Unlocking Luxury Wine: Charlotte Selles on Brand Strategy, Relationships, and the Business of Wine

0:00 Taking care of your core, whether it's portfolio or customers allows you to really unlock and know a lot. Whether it's the data or pick up. Your phone, sit back and grab a glass. It's Wine Talks with Paul Kay. Hey, welcome to Wine Talks with Paul Kay. And we are in studio today what would have been beautiful Southern California, but not today. The whole front patio of my studio here is flooded. But to have a conversation with Charlotte Sell's introductions in just a minute. Hey, have a listen to Kelly E. Carter comes out today. It's a crazy good story about the woman in the locker room who now has turned an award winning journalist as well as a New York Times bestselling author, but now turned Napa Valley tourist with a company called Not Tourism, Napa Valley Noir. Have a check it out. But now while we're here, we're here to welcome Charlotte Sell. She is a luxury wine growth strategist here the founder and CEO of To say where she advises premium vineyards and artisan wineries on eccentric on concentric brand management.

1:05 Prior to launching Tissay, she served as general manager of Robert Mongave and Constellation Brands and vice president of international portfolio strategy for Jackson Family Wines, two huge companies. She teaches at Sonoma State Wine Business at the Wine Business Institute. Actually there was somebody else that was on that, on that faculty that I had on the show once. But she speaks on the intersection of leadership, wine innovation and global market evolution. Those are the only subjects that we talk about as if that's small little pieces of our industry. But you said earlier it's really not what you consider one of your great achievements in life. No, I mean I've had absolutely amazing experiences and everyone has been a source of massive growth and learnings and sort of putting the pieces of the puzzle.

1:58 But I like to say to both my husband and kid, which I think is not in best taste. But for my eulogy, the only achievement I want to be discussed is the time I spent working at the food bank in San Francisco during COVID Well, at the beginning of COVID and it was wasn't the type of experience where one finds that elusive purpose. It was draining. It was tiring. I mean we'd walk 22,000 steps every day. Wow. My wife would be really happy with. Yeah, I was, I was very proud. A little more, A little more. There was definitely a lot of pain and anxiety for those waiting to, to get their bag.

2:45 Obviously a massive food crisis. And in San Francisco we have a strong Chinese community and there was this group of elderly, 80s, 90s Chinese lady that were coming back over and over and over and getting more bags. And so some would say, oh, we've got to punish them. Oh, we got to photograph them. And I was like, well, how about we try to understand. And those woman came from. From the great famine in China, where they've seen millions and millions of people dying and they made it to another country. So it's like, you know, we're not the food police here. We're the food bank. So can we be okay with, you know, not opening a restaurant right now? No, but that's. That's an interesting thought because. And I'm Armenian. We come from, you know, the genocide and the woe US mentality, which is, I think, in certain cases, valid. But, well, if you consider the background. And they're like, wow, this is food and it's free food. And we were, you know, we came from a famine. You can understand them and, you know, the outlook that they have. It's like, this is what a great country for one, would be part of that. Yeah. You know, I'm starting another podcast called Song of America, which is about these kinds of stories about people that come here and they have social, political, financial success, or just a story that's so interesting like that. But that's not what you always did. I mean, first of all, I'm not going to write you a eulogy today.

4:07 No, please don't. I still have to drive back to Laguna beach, but please don't. Yeah, and you're going to have to, like, tell the chap GT that what you want to say. But you were born here. You're born in Paris. Yeah, I was born in Paris. My father was in the Bercy negotiat industry. So at that time, mid-70s, early-70s, the wines were gathered in this southern part of Paris called Bercy and then sold back to different outlets. And he was bored out of his mind. He was like the. He was a pie noire. You know, he was. His grandmother had seen the wind coming, so they were able to sell their properties. So he had this comfortable life, nice wife, two little kids. We have four now.

4:54 But he was bored and he wanted to be a gentleman farmer. And his words. He made a critical mistake by buying an estate in the Beaujolais region. Wow. Which would never allow him to become a gentleman farmer. But what he did was create what is now the sort of mass negotian format. And it worked because at that time, the regular classy negotiations would never sell their wines, quote, unquote. Next to toilet paper, that is supermarkets. And they would never open shop in August either. So he was hungry. He did that. And in 1994, I had met David, who still is my husband, and I said, well, I'm going to San Francisco. He's driving me to the airport and says, what are you going to do there? I said, well, you know, I mean, if it doesn't work, if it works out, I'll get married, and if it doesn't, I'll come back to Paris. I'm 20. I don't care. 22. I took some guts. Yeah, but 22, you know, I know. But still get out of town and. Said, well, that's very stupid. So that's going to date me. But buy yourself a fax machine and sell our Wines in the U.S.

6:09 how interesting. So let me go back up just a little bit. When you say that he. He feels like he made a mistake because he didn't become a gentleman farmer because he bought him Beaujolais, what does that mean? Does that mean that his. It didn't go the way he wanted it to go? Or Beaujolais became so competitively difficult to make it work? Well, Beaujolais was never meant to be a top of the world region. Right. Gamay is a bit of a weed and it has only so much range. And I'm saying that with caution because there are some extraordinary villages out there. There were some of my favorite wines, but overall was never meant to be a crus classe or a village. Don't tell them that. Right.

