Why Small Family Wineries Don't Survive

It seems that there's a small, family-owned winery getting gobbled up by a corporation every month. Some even just close their doors. Current economic issues, the loss of income during the pandemic, and a slowdown in the number of visitors is likely to close more operations.

Stu and Charlie Smith of Smith-Madrone Winery
Working on Spring Mountain for over 50 years
image from smithmadrone.com

There are different situations for family run wineries:

• First generation owners who don't have a retirement plan because every penny they have goes into their wine business. Selling the winery funds their golden years.
  
  
• The kids have seen the work that goes into running a winery, or have other interests, and don't want to take over their parent's business.
  
  
• Not everybody is a farmer or can perform the physical demands of running a winery. They just want out.
  
  
• Some are well-off businessmen, doctors, venture capitalists, etc. wanting a tax shelter. They are also well aware of profitable exit strategies and never planned on holding on to the winery forever.
  
  
• With multi-generation family owners, by the time you get down to the third and fourth generation of ownership there can be arguments between cousins, kids, parents, and in-laws who want to run things or maybe want to sell their share.
  
  
• Sometimes the money is just too good. If you're lucky enough to have a successful operation and maybe some vineyards in Napa the payout can be dazzling right now, and who knows what the future will bring what with wildfires, economic uncertainty, and all the news stories about the younger generation not drinking wine.

 

Jerry Seps, farming his Storybook Mountain Vineyards
since the 1970s. His daughter makes the wine now,
he still tends to the vineyards on his new tractor
image from bbc.com

Corporations with cash reserves, investors, and a varied portfolio can weather the downturns easier than most family wineries, whose only recourse might be to get another bank loan. The big guys have professional finance, IT, and marketing people. That last group is important in that there is always a battle for shelf space in the retail market. Yes, the corporations have a definite advantage in the country's retail market.

Justin, Argot Wines founder, winemaker,
grape sorter, marketing, host, father
image from argotwines.com

Stu, Charlie, Jerry, and Justin are a part of the hundreds of family operations in Napa and Sonoma. These folks are doing what they love and are trying to support themselves and their families. You can do these hard-working small business owners a big favor by seeking them out and trying their wines. See if you can taste the pride that went into the bottle.

Inspired by a Meininger's International article