Starting a Winery with $0

In the early 2000s, Ryan Carr, an ASU alum who studied graphic design and had no money and no wine experience decided he wanted to learn how to make wine and start a company. He started by working with wine makers in the Santa Barbara area and began to learn the trade well enough to begin making his own wines in his garage. He made enough to sell 10 cases to friends who immediately took to the wines and wanted more. Fueled by the success of his first go attempt, Ryan began to scale up his production, trading his time working for anther winery for the space and equipment to produce his own commercial wine. Eventually, he continued to scale to the point of owning his own wine tasting room in downtown Santa Barbara and starting his own vineyard management company.

Here’s the success: Ryan owns hundreds of barrels worth of wine all housed in his own tasting room and has received some of the highest honors and best commercial success for his pinots in the Santa Barbara area.

Here’s what makes this even more incredible: he started from nothing and still doesn’t own any vineyards.

What?! I thought you had to have a fortune to start a winery?

This summer I had the opportunity to visit Carr Winery’s tasting room in downtown Santa Barbara and learned about Ryan from his wife (who runs the tasting room). Ryan’s story fascinated me because it runs so antithetical to the oft cited story of the multi millionaire who wanted an outlet to spend all his/her money and so started a winery.

Ryan’s winery has been profitable from the start and he’s grown more or less just on the back of his compounding business success in wine making. I love this story because it’s a great example of how hard work, determination to learn, and resourcefulness enabled an entrepreneur to buck the traditional model of winemaking (buying and owning a vineyard before making wine) and found success along the way.

Maybe this could be a new case for this class?

Biodynamics and one woman

When I was in cooking school in Ireland, I attended a dinner hosted in honor of Anne-Claude Leflaive, named in 2006 as the best white wine maker in the world. Leflaive is a legend in the wine world. Her family estate is in Puligny-Montrachet, Burgundy, and her land has a Grand Cru appellation, meaning that it is some on the most coveted terroir in the world. She also pioneered biodynamic practices in Burgundy when no one else in the old guard understood its value.

In Ireland, there's a great tradition of folk music after dinner, and that's exactly what we did. We all clustered into the drawing room to hear old songs about the emerald isle, or the Irish bandit whose lover betrayed him. My brother, though American with no Irish heritage, had to play a folk song for the group - that's just the kind of guy he is. But Anne-Claude became enamored of him on the spot. Suddenly, we had plans to dine with her the next night.

When we sat down for dinner, all of us nervous to impress her, the sommelier handed the wine list to my dad. I've never seen him so panicked. I mean, how do you pick wine for the best winemaker in the world?? He settled on an Albarino.

Throughout the course of that conversation, Anne-Claude told us about the meaning of her biodynamic practices. Yes, she believed that the practices improved the quality of her wine. She believed that they concentrated the flavor of her wines. But, to focus purely on quality misses the point of her life's work. She viewed herself as a steward on the land. A temporary inhabitant of a long line of Leflaives whose responsibility it was to make her land more resilient. Her practices were driven by a respect for nature and for the environment. I feel compelled to buy biodynamic wines because I want to support that stewardship.

At the end of dinner, I asked if I could come to her vineyard for the harvest. I'll never forget her response. She said, "yes, of course, but be aware that you'll be shitting in a bucket. We'll use your waste to compost."

I never ended up going, and it's one of my biggest regrets. Anne-Claude passed away a few years ago. The world lost one of the best winemakers, and one of the few top women winemakers.

Does Hanging Deer Bladders Stuffed with Yarrow Flowers in your Vineyard Improve the Taste of your Wine?

Last class, Professor Rapp made short reference to the winemaking "witchcraft" of biodynamic agriculture. While she teased some of the bizarre practices—which include stuffing severed cow horns with "the manure of lactating bovines"—involved in biodynamic winemaking, I believe it may have undersold what is surely one of the most baffling widely-practiced agricultural techniques in the modern world.

After visiting yet another vineyard that espoused biodynamic principles on our Argentina/Chile GST focused on the New World wine industry, I became interested in learning more about the practice, which had previously been described to me as "beyond organic" or "the Cadillac of organic farming".

Suffice it to say, a few short minutes of Googling will surface enough mysticism to bring even the most pious astrologer to his knees.

In addition to the above, so-called biodynamic "preparations" include: "stuffing chamomile blossoms in to the small intestines of cattle then burying in humus-rich soil in the fall and digging up in the spring", "placing chopped oak bark inside the skull of a domesticated animal surrounded by peat and burying in the ground where rain water flows", and packing "deer bladders with yarrow flowers and then hang[ing] them amid the vines". Each preparation is to be properly "activated" by a stirring process known as "dynamization" and applied to the land with due care to the position and influence of celestial bodies.

SF Weekly writer Joe Eskenazi recalls his visit to a biodynamic vineyarrd thusly, "Luke and Sue sit beneath a tree, scooping up handfuls of ripe manure and packing it tightly into cows' horns. Nearby sit four "sausages" of chamomile wrapped in cow intestines. Both will be buried around the fall equinox and unearthed on the spring equinox after having amassed "etheric and astral forces" – for which the horn serves as an amplifier." He notes that both Luke and Sue "believe the well-being of this winery is controlled by cosmic, supernatural powers that descend from the distant heavens and percolate up from the depths of the Earth."