7:01 Well, then happened the magic and the curse of Beaujolais, which was Beaujolais nouveau, which created the plantings of hectares and hectares where it should have been potatoes, that is in the plains. So it overall dragged down the reputation of Beaujolais. It became this quick and easy wine you drink once a year for fun. Otherwise most of the time it's crap and it's not fair. So the region went through many, many changes. It's part of Burgundy now. Officially, they plant Syrah and some cabernet I've seen. But for my father, very quickly, his revenue were really definitely not from that estate. But we had a conversation, Paul, a few weeks ago, and you asked me, what is luxury wine to you? And that estate was this luxury.

7:55 It was expensive for what it was, what it could ever return. It was incredibly expensive in terms of self commitment. I mean, we would see dark clouds rolling in in June and we would start stop breathing because it could be hail, right? And if it was hail, then everything would be devastated. And then we stopped breathing again. If it was raining too much in the summer, and especially when harvest started, we definitely did not breathe. I don't know. I was still alive. But, you know, it was his tension, it was his challenge, it was his is grounding as well. And that, to us as a family and to me later on, really define what luxury is. That tension, that commitment to overcome. And obviously lots of negative stuff about wine. Plenty of people saying luxury wine is overrated. Nothing is worth that much money for a bottle of wine. And I think they're kind of missing the point because it really isn't about the cost.

9:11 It really is about the tension. We. Whether it's wine or watches, we talked about watches. You still have a watch, right? I don't usually wear one, but we. Can talk about salt the same way. Let me back up something. We'll get to the luxury part in a second. Because I had. I've had the Lou Jadot winemaker on the show, and he used to bring with him a menu from the 60s from Lyon or Dijon, where Beaujolais in general was not at least the same price of Burgundy, if not more in some cases. So he would profess, look, it's an elegant place, it's an elegant wine.

9:53 It can be very sophisticated. I think Cote de P wines are incredibly sophisticated. But was it the Georges Dubeuf movement for Beaujolais nouveau that changed that perception? Is that what you're saying? Basically, no. No, it was definitely not Georges Dubeuf. I think Georges Dubeuf and his family did a great job at trying to keep it up in terms of quality and real wine. I think in some ways, we were the culprits to try to get it as cheap as possible. I mean, we had. I had negotiation with my Japanese importers where we were negotiating. Half a cent. Yes, down, down, down, down all the time. So I think George and his family, I think Funk is still involved, were actually doing the best they could to maintain image and quality. It's just, you know, somehow maybe the. It's not the luxury side of it, but the excitement, the exciting part of the. The release, bringing nouveau to the world as a celebration of the wine and the region and then, you know, the harvest. Maybe that's what, you know, their purpose was.

11:05 And maybe the commercial part became too big, too big for its own self. Because, you know, when. When. When we were kids, I moved to Paris later, afterwards. But when we were kids, we'd go to Villeforste town nearby or Lyon, and. And it was just A celebration. It was a celebration of, hey, we survived the June hail storms, we survived the rain during harvest, we made the wine, and we're pretty proud of it and we're just going to enjoy it. It was meant to be something simple. Perspective and using that to define luxury. But before we get to that, because I had an incredible gentleman here who came from Iran. His name was Zaya Unan. And I'll get into that story a little bit, but his idea of luxury and why it's important and actually not trying to topple, but trying to compete with LVMH at that level. So. But you come to America at 22. This is where you met your husband. No, I had met him prior, which is why he met him one or two years earlier. I met him in 92 at Molly Malone's on Fairfax in Los Angeles.

12:09 Yes, but that usually doesn't work when. And I've seen it so many times, where a woman or man come from a foreign country. One being foreign being not used to American lifestyle and the sort of the outlook on life that Americans have in coming to America and making it work. This doesn't happen all the time. Well, we landed in San Francisco, which is very European in many, many ways. Yeah, true. I traveled a lot and I think I found the perfect man. And I still say it, you know, I mean, we've been married for 29 years. Wow. Congratulations. It's just. It's a. Gosh, this is the congratulations part.

12:51 That's really funny because we celebrate the number of years and in some ways I know people that have better relationships that are much shorter. Right. So in that lifespan of 29 years, there are the great years, there's the not so good years, and then there's kind of the baseline. My son just moved out in July. Oh, wow. And I was. I'm very excited. How did that feel? Well, it was horned as the first two days. I felt betrayed and left. And now what am I going to do with David? And now we've just been having our best life ever. So there you go. Don't worry, they come back. I can vouch for that. Yeah.

