringing about the downfall of one of Napa Valley’s premier wineries – Robert Mondavi. Now, don’t get me wrong, the company will survive as a publicly traded, successful business. But, paradoxically, the only way for it to survive as a publicly traded business is for Robert Mondavi, the company, to dismantle what Robert Mondavi, the man, built.
At 91 years of age, Robert Mondavi is considered a global emissary of American food and wine. When he started his winery his vision for his company was to create wines in California that belong in the company of the great wines of the world. Particularly daring because at the time California was known for mass produced or “jug” wines. Today, looking at some of the classics from the Mondavi vineyard itself as well as creating brands such as Opus One its easy to say that he succeeded.
The rapid growth of the CA wine industry and the June 1993 IPO of Robert Mondavi, the company, solidified Mondavi and his company as a pillar of Napa Valley wines.
Recent downturns in business, however, are about to change everything. Mondavi is becoming a victim of its, and his, own success. After a series of management upheavals, the Mondavi family today has little control over the company and the company’s drive to satisfy the public markets’ need for earnings is driving the Mondavi the company to go against the principles of Mondavi the man. Mondavi the company has decided to sell its premium wine assets and focus on the exact thing that Mondavi the man created the business to move away from – “affordable” low-end wines. Mondavi the company will soon be focused on competition with “Two-buck Chuck” instead of finer wines from Bordeux and Burgundy.
As a business, going to lower end wines where the prices and volumes are more stable and you can deliver reliable, predictable earnings to Wall Street is a smart move.
As a lover of fine wines and a native of Northern California, this is a horrible turn of events demonstrating that it may not be possible to satisfy big business requirements using a fine wine passion as you business model.