All you successful business executives, doctors and other folks with money to spend who love wine and always wanted to leave the rat race, tend to grapes and open your own little winery someday:
First have a chat with Joseph Roche.
Roche, a San Francisco pathologist, and his wife, Genevieve, also a doctor, came to California wine country in 1978, buying a spread of land to raise their four children, but with an eye toward getting into the wine business.
”We`ve always loved wine,” Joseph Roche said, ”and we kind of eased into it.”
The Roches planted vineyards in 1982. A few years later they opened a winery in the southern Carneros region of Sonoma Valley. Their first vintage, a 1988 chardonnay, sold out. ”It was the worst thing that could`ve happened to me,” Roche said. ”I thought I knew everything there was to know about wine.”
Now the Roche label claims a well-regarded pinot noir along with its chardonnay. But the Roches are struggling financially with their winery, and they freely admit it.
”A lot of doctors come into our tasting room on the weekends, and we often get to talking about what a high-burnout job that is,” said Roche, an amiable, self-deprecating sort. ”They often say to me it`s always been their dream to own a winery. I tell them it was always my dream to open a winery, too. Only now my nightmare is that I own a winery.”
Roche is fairly typical in his reasons for entering the wine business. A recent survey by UCC Vineyards Group, an industry organization, showed that nearly one-third of local winemakers listed the appeal of being in the wine business for entering the field, compared with one-fifth who said they began on the basis of a financial analysis.
More than 370 new wineries opened in California in the last decade, nearly half the total in America`s undisputed wine capital. But like Roche, small winemakers across the state are finding the business much more difficult than they imagined.
Buffeted by the recession like other industries, the wine business also is feeling the squeeze from the health movement and steadily declining per-capita wine consumption.
The much-publicized plague of phylloxera, a raging insect infestation in the Napa and Sonoma areas, may cost $500 million to $1 billion in new plantings, promising to eliminate some smaller vineyards that cannot afford replacement costs.
The gloomy picture is aggravated by tightening bank credit, a glut of wine on the market, too many brands, increased foreign competition and rising marketing costs. To add insult to injury, many winemakers are having a hard time finding buyers for failed wineries.
Carol Landry, manager of Napa Valley Bank in St. Helena, Calif., said banks are scaling back debt exposure in the wine business and are reluctant to make new loans without evidence of healthy profits. She estimates that one-quarter of wineries in Napa Valley are in serious trouble.
”About a quarter are facing some difficult times, are either close to bankruptcy or will be within two years,” she said.
The hard times are difficult to see at first amid the good living that still characterizes the picturesque wine-growing regions of the Sonoma and Napa Valleys. Cars of wine lovers and tourists hopping from tasting room to tasting room jam narrow roads lined by tidy vineyards in the shadow of two mountain ranges.
The annual late-summer grape crush is on, and reservations are needed days ahead at exclusive restaurants such as L`Auberge du Soleil, where the rich and famous feast in the splendor celebrated by Robin Leach and his hedonistic TV show as one of America`s top eateries.
But there is unmistakably a fear in the air in wine country, where more than 120 winemakers, growers, financial analysts and consultants gathered recently for a pessimistic symposium on the financial future of the industry. Small wineries are especially vulnerable, said Robert Smiley, dean of the Graduate School of Management at the University of California-Davis, long renowned as the top ”wine university” in the country. He compared the wine industry`s problems-health concerns, lower consumption and proliferation of producers-to the ice cream industry`s.
”The industry is entering difficult, tumultuous times,” Smiley told the group. ”I think it`s going to become more fragmented, and some of the marginal producers are going to have a difficult time surviving.”
At least eight wineries in the Napa and Sonoma areas are in bankruptcy, and many others, particularly those of the mom-and-pop variety, are looking for buyers.
One is Folie A Deux, the French phrase for ”folly for two,” a psychiatric term for a delusion shared by two people. Owned by psychologists Larry and Evie Dizmang, the label on the winery`s chardonnay invites consumers to ”share the fantasy.” The winery is for sale.
”So many of the small winery owners are so financially unsophisticated,” Landry said. ”People came into the business for the lifestyle and had no idea what they were getting into. A lot have been successful in other fields-businessmen, doctors, pilots. They like wine, so they buy a winery. Then they realize it`s a tough business.”
Young wineries are not the only ones in trouble. Long-established vintners are feeling the squeeze from the same array of financial forces hurting the new, little wineries.
Hanns Kornell Champagne Cellars, a Napa Valley mainstay for 40 years and the area`s first producer of sparkling wines, filed for Chapter 11 bankruptcy protection last year. So did Grand Cru Vineyards and Vintech, a local investor group that owned four wineries.
The return of phylloxera, a stubborn soil-based insect that has infected an estimated 70 to 80 percent of vineyards in Napa Valley after destroying the region in the late 19th Century, is one of the most immediate problems.
The insect feeds mainly on a popular rootstock that most growers have used in the region since the 1950s. The rootstock was developed in France to combat phylloxera, but was abandoned there decades ago. Now a mutated form of the bug is feasting on the rootstock in Napa and Sonoma, and replanting costs, estimated at $10,000 to $20,000 an acre, threaten the fiscal health of growers and wineries large and small.
Still, in the recent UCC Vineyards Group survey of area winemakers, the infestation ranked sixth among chief concerns for the future, behind ”neo-Prohibition” attitudes, distribution problems, government regulations, taxes and the recession.
Larry Brooks, general manager of Acacia Winery, is among those who believes the phylloxera infestation provides a golden opportunity to develop stronger, healthier vineyards that produce better fruit, and ultimately, higher-quality wines.
Rootstocks need to be replanted every 30 years or so anyway, and many are nearing the end of their natural life, Brooks said. ”It`s going to be good for us in the long run. Of course, some people are not going to be able to afford it.”
Robert Mondavi Winery is at the forefront of experiments in different types of rootstocks and new, narrower spacing of vines to produce higher-quality grapes and wines. Brooks and other small winemakers praise Mondavi for sharing the fruits of its research.
Mondavi is an example of what Brooks calls the ”Darwinian economics” of winemaking-the strong survive. The prestigious winery reports continued success despite the hard times afflicting the industry, with an 11 percent increase in sales last year.
Another winery, Kendall-Jackson, did even better with its premium chardonnay, virtually doubling sales from 1989 to 1991.
The industry giant, Ernest & Julio Gallo, still dwarfs the field. Long known for its inexpensive jug wines, Gallo now also dominates competitors in the more expensive varietal wines, accounting for an estimated 40 percent of the industry`s growth in that market last year.
Despite recent setbacks, some winemakers remain optimistic.
David Freed, president of UCC Vineyards Group and organizer of the financial conference, urged winemakers to pool resources, lease some assets and step up cooperation.
”This is a tough business. It`s a very competitive consumer business. It`s like selling cereal,” Freed said. ”You have to know your product and your focus and stick to it.”
For now, Roche will stick it out at his winery. But he hasn`t quit his day job. He still commutes to St. Mary`s Hospital in San Francisco and teaches medicine at the University of California-San Francisco.
He is focusing attention on sales in his tasting room and in exclusive wine stores. The family is marketing a line of wine-based gourmet salad dressings and mustards. The winery aggressively markets discounts and club memberships for prospective customers. And Roche has leased use of his facility to his winemaker, Steve McRostie, who markets his own label.
Ideally, Roche and his wife would like to pass on the business to their children. But he has candid advice for others wanting to get into the wine business: It is not, to say the least, a good time.
”If I had a crystal ball five years ago,” Roche said, ”I would never have gotten into the wine business.”