13:33 No, I mean, it really truly is, to me, a sticking point where when you say you've been together with someone for a long time, there's that wow. And really, it isn't a wow. It really is. We found each other. We found each other's back when we were both moving apart. You've been married also a long time? 30. It'll be 39 years, I think. So you know better than I do. Right. Well, 17 years worth or whatever the. Difference is, I'm not going to go and dig. So you, you, you came. Did you have your dad's book in your hand as the Beaujolais producer or the negociant? Yep. And you were going to forge a career in wine because of that? Yeah. So I came to the US from a business standpoint with making the same mistake that every foreign wine producer makes. He's like, let's go to the USA. It's like, no, it's like 45, 45 or 50 different markets. If your brand is already established, you're not looking for an importer because they have already found you.

14:42 So the, you know, Deutsch Co brand type of importers, they've already found you as a promising brand and some still will build a brand for you. But it's rare and at a national level it's almost impossible because they have other focus areas to do so. It's not that they're bad people, it's just that they have other core competency. But that's changed a little bit, right? I mean you started long enough ago to see that happen. Yeah. So it doesn't happen anymore. Well, so here's what I did. I was very lucky. I started working with Trader Joe's. So my parents were happy about the volume they would get. Also for the fun story, I had zero background in marketing and coming from a French family, no exposure, no connectivity with the concept.

15:33 And so Trader Joe's had just opened a store in San Francisco on Masonic and it was a hoot. There were lines and lines of people and cars. And so the assumption was if a product works well there, then it will get rapidly expanding national distribution. So we had this viognier to Clairv and I just, I just bought a couple cases and then I threw it around my friends and I said, hey, you know, I'm excited about this wine. If you like it, go buy it, you know, have parties. Tell me I did like a mini CRM. Yeah, right. And it exploded and it was like. The number one wine V in America. When you, when you came here, you came from Wine is life. It's a lifestyle.

16:17 America. Certainly in the 70s it was not a lifestyle. I mean not the 70s, but in the 90s whenever you came. Well, it would have been in the early 90s it was more of a lifestyle than it had been prior. But still, I don't, I mean, sure that, that America ever catches up as a lifestyle of wine that, that the Europeans have But did that surprise you or did you think this was. No, I felt that Americans were curious about wine. I felt Napa was exploding. I felt it was a little bit unidimensional in terms of style. So what I'm saying politely, with a smile was I just thought wine sucked. I thought it was pretentious. I thought it was holier than thou type of thing and all tasted the same. I grew up from that statement. I've learned the intricacy. Intricacy, intricacies. You have the right to correct me or permission I should say. You know, when I, when I joined the Robert Mondavi Winery team, I.

17:22 It was the missing piece of the puzzle for me because it really made sense that this guy, Robert Mondavi would just go out in the world and say, I'm going to, you know, show the world what we can do and my wine is going to be $30. Yeah. And it all made sense from there. How the Harlans, the Chappellet, all those fantastic names. Today we're unable to dream. Robert Mondavy brought in that enablement to dream. So then after we've all read the book, there might be some controversy, but he was a visionary and he was the first one to say I'm going to do something different and I'm making the bet on it. And look at it today.

18:07 I love talking about how Napa in such a period of time made wines that are if not more coveted, at least as much coveted than the classified Bordeaux and Burgundy. And I think the magic trick was this direct to consumer, straight on allocation. Allocations were not new. They were already. System was already in place. But this, this idea that those wineries would bet on not relying on distribution or very small for some restaurants and a couple outlet, but really rely on the relationships they would build with their. Their, you know, in the 70s and even after the judgment of Paris, which still took many years for the industry to fill, feel like it was a full on industry. I mean, I think I've brought this up before on the show.

19:04 Jim Barrett didn't retire from being an attorney until like 85. And that photograph there of my father in the store. Yeah, that's that they did. You know, the sales call for that, that era in the late 70s, early 80s was you loaded up your station wagon full of wine and you drove to Los Angeles and you stopped at my dad's store and you stopped at the Duke of Bourbon and Wally's and that was a sales call and hopefully you left with an empty. Such an interesting thought. That the distribution of the three tier thing was not really part of the mix then. So when you got to Robert Dhabi, what opened your eyes? Were you like, wow, he was the ambassador of Napa Valley. And let's just face it, that's what he did. He traveled the world. He spoke at my dad's store once to say, hey, we're here and we're real. So the big eye opener.

19:51 And I don't know if she'd be open for doing this, but would really like you to talk to her. Her name is Genevieve Johnson. She was, I think, the first. She's going to hate me if she listens to this. She started to work with Robert Mondavi and then I think she was the first winemaker for Opus Wine and then went back as no longer a winemaker, but a director of winemaking, where you're organizing the teams, not just making the wine. She went back to Robert Mondavy. She still consults with the Winerian constellation. But she's in Napa. She lives in Napa. And what really drew me to her was her commitment to make vin de garde wines that age.

20:44 And somehow conceptually, it's a little bit challenging when you have this opulence in the wine style, right? Because you're missing the structure that's going to help it age. And do people really care about aging? And the answer is enough of them do care about aging. So it doesn't need to be the entire country that cares about aging. There's just enough of them that care about this evolution. And she actually made her own label. She border lays. She would kill me if I didn't know that answer. We're gonna have to look it up. We're in big trouble already.