Biodynamic agriculture was divined by an Austrian soothsayer named Rudolf Steiner, who Eskenazi reports was "a self-professed clairvoyant and occult philosopher" that "conceived of Biodynamics during his telepathic visits to the realm of spirits he claimed existed 'behind' our material world."

Indeed, science has not been kind to Steiner's preparations.

Linda Chalker-Scott, a professor at Washington State University, notes that many today associate biodynamic agriculture with organic practices. That is, biodynamic is simply organic farming with a bit of sophistry added on top. However, Steiner himself had nothing to do with the inclusion of standard organic practices in biodynamic agriculture.

This has served to muddy the scientific waters, as some of the studies that proponents of biodynamic practices have pointed to merely compare conventional to biodynamic farming, without controlling for the scientifically verified effects of organic farming. However, Chalker-Scott concludes, "when researchers have compared biodynamic, conventional, and organic farms... by and large there are no differences between the biodynamic and the organic farms".

And, although Professor Rapp mentioned a study (perhaps this one?) showing that biodynamic wines performed better in a blind taste test, one wonders whether the control group included non-biodynamic organic vineyards. Even then, perhaps we should wonder whether this is a matter of causation or correlation. That is, does jumping through all of the biodynamic hoops simply lead one to take better care of your vineyard, even if its scientific benefits are dubious?

For those with more interest, Katherine Cole has a book called "Voodoo Vitners: Oregon's Astonishing Biodynamic Winegrowers".

Sources:
http://archive.fortune.com/magazines/fortune/fortune_archive/2004/08/23/379392/index.htm
https://drinkwhatyoulike.wordpress.com/2011/12/31/cow-horns-manure-mysticism-planetary-alignment-and-biodynamic-viticulture-in-virginia-and-other-eastern-wine-regions/
https://civileats.com/2011/05/03/voodoo-vintners-oregons-astonishing-biodynamic-winegrowers/
https://archives.sfweekly.com/sanfrancisco/voodoo-on-the-vine/Content?oid=2170162&storyPage=2

Experience or Convenience?

      Throughout this course, I have been surprised by the number of online wine players that have been shared on the screen such as WineDirect and Wine.com. Despite the growth in this space, I still find myself thinking brick & mortar for my own personal wine purchases, however maybe I am just old school. For me, wine has always been an activity of discovery when dealing with lower priced wines, but when thinking about a more expensive purchase, I exclusively rely on a few trusted people for direction. For this reason, I was not surprised to read in the "Drowning in the Wine Lake" reading that the attribute ranked second as most valuable in wine choice was good customer service. It also stated that "at the specialist shop, having a staff with good wine knowledge was rated more important than a good selection of higher priced wines, implying that even more knowledgeable consumers want a salesman that can be trusted with making wine recommendations." So where does ecommerce come into play here and why would someone chose to forego the experience of wine selection and choice to purchase online? I think one of the key differentiators is knowledge and education in this space. There is no way to know what the wine inside the bottle will taste like without expert knowledge of the region, the varietal and perhaps even simply having tasted it before. The salesperson is necessary to bridge this gap between the product and the consumer. Without this expert knowledge, people are most likely to rely on queues such as a familiar brand name, an eye catching label or perhaps a brand name that triggers a recollection. Another thing to note is the differentiation of selection that consumers can find online vs. in store. Growth of online DTC has grown over 60% in the past several years, but when looking at lower priced wines under $15, that growth is much smaller. Perhaps, online consumers are falling more into a category of wine enthusiasts that enjoy the search for a delicious wine to round out their collection or perhaps even to gift to a friend. My assumption and learning from this course is that many smaller wineries are using the DTC online channel to circumvent the three-tier system and that wine enthusiasts that want specific bottles will go to the source to attain them.

      This caused me to think a lot about the role ecommerce plays in other luxury industries such as fashion or beauty. Many of the luxury players have been slow to jump on the ecommerce bandwagon relinquishing power of controlling the experience that consumers have with the brands. Consumers enjoy the process of entering a luxury house, being cared for by the associates and then showcasing their new purchase in a luxury labeled bag as they exit the store. This experience is lost with ecommerce, but with it, consumers gain convenience and expanded distribution availability. The question remains – which is more valuable to the consumer and does this change depending on what the product is that is being purchased? As ecommerce has become more popular, we see many of these luxury houses starting to adopt ecommerce as a distribution channel because of the benefits of being able to reach a wider range of consumers. The challenge is balancing exclusivity with availability. Many of the big wine players have managed to tackle this challenge by introducing wine clubs, but I will be interested to see how these luxury players continue to weather this trend – will the store experience or the tasting experience ever decouple from the purchase of wine? Will a world ever exist where we rely solely on information available over the web and forego the luxury experience for convenience? I am not sure that it will ever be that extreme, but I am eager to see how this industry plays out as technology begins to play an ever-present role in our lives.