Saturday, February 6, 2016

How to buy a historic winery cheap... if you're a movie director

 The Far Side of Eden dealt with many of the issues now playing out on a large scale in Napa Valley. Earlier related postings can be found in the menu to the right, starting in June 2015.  
                                                               The Prize
    John Skupny worked for Caymus Vineyards and there earned a reputation as an effective, straightforward, pleasant administrator, a blond Californian with a degree in fine arts and that rarity among winery managers, a sense of humor. Down there by the Napa River, a few stones’ throw from Inglenook, he had dealt with the irascible old Charley Wagner and his son, Chuck, and with Randy Dunn, fresh out of Davis and not yet on the heights of Howell Mountain, and had learned most everything about power cabernets, from production to marketing to the delicate managing of myth and reality.
     Skupny went to work for Francis in 1992, before the Inglenook winery was purchased. Niebaum-Coppola had some assets in addition to the vineyards that had come with the house, including a good winemaker, Tony Soter, of Spottswoode fame, a new press, and a determination on the part of the owner to develop a more elegant style of cabernet. Liabilities included limited working facilities—the wine was made where carriages had once stood, and it shared storage space upstairs with reels of film—and a lot of inky, older Rubicon that badly needed selling.
     Wine had to be moved through an old-boy network of distributors, the narrow part of the hourglass. The producer was on top and the consumer on the bottom, and the old boys in the middle didn’t like aged wine without stellar rankings by Robert Parker or Wine Spectator. Skupny’s challenge was to find someone willing to bet that Rubicon would improve and, until it did, to move the present inventory. Francis was gracious when Skupny brought the distributors and big names in the trade by the house, entertaining them, making them feel special. And Skupny pointed out that Niebaum-Coppola intended to increase the quality of the wine while cutting production, making the wine rare and raising the price at the same time.
     Production of Rubicon went down to two thousand cases, very small, but that meant another Coppola brand had to be invented to broaden the market. A wine consultant and the new winemaker sat down together and fashioned something from cabernet franc and merlot, and they called it Francis Coppola Family Wine. Skupny put it out for eighteen dollars a bottle, and it sold like crazy during a recession. They also decided to make a brand of zinfandel called Paternino, a tribute to Francis’s Italian grandfather. The winery had trouble with the Bureau of Alcohol, Tobacco and Firearms because there was to be a picture of the Statue of Liberty on the bottle, but the label was finally approved because, Skupny thought, the BATF got preoccupied with Branch Davidians down in Waco.
     At that point wine was small potatoes in Francis’s larger financial basket. But he told Skupny he wanted to be on first base if Heublein ever decided to sell Inglenook, the regal chateau standing out there to the east facing Highway 29, and they could move into the big time. Skupny knew Heublein’s history and all the baggage it carried in the valley, symbolized by the big, ugly storage facility built in front of the winery shortly after Heublein acquired it, spoiling the view from the highway. He knew Heublein could never recover from decades of bad decisions and that someday the corporation would have to unload a property also burdened by an unhappy family history.
      Niebaum’s great-grandnephew, John Daniel, a conservative pillar of rectitude, had been married to a woman known variously as beautiful, talented, and destructive. Her name was Betty, and she had made much of John Daniel’s life miserable. Her hatred of the winery contributed to his decision to dump the family heirloom in the sixties; in Daniel’s eyes, Heublein soon devalued the Inglenook name, which had been carefully made into a symbol of excellence, by producing a great deal of cheap wine and plastering it with that proud name. Daniel had refused to sell any wine that was not first rate, a standard that had prevented him from ever making a profit, and otherwise hewed to the line laid down by Niebaum in bygone times. After selling out he had to watch an invasive corporation use out-of-valley grapes to fill jugs—sacrilege, in his view, and a possible factor in Daniel’s subsequent suicide.
     John Skupny knew all this. He knew that the corporation would now like to unload Inglenook, but assumed the price would be unapproachable by an independent operator like Coppola, even with his occasionally massive cash flows. But Skupny, like others in the valley, dreamed of the old chateau’s passing again to “local” control, and feared its being taken over by another corporation more ambitious than Heublein.
     One night in 1994 he received a call from a friend in the “One night in 1994 he received a call from a friend in the business who told him, “Your worst nightmare is about to be realized. Heublein’s being sold to Canandaigua.”
     Spike Lee’s movie Do the Right Thing had just come out. Francis had seen it, and Skupny thought he was influenced by the notion of doing the right thing. Francis invited everybody to meet on his porch late one morning, to sit out there as if on the deck of a crenelated white ship sailing through a sea of vineyards, all very cordial and low-key. But the Heublein people were tight with information. If they agreed to sell, they would still demand the right to buy grapes from the prized Inglenook terroir, and that Francis replant the vineyard. Also, they would demand a lease-back on the ugly storage facility out front, to house their barrels.
     They wouldn’t come up with a dollar amount and wanted Francis to make an offer. He and Skupny thought they were being used to push up the price while Heublein shopped Inglenook around among other potential buyers. Francis came up with another strategy—preemption. The chief financial officer of Zoetrope, Francis’s company headquartered in San Francisco, part of the Coppola team, worked out how Inglenook would fit in with Francis’s other businesses, while the staff in Rutherford studied the inventories provided by Heublein. And the attorney who acted as Francis’s guardian had to be convinced that it was all a good idea.
     At last a purchase agreement was produced, and Francis wrote a check for a million dollars in the little house near the stable that served as his office. Skupny walked the check over to the big house so Eleanor could countersign it, then walked it back again. Francis was giddy, Skupny would remember. He asked if Skupny played poker, and when he answered yes, Francis said, “Good.”
     Skupny delivered the purchase agreement and the check to Heublein. The next day the guy called and said okay, and Skupny got into his car and drove over to Inglenook and stood out in the courtyard, under the massive façade overgrown with ivy, and called Francis on his cell phone. Skupny told him, “It’s yours.”

The first volume, Napa: The Story of an American Eden, is available at:
To order Napa:

No comments:

Post a Comment