21:25 Well, I mean, the idea of avant garde is going to be more French or at least Bordeaux esque than certainly Napa. Genevieve, please forgive me if you're watching this. I don't think she was born in Bordeaux, but she did study in Bordeaux. I'm gonna really get scared cold in. Well, you know, let's move on from that. But let's go. Let's go back to the Von de Guard things. I just. We were just in Yontville and the. The vintage house or the estate of Yonville is called now had a bottle of Mondavi Cab and I thought, you know, what am I gonna do with a bottle? Mond. We got a cellar full of wine at home. But I took. I brought it home anyway. I figured, why leave it in the hotel room? I was impressed and I, for a couple of reasons. One was it wasn't the overdone, opulent style that Napa has become to be known for. And it carried some pedigree with it already.

22:16 And I thought, how interesting because it's a Constellation product and I talk about this on the show that these, you know, there aren't that many privately owned wineries of those days anymore. And how do we maintain the brand value of a wine like Mondavi when it's run by a major corporation? Well, that's a very, very big sticking point today. So there was always those dynamics and it's somehow of a classic large portfolio architecture where you have the Robert Montavy Winery that's sitting on the Tocquellon Estate. Then you have Robert Mondavi Private Reserve. And then you had Woodbridge by Mondavi. The assumption was always you start here in the bottom when you're young and, and then you walk your way up. I'm not going to spend one penny doing some studies on whether this works or not. But now that Woodbridge and Robert Mondevi Private Reserve have been sold to the wine group, it's a bit of a challenge, isn't it? Because say, Paul, you go see Constellation and you say, well, I want to buy the Robert Mondevy Winery. That's great, you put a lot of money but now you're going to have another company that's selling with very different positioning and no, no sanctity between each world. That's interesting. So, so it's, it's going to be a real big challenge for whoever takes this on.

23:46 There's, for me, the more question and I'll, I'll get to answering your question a bit earlier is what really opened my eyes working with those great group of people was the Tokel on estate. And what really opened my eyes because I'm a mountain fruit girl. So I also snub plain fruit. I was wired that way with Beaujolais. Okay, right. Well, discovering eye block, which is Sauvignon Blanc, 60 year old vines, 65 year old vines that are not irrigated is telling me well, okay, maybe, maybe vines were meant to be here. Not to mention the wine is fabulous. But it's really opened my eyes and seeing all the efforts. So I've seen a couple ones. Harlan is doing more and more dry farming.

24:35 And then I was talking with Bettina Bryant from Bryant Estate a couple years ago and the drought was very bad. The lake right next to Pritchard Hill was drying up. So they said, well, we're Going to save the water for humans. Are you okay with that? And it was a massive, massive moment of anxiety for Bettina and her team because what's going to happen to my grapes? What's going to happen to my vines? And again, mountain fruit, which means really eager roots survived for the most part. So again, yes, you know, Napa is meant to have those luxury wines.

25:16 A special part. I think so. And I, it, I think it still has a long way to go. Not because it's elementary, but because it takes that long to understand what it's going to do. And right now we're in the sort of marketing turmoil. And it's very interesting because the other day I took a bottle of silver oak to a friend because they took me to the baseball game and they were so happy. They were just so thrilled or came as took actually one of each. And so I wanted to take a nice Bordeaux or something interesting boutique Napa wine. But I knew that they would recognize this and appreciate the fact that they feel like they're being treated to luxury at this point.

26:01 Right. And though we know that there are interesting things to be had there. And I would just come, like I said, from Napa and I had a tasting with Chris Phelps, who used to be a Dominus and then makes his own wine at Vivium. You know, here's this fabulous mountain fruit, some of his mountain fruit and then he's got yon feel fruit. And I'm like, I wish I could take this, but it didn't carry that brand value. So your position now with to say is a consulting firm. Yeah, we have many labels. What we really are good at.

26:42 Is. Especially for wineries that are transitioning or recovering. So transitioning from. You've mastered your craft in terms of wine and product, but the business part of the wine business is still kind of foreign to you. And you've probably been advised by people that are telling you you should do ads and you know, make sure lots of people come through your, your tasting room door. So those, those winers are still being advised that way and it's slowed them down when things were good and it's pretty much killing them now. Things aren't good. And the other part, the other type of wineries we're really good at helping is recovery and especially recovery from over expansion and flirting with the bottom shelf. So if you're on on on the top of, of a very prestigious and I was talking about Pritchard Hill and you're still selling wines that are under 50, $50, you're doing the same thing then the Robert Mondevi Winery team did way back when of saying, well, I can sell more and cheaper because now my name is recognized and I've just halo effect. And it's going to bring people in. That's never really been substantiated. It's very helpful if you have a cash flow problem, which many very

28:14 unfortunately have right now. But it's. How do I help you think that by focusing on your core essence and really nurturing the relationships you have with your existing customers will work? And I'm going to take a tangent here and tell you about the other type of clients we have because it's been pretty wild since the last time we talked, or at least early July is what we're really doing. And so there's a strategic. We put you back on track. And I'll want to go back to it because there's some really important things there. But from a marketing standpoint, what we've been really learning, 5,000% every day, is retention marketing. And we're working with an AI companionship company. We're working with a SaaS company.

