The Story of “Doon to Earth,” Part 1 of 3
This is a speech that Randall Grahm delivered in Washington, D.C., at the Inc. Magazine Conference, September 2009 (part 1 of a 3-part series).
I wish I could offer you some real guidance, but I’m as confused as anybody. We have undergone and are likely to continue to undergo a series of right-sizings since our significant reconfiguration three years ago, when I sold off our two largest brands, Big House and Cardinal Zin, and spun off Pacific Rim as a separate company, reducing our size from approximately 450,000 cases to about 35,000.
Shortly after this significant reduction came the economic meltdown and with all of the doon-sizings our company has experienced, I find myself at times feeling a bit like Monty Python’s knight, more or less limited to the head-butt as an offensive tactic.
The wine business is particularly difficult to right-size quickly for a number of reasons. The elements of the supply chain – the establishment of vineyards in particular, are enormously long-term propositions with a lot of inertial mass – it’s something that you are generally obliged to commit to for the long haul and unless you can manage to unlock yourself from long-term contracts, they are infernal machines that keep churning out product.
Wine businesses are enormously capital intensive, so there is that other pesky element of debt, making a highly leveraged winery particularly vulnerable. Coupled with the fact that essentially the entire world from rock stars to film directors and athletes have decided at precisely the same time that it would be very cool to be the wine business, you have in short the perfect storm. The biggest challenge right now is to imagine how one might sell one’s wine profitably through the established commercial channels, the so-called 3-tier system, something that just does not seem particularly feasible in the near-term horizon. This is problematic, because that which solves the short-term issue of cash, i.e. heavy discounting, creates another problem with respect to our overall profitability, always something to bear in mind.
I will talk about my own business, the only business that I know or thought I knew. Unfortunately for all of you, I am a complete business dunce, and have survived the last 30 years in the business essentially due to extraordinary luck and perhaps slightly above-average karma. I think that some of my personality traits may have propelled my so-called “success” – contrarianism, compulsive risk-taking, my Luftmensch persona, leading me to more or less a case of clinical denial ofthe so-called hard “realities” (Everybody knows or knew that you couldn’t sell dessert wines made from artificially frozen grapes, or raspberry wines or California RhÃ´ne-varietal wines, or dry Rieslings, or bottles with screwcaps, with goofy labels, etc.) but I’m not sure if these traits serve me so well anymore.
I didn’t listen to anyone in the day, did just what I wanted to do. But this sort of absolute confidence or arrogance or willful naivete – if the world wasn’t quite ready for what I was preparing to send its way, I would somehow through sheer will just make it ready – this sort of attitude just doesn’t seem to work anymore. The last thing one needs now is denial; I think you really need to look at things as they are with a steely gaze and not flinch – but of course not totally lose heart either. My success, my mojo, as it were, over the years has somehow been linked with my ability to delight people – whether it was a funny label or a wine that overdelivered in value. But the mood seems rather grim these days, customer’s bandwidth for new information has greatly shrunk, and delight does not seem to be so high on the elective experiential scale.
Part 2 of 3 continued Thursday, October 1.