The best way to understand the wine business in California and which people matter the most is to accept that the state is almost too big and too diverse. It’s almost like talking about several different countries trying to coexist, even though they agree about very little. For example, the Los Angeles area produces almost no wine, yet it is as important to the state’s wine culture as the San Francisco area, which is at the center of some of the most important wine regions in the world.
Meanwhile, several grape growing regions outside of San Francisco, including and especially the Central Valley, are as important in their own way as Napa and Sonoma near San Francisco. And none of this takes into account the business side of wine in California, which is home to the biggest family-owned producer in the world, some of the most important wine critics, and some of the most influential financiers and marketers. Or the fact that wine tourism, invented in California, attracts more visitors each year than Disneyland.
“What is California, the fifth biggest economy in the world if it was a country? So that it is so big and diverse, and especially for wine, means it’s not easy getting a handle on,” says Dave McIntyre, wine columnist for the Washington Post. “One person’s California may not be another person’s California.”
Making sense of who’s who encompasses many people that may not come readily to mind. But their roles, given the way the state’s wine business works, are crucial. To identify them, I talked to some four dozen people in California, and in the wine business nationally, from writers and marketers to beverage managers and sommeliers. Most asked not to be named, given the nature of the article. I collated their suggestions and ran that list past a half dozen people who were familiar with California. I refined the list again using their suggestions – but the final list is mine.
Note, too, that some of the most important wine executives in the US (in the world, for that matter) aren’t on this list, because this is about who shapes California as a whole. California is unique in that not only are its biggest wine companies huge, but many are still family owned. That means the state is home to people like Gina Gallo, who oversees the $5bn E&J Gallo family empire; the Trinchero Family, whose self-named brand is the fourth biggest wine company in the US with 20m cases; the Indelicato Family (11m), Fred Franzia of Bronco Wine (10m), and Julia Jackson of Jackson Family Estates (6m), with its ubiquitous Kendall Jackson Chardonnay.
The government
California, though its liquor laws are a little less strict than most of the rest of the US (some wineries can sell directly to retailers), is also one of the most aggressive in making and enforcing law. Hence, the director of the state’s Alcoholic Beverage Control, Jacob Appelsmith, has an important say in how wine is regulated. Over the past five or six years, the California ABC has pursued significant cases against winery social media use and retailer advertising.
On the federal level, US Representative Mike Thompson (Democrats, California) represents wine’s interests as co-chair of the Congressional Wine Caucus. His district includes all of Napa and part of Sonoma counties, as well as other wine regions. He has worked to increase funding for the federal agency that oversees alcohol regulation in a time of budget cuts and has sponsored legislation for tax relief in the wake of the wine country wildfires.
The trade group
Bobby Koch is the president and CEO of the Wine Institute, the trade group representing wineries and wine-related businesses that account for more than 80 percent of US wine production and 90 percent of its wine exports. As such, he has most recently lobbied against the Trump Administration’s various tariffs on European wine, and has also urged state and federal lawmakers to loosen the requirements for direct to consumer wine shipments, which are still mostly illegal in the US.
The wholesaler
California’s version of the US’s three-tier alcohol supply chain system requires that most wineries need a distributor or wholesaler to be sold in a store or restaurant. The most important distributor is Young’s Market Company, a family-owned and operated business run by Vern Underwood, and his son Chris, with some $3bn in sales in 2018. And, as distributor consolidation in the US has intensified over the past decade, the Underwoods negotiated a joint venture with second-largest wholesaler RNDC last year that will give the combined companies $11bn in sales in 32 states. As such, Young’s plays a powerful role in deciding how producers are brought to market, and its emphasis on the biggest brands means smaller wineries are often left with less effective distribution.
The big retailers
As many as four of every five bottles of wine sold in the state are sold by a supermarket chain or mega-retailer like Costco. Buyers for the biggest chains, such as the 300-plus location Kroger’s (which includes Ralphs in southern California; and Albertsons and its Vons and Pavilions nameplates), can be buying for up to 600 stores. Many chain buyers have little authority to buy locally, and several of the people interviewed for this story said corporate purchasing is becoming the standard. And, when it comes to corporate, Costco and its national wine buyer in Kirkland, Washington, are the most powerful in the country. The buyer, as of January 2020, is Chad Sokol.
Another important chain is Trader Joe’s, which started in southern California in 1967 and has 183 stores in the state. Trader Joe’s and national buyer Chris Condit focuses on private labels, contracting with bulk producers and name brand wineries for its own labels.
The smaller retailers
In southern California, Wally’s Wine & Spirits, with stores (and restaurants) in Beverly Hills and Santa Monica, and Wine House in west Los Angeles have been mainstays for decades; more than 50 years for Wally’s and 40 for Wine House. Buying at Wally’s is split between several people, including Christian Navarro, the company’s president, and wine director Matt Turner. At Wine House, most buying is done by the owners – Bill, Jim, and Glen Knight.
In northern California, the legendary Kermit Lynch Wine Merchant has been importing and selling French and Italian wine at retail since 1972 (and also has a wholesale division). Dixon Brooke III is chief operating officer. K&L Wine Merchants, with two locations in the Bay area and one in Hollywood, is owned by Todd Zucker and Clyde Beffa Jr., while Trey Beffa is the wine buyer.
One long-time marketer says Barry Herbst of the Bottle Barn in Santa Rosa is legendary for his palate and acumen, and the store is regarded as one of the best in the state. In Sacramento, Corti Brothers has been a food and wine destination almost since it opened in 1947, and Darrel Corti was one of the leaders in the movement opposing California wine’s higher alcohol levels several years ago.
The sommeliers
In California, sommeliers do more than buy wine for restaurants. Bob Bath, Master Sommelier (MS), is a professor of wine and beverage studies at the Greystone campus of the Culinary Institute of America (CIA), and a fellow MS calls him one of the leading wine educators in the US. His colleague, Traci Dutton, is the CIA’s Manager of Public Wine & Beverage Studies in California. Sonoma State University’s Liz Thach, MW, PhD, is one of the most respected wine business analysts in the country.
Wolfgang Puck’s international restaurant chain operates eight restaurants in the Los Angeles area. The most important is the flagship Spago in Beverly Hills, where Phillip Dunn, MS, oversees one of California’s great wine lists.
The marketer
Modern wine marketing owes much to Paul Wagner, the founder of Balzac Communications & Marketing in Napa. He started Balzac in 1991, with the intention to move wine marketing and public relations past the touchy-feely stage and to bring it level with marketing for other consumer goods. His book “Wine Marketing & Sales,” in its third edition, is considered the standard for wine marketing.
The writers
Esther Mobley of the Chronicle newspaper in San Francisco covers wine for the industry’s “hometown” newspaper. Her coverage is more news-oriented than many of her predecessors, and she has broken several important stories, including the sommelier cheating scandal. One fellow wine writer says, “she has to be included, as she covers the trade in a remarkably timely, frank and comprehensive way.”
Mobley replaced Jon Bonne at the Chronicle, where he oversaw wine coverage for almost 10 years. He is the author of several books, including the influential and controversial The New California Wine in 2013.
The banker
Rob McMillan, the executive vice president and founder of Silicon Valley Bank in Napa, started one of the most important wine industry analyses almost by accident. He needed current industry financial information, but very little was publicly available. Today, 19 years later, the bank’s annual State of the Wine Industry report is required reading for anyone who follows the wine business.
Jeff Siegel
This article first appeared in Issue 1, 2020 of Meininger's Wine Business International magazine, available by subscription in print or digital.