29:06 Nothing to do with wine. They don't even drink, these people. Right? And I'm having those conversations and explaining what I do for wineries and I say, well, help me do it for my business. So wineries, it's a different cycle because we go through the releases cycle to potentially three a year, etc. For those people, we're talking about daily data, right? So who canceled? Paul, did you cancel your separation? How do we get you back? How did you use our product? And there's all those signals which are great for my adhd, but sometimes exhausting. I wouldn't say adhd. Yeah, yeah, I do. I mean, a lot of us do on the safe side of the spectrum, of course, but it really is this idea of instead of wanting to open the floodgates of plenty of people through your tasting room, plenty of people coming, why don't you just take a second to nurture, understand and care for the ones that are in your world? And it's critical because with the exception of Galo and Galo really, no wineries has solid, solid consumer insights like Galo really does. It's part of their growth engine to know what people do. But it's a scale very, very little wineries can do. But when you have all this data, rich data, crazy rich information about the people you

30:37 have, then you can start doing some work at a level that potentially Galo can't do because they're busy doing other things. Let me slow you down for a second. It's so exciting. Well, what I did, I watched all of it. Right. We started the why the Month Club by shaking hands at a booth, at a show. And this established a relationship at that moment. And so the retention was very high because they would remember this conversation and meeting at the fairs and what I told my father's story, whatever. And we tried to. As marketing moved on and we went into the mail and cataloging, we had our first website in 1997. All this retention stuff started to make more sense, though. It was always around because. But there was less volatility without the Internet. You know, the fact that they got their wine every month felt good every month. And there was no barrage of trying to go somewhere else and other messaging and getting a case of wine for 60 bucks for shipping. That didn't exist. And so when you got. Now we got on the Internet and all of a sudden the data was available to you if you weren't mining it somehow, which is hard and expensive for most wineries. And by the way, we're farmers. Like your father wanted to be a gentleman farmer. He didn't want to learn about AI and metrics, social media metrics, which are, I think, worthless in most cases. Agreed.

32:00 But that retention part of the business was always something we needed to continue to nurture. Whether it was through dinners, which I used to use all over the country. I would fly and do dinners and they'd show up and they'd come. They, they. All the people sit at the tables. They, they were strangers to each other. They would talk about the Wine of the Month club and it was just great relationship building. It's different now. How do you get that relationship? How do you nurture digitally the. The clients that you have? It's so easy. All the, all the. It really is easy. So hard. The hard part is the mindset. Because if you looking at the business with the mindset that it's easier, cheaper to find new people in. It's okay if people are leaving. You are missing out a lot. Because it's not just about retaining.

32:55 What am I going to do so Paul doesn't go away. It really truly is with the data, which is very simple. So some. Most small and medium wineries are using Commerce 7. They were on wine Direct. There's a Belgium guy who's called Chris who does analytics, enolytics. So enolytics, Enolytics. All the tourism. Enolytics. And every single time I talk to not the winery owner, they don't know that term, but their team. There is a magic little setting called rfm Recency Frequency monitoring.

33:36 Who bought recently, who, who buys frequently and how much money do they spend? And it's just in there. And they don't know because you know, most of the time when you're working in a DTC team, there are some brilliant talent there. Like there's, there's real talent. Like those people are exploding with AI because it used to be you had to go sift through all those reports and you had to download the report and you had to read and understand. Now you just. First you may have a platform that will do the analysis for you. That's what Stefan is doing. Stefan Mock. So instead of downloading the report and knowing what to download, you just type in the question like GPT, Hey, I want to do this. What do we know and what should I do?

34:29 Is it being used? I mean, I have to tell you something. When I sold the company three years ago, well, coming on three years, we were in the middle of rewriting our site. And because I'd done this for 35 years, because what I wrote in 1993 in DOS was infinitely more sophisticated than what was on the market at the time that I went to go rerap my site. Commerce 7. Big, big whatever the big commerce, all those guys. The subscription side of this, which is such an important side of the DTC was average at best. Mine was superior. But unfortunately since I wrote it in dos, it didn't have a customer facing capabilities that you have on the Internet. So we were rewriting the features of what I had done for 35 years into a UX, but we never finished it because I sold it. But is it, is it pretty capable now? Are we able to mine this data and use Steve Stephan, you call him Stephan, I'll call him Stephen.

35:27 Stephen. It's Stephen French style. Stephen. Stephen, yes. Apologies to you too, Stephen. To. Are, are they receptive? Are your clients receptive to running those reports using, you know, an English based prompt and, and figure out what to do with the data? So, so the owners we talk to are not in a good shape. Right. Things are not good as, as good as they were for those who are not losing money, they're not making more money. And there's this constant, you know, wine is dying, wine is dying buzz around them. So it's, it's a tough one. I mean it's to your point for the most part. There are farmers, I believe it, by the way. I Don't believe it. I mean, I know sales are down, but I don't believe.

