General Blog

Succession and Maintaining the Dream

By September 7, 2013No Comments
The recent news that David Powell, the founder of Torbreck winery in the Barossa Valley, has departed, following his contract not being renewed, highlights issues that many winegrowing businesses are facing today. Succession is a topic on many vineyard and winery owners’ minds, and it is more prevalent in the New World, where there is not the history of generational family ownership. The situation is increasingly appearing in Europe too, where young people are more attracted to the less physical working conditions and a more social and profitable life in cities or overseas.

A high proportion of modern winegrowing businesses have been established by passionate individuals who have fallen in love with wine and have had the dream to create their own. The aspirations are different, of course, with some wanting to take on the world, and others who just want to make something to drink that pleases them that they can call their own. But it is the intent and individual dream that is the common factor. While many of these businesses become established and operate profitably, and achieve much of what they were set up to do, some of these vineyards and wineries fail abysmally, and the owners go down the path of bankruptcy and ruin. But others succeed, wildly beyond any dream. In New Zealand, we see Villa Maria as a wonderful example.

The Next Generation and Selling Up
It’s an extremely pleasing scenario when the next generation are willing to be involved in what was established, to continue the gains and philosophies of a vineyard and winery, that more often than not required considerable sacrifice in physical, emotional and financial terms to get going. Most parents here will wish their children to take over the business and have a heartfelt desire to hand over the reins, and not see the results of their labours be for nought. The ‘softly, softly’ approach is generally the best, as the forceful expression of parents’ expectations usually results in rebellion! New Zealand has a number of winegrowing operations where a handover to the next generation is happening or has occurred. To mind, besides Villa Maria are Babich and Kumeu River in Auckland, Te Mata Estate in Hawke’s Bay, Seifried Estate in Nelson, Pegasus Bay in Waipara, and Rippon in Central Otago.

Many winegrowers have resigned themselves to selling up to outside parties when the time comes to end their working days, and it’s a fact of life. Most people will want to sell to parties who will carry on the dream, and share the same views as to style and quality, and how to do it. But once ownership is relinquished, that signals the end of it. There have been some very good and smooth changes of ownership, with a number of operations becoming even stronger. I like what has happened at Stonecroft, Dry River, Te Whare Ra and Felton Road, for example.

Changes of Power and Direction
There is the very common situation where owners have had to bring in outside investment, and this is a most tricky situation, with changes of ownership and power as the consequences. The Nobilo family has now become part of a global business and likewise with the Kim Crawford label. The direction and style of these businesses are very different to what was originally envisaged. The outcome as in the David Powell and Torbreck case is an unfortunate one, where the person whose dream and passion lead to the success of the business being ousted is happening more. Here the founder is still actively involved, but forced out unwillingly.

I rue these happenings, not only because of the acrimony that accomanies these events, but really the loss of the experince and the possible continued contribution these key people can have in the future of the company. Sure the vineyards, winemaking team, operational and business systems are all in place and working well, but there is the extra, almost undefined spark of passion and sense of mana that will never be there with the departure of the founder. Such passion and mana can be passed on. It’s more easily done by passing it via the family connection, but it is a more difficult and less defined process when there is no blood line.

Changes of power and direction can be managed sensitively with benefits to all concerned. There are a number of winegrowing figureheads who conduct themselves with stature and decorum, the the businesses they founded appreciate their changed role and fully support them in it. Many of these founders and presidents have a strong input into the business model and direction, as board members or shareholders, though they no longer have financial control. I see Wolfgang Blass as one such man, and the industry’s respect for him is enormous. It takes some forethought and skill, if not wisdom to utilise the skills and assets of these key people.

Lets hope that as the issue of succession becomes more significant, we don’t dismiss the importance of the original dream, the grounding of the hard work and the experience gained that goes into the making of a success winegrowing business. These points make the foundation of the story of the wine label and the heart of the wine.

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