36:17 So I listened to your interview with Zaya. Yeah. Oh, you did? Okay. Yeah, I did, yes. You said it was fantastic. He discovered wine. I mean, he may have known wine exists, but he discovered his Tata moment was this business dinner with his G. Was it G? Yes. It was Petrus. So that moment can happen very differently for different people. So the fact that someone buys Woodbridge today is not a guarantee that they will become a luxury wine connoisseur, meaning interested and wealthy enough to go that path. So it's going to be all those different moments and life is peppered with it.

37:04 It's celebrations, right? It, it's, it's, it's. It's new. New business ventures. It's. It's new people in your life that, that are fascinated by it. It's a. You're a real estate agent and you're going up your ladder and then you discover this property with this massive seller and it does something to you or it does nothing. Are you trying to say you're going to be harder drugs if you start with Woodbridge and you might get the harder drugs like Dominus or Petrus or something like that. Who knows, right? Like, everybody's path is going to be different. And, and, and so the so what for a winery owner is what do I do? Do I continue doing what I'm doing and I'm not having much success, or do I do things differently? And there's a couple markers. That's why I wanted to go back. So most winery owners, as some sort of C suite, fractional or full time, and it's usually someone. I want to make a parenthesis here. You know why I really wanted to meet you, Paul, is that on your show you have an insane amount of women you bring up here. And I've been in this industry for about 30 years officially, and still leadership is mostly men. So when we think about my target, it's mostly men. And I close the parenthesis to say thank you, because what you're doing is very important in continuing pushing the ball.

38:37 Had Jessica Kogan, who's a huge flag waiver for women in the wine trade. Tracy Mason. You know, this winery owner thing just triggered a thought. I went to an Armenian tasting Sunday, and there's this wonderful couple who've been on the show and they make wine in Paso and they have a little tasting room and they. And I started thinking, that person needs to do what you're talking about. They need to Embrace the technologies in order to compete and to understand. But at the same time, they didn't get into the industry and they didn't start making wine and passive robles because they were looking to build this magnanimous business. They just wanted to fall in love with the, with the lifestyle.

39:24 And is there's this. Is that a conflict you run into with this between the person who now realizes we've got to make, you know, we're not making any money at this. It's hard to make money at this. And so what do we have to do? Is there resistance to learning this? I just wanted to make wine. It's a balance between fear and how you will be managing that fear. So when you're coming to this industry potentially wealthy and say, I want to do wine, okay, more than potentially, but wealthy, and you're able to buy this land and you're learning how to develop this land, right? The vineyard doesn't plop itself. There's millions of critical decisions to be made. And then you get to the making the wine. One of my previous clients in Santa Barbara, fascinated by wine. Part of the Confreres Chevalier de Chevalier, and then just wanted to see how Pinot and Chardonnay would thrive in a Santa Rita hills or bottom of the Santa Rita hills.

40:33 And so he's fascinated by the development, never wanted to make wine, was selling his grapes to a winery, but the winery went bankrupt. So now he's back with his 16 barrels of wine and he's gotta like reluctantly be part of the winemaking process. He works with the Sandy people, Sashimorman and company. And when I first met him, he said, like, it feels to me like the part I still haven't gotten is the business of wine. Not the wine business, the business of wine. Business of wine. And this is very tricky because you'll have some people in good faith who will tell you, well, you've got to sell to wholesale, but you do have to have some dtc. But if they're not from a DTC background, they might not wire you for the best.

41:23 And if they don't really have strategic marketing experience and tools, they might not wire you for going where you want to go, but you still don't know as an owner. So you have to have trust and faith and it might not work right. It's just like building a house. In some ways. You have an idea of what a nice house looks like. You've never built a house. You're going to take a leap of faith in hiring a builder and some good things. Some bad things may happen a few times. So the hard part is really right now because cash flow is not as flowing as it was. Some debts are being called and there's this negative outlook.

42:09 So now is the time to really go back to your database. Hire people that know how to do it. The tools are there, the data is here. The tools to analyze the data. When we I launched a new word to pseudonyze. Sounds kinky, but it is to into sodomize. Pseudonize. Pseudoize. Never heard of it. Okay, so bear with me. So I get all this report, right And I don't have time and I don't really want to spend a whole day on Excel like trying to balance that. So what I do is I pseudonize meaning that I change your your subscribers names with ABC 123 keys. That's a pseudonym. I'm going to have to practice that word before I make pseudonymized like pseudo. P S E U D. Oh pseudony. Thank you. You know, I'm going to stay away from that word because it's making a lot of people nervous.

43:13 But so and I use Julius AI or likely, you know, similar GPT rappers we call them. And then you know exactly who to go talk to. Right. So when your members cancel, I picked up two clients who had more cancels than sign ins and the cancels were on the higher tiers of their membership. And then signing comes at the bottom tier. So you know where the business is going when that's happening. Of course, like it's just a matter of calculating how long the Runway will be. When we were. Let me interrupt. So when we were growing and I when we started the club, there was one club, one price. Then we added a premium club which is called the Limited Series. And this is many, many, many years ago. And then we then as the marketplace became more variable and there was more flexibility with what you signed up for. With my competitors, we started adding either Bordeaux Club and Napa Series Club.

44:08 But always, always, always the, the, the Value club was the biggest. So no matter what I offered and hoped for instance that they had the Woodbridge mentality when they joined the Classic series as we called it. And they would grow to, you know, the Mondavi Reserve or the Limited Series or one of those types of clubs. But I want to go back to something for a second. Kevin o' Leary was on this show and it was because he and I had a couple conversations about doing business together. Now he has family Lear Estates. It was Pat Ronet was making it up at Vintage wine estates. I don't know where it's made now. And his final advice to me, which I had this without having to go on the TV show, got advice from him. That's pretty good. Now, at this point, he. They had seen my numbers, they'd seen where I was selling, who I was selling to, and the kinds of things I was selling. It didn't fit the model, didn't fit what they were looking for to. To supplement the brands that they had.

45:08 But he said, you know, you really ought to be focusing on your current client base. You really ought to be laser sharp and offering them the clubbiness, as my dad used to call it back in the day of what you're doing and build that brand around it, because leading to what you're talking about, there's so many directions right now. Somebody could come to one of your clients, say, you should have a can. You should have a non elk. You should have a low, low elk Prosecco. You should have sparkling. You should have 375s and 187s and 250s. I mean, all these decisions could completely waylay you. And each one of those decisions requires a firm commitment to develop that. Yep. And do you. Are they faced with those kinds of decisions? When you come to them all the time, There's.

46:03 There's always a shiny new object. And if it's presented to you, if you don't have built that confidence with the business of wine, then you'll say, all right, that kind of makes sense. I'm not stupid. Let's go do it. Taking care of your core, whether it's portfolio or customers, allows you to really unlock and know a lot, whether it's the data or pick up your phone. Another person I would love to talk to is the Seyon family. Pierre and Monique probably are just traveling somewhere. They created Verite with Jess Jackson in 1998. Well, 98 was the first vintage. What was the brand?

46:46 Verite. Oh, yeah, I know it. It's magnificent. It really is magnificent. And when you come to San Francisco, you have time. We'll go together. But, you know, they had three or four people in the DTC team. There's $700 wine. It was not a DTC team. And, you know, there were not hundreds of appointments. It was by appointment only, of course. But those people, when they weren't hosting and taking care of. You want a phone? Hey, Paul, you know, you usually buy some of this one at this time of the year. What's going on? Hey, Paul, you know, you told Me, you were building a new seller. How's the building going?

47:31 And they built that relationship, that scary, scary, scary word relationship with these people. So. Well, I have 2,000 members. I can't call them all. No, but if you're using the data, you should know the 10 people you should be calling and you're going to learn from the 10 people you've been talking to or, or your team has been talking to and you should know what's happening. And then you'll move it to 20 and 30 and 40. Some people like me, I'll probably never take your call because I'm busy. And I'm like, yeah, I love you. I'm still buying you, so you don't need to know more. But it's this sort of removal from that, that end consumer, like that target that, you know, like. No, there are people like you, you and me. If you have high end wines, they're buying in, into your product. Of course it's the style of wine, van de garde or classic versus modern. But also love your story. There's a grit, there's a tension in your story that makes it interesting.

48:34 So stay in touch. Just don't show up when you need to sell something. I'm speaking for luxury wineries, of course. Well, that's, that's branding and that's a tough, it takes. Well, I, I, you know, we're almost out of time actually, if you believe this. No, no, we're staying until like noon, until the storm's over. No, but, but so, so for example, we don't work together anymore. But I had said, you know, your, your concierge or your private client manager is, is gonna know what Paul likes and Paul's gonna be looking for a Von Romane. So your concierge is actually going to call KNL or Wally's and find that Von Romane, the owner was furious at me. Like, are you implying that we should source other wines for them? I'm like, yes.

49:24 Not the vineyard next door, but yes. If you're here for Paul and his wine journey, Paul will stay with you forever. Yeah. And that's it. That's the end of the story. So it's an interesting dynamic in what we're facing today. My most comments and most of my people that I discuss is you have to stay the course and you have to pick a strategy that, that's worked and is working and do not get distracted because this will, this stuff will pass. And that brand value, you can't give up the position of your brand value otherwise. You lose everything. Be focused. If you're in the in, in in the luxury segment, whether you're recovering or you're aspiring, it's going to be bound to be a relationship marketing anyways.

50:16 Don't be afraid of those conversations. And if anyone comes to you and say we're going to bring plenty of people to the tasting room, stay away, stay away. Because the retention I'm marketing. I'm going to go back and finish this with my father. It was a beautiful house in the countryside. It was old house. It was cold in the wintertime and I always wanted to turn on the heat. And my father would forces to make sure that one, all the windows were closed and two, put a sweater before we turned it on. We weren't poor, but a was very adamant at that. And so back to retention marketing. The whole idea is before you go turn on the heat. I spend money on advertising or bringing new people in. Make sure the windows are closed. You know why people are leaving and you have done the right amount of work to make sure they didn't. That's a great analogy. And also you. The sweater you put on a sweater is the upselling which was what you were trying to do. Where if Paul, you buy five wines. Here's an another, you know, block or vineyard designate we have that really might be interested in. I'm coming in your town. Maybe we should try it with a few of your friends. So, you know, that's, that's what's interesting to me is those lessons are the same lessons that I would have learned in 1972 with my father when I was working the shop or when I took over the company in 1988. It's the same business. Business doesn't change. The relationship of business doesn't change. The requirement for a relationship in business doesn't change. And when it does

51:48 change, the trouble we ran into when the Internet started was the Groupon culture showed up. And so they're just looking for the bargain. And then the barrage of information that people are getting on their phones and on the Internet in general, you know, created a loyalty problem. And that comes from not developing and practicing your brand and doing the things you're talking about, putting the sweater on and making sure those things happen. And that's what we. That's when we started doing more events here at the office and things where people when they got that box of wine, they had a memory of something. Right. And that's because in the business lesson is it is always infinitely more expensive to find a new customer than it is to satisfy the old one. And I think that gets lost with some generations. They don't, they want to learn it themselves or they have to learn it themselves. The hard way is that's never going to change. And particularly in today's market, acquisition costs through social and all the rest of it. It's a nightmare to get loyalty little things. Paul canceled a subscription on this exited interview. He said that's too much wine. So do you just look at it like, ah, well, sorry Paul, let's go find Mary. Yeah, right. And that's really expensive and difficult and difficult. Or do we just pick up the phone and say, hey Paul, can we work out a different way? I mean I understand you drink less wine and, and, and how can we work with you? And maybe Paul will say, you know what, I just got sick, I'm not drinking wine anymore. So you just, you know, send a nice note. And

53:21 we, we started every other month and once a quarter because of that. And I just triggered a thought. When we sold the company, the people we sold were the core believers in the Wine of the Month club. It wasn't as big as it had been in 2007, but what people that were there when I, when I sold the list and sold that next shipment were the people that were die hard Wine of the Month club devotees and that had value to somebody because they weren't going to walk soon. There are lots of reasons why people cancel, least of which what you want is the quality of the wine. It has to be not the good reason for them to cancel, not a reason you would want them to cancel. But there's all kinds of other reasons.

54:07 But it triggered my thought that those were the people that, that believed in us. And that's what you have to build. That's what you have to build. You just have to again, especially you know, recovering or aspiring to luxury positioning. Find your tribe, find your right luxury consumers. So some want flashy wineries. We've talked about this a little bit earlier. Some are looking for an archetype, an embodiment. I relate to Paul. We're both mavericks and have build our things. And then others are going to be more intellectual, some are going to be explorers. So find them again. This is amazing day to be a marketer because you can find this in a way you probably couldn't even four or five years ago without. You had to hire a team or an agency. So yes, it's a really hard time.

55:07 Most owners we've worked with are coming from a good place. It's just that they weren't growing as fast as the others because they didn't really have the right business of wine in place. And so now, right now it's painful because the trends have shifted. So it's not because young people are not drinking Woodbridge that a luxury winery is affected, but there is an overall. You say headwind, right? Headwind that requires you to be a little bit more focused on what you and your team are doing. I think most of the people I've talked to in the DTC world are dying to experiment and, and take off.

55:55 They have that same ownership mentality. So see where the disconnects are and that's how we help them is like, hey, you have a magician here. It's just that you're taking his wand about, so you're gonna need, you know, give him the tool back to do it. So it's exciting time. It's exciting time, you know, wrapping this up. One of the things that Stephen and I talked about and I've. I took it away from him and used it to inspire myself and motivate myself to, to play with AI and do things. And I just got done writing a program that I have a database of all the wines I've tasted that were in the studio back. There's like 60,000 wines in there when I taste them on site. But I never had a way of putting those in the database when I was at a tasting, which I go to them regularly like today.

56:44 And so I got on one of the code generating AI sites and it took me a couple hours for the massage, the data. And now I can go to today this board notation, bring my phone up and put inventory. And it just, it walks me through the screens the way I wanted it. That would have cost me 30 grand five years ago. Yes. Or, or half a half, half a year of development. I wanted to learn it and we talking to people on the phone and I sat in front of the computer and wrote the thing on my own. And it was. I paid 20 bucks a month for the AI service. It's unbelievable. So how do you aspire people to do that? Okay, so I mean we live and breathe AI. We work with an AI companionship company. So if we didn't.

57:27 It's a tool. I've dug up some comments about Excel that wasn't reliable and was going to make us really dumb because we wouldn't know how to do calculations. I actually did hear that stuff in elementary school about calculators. It's a tool, right? The one thing that Is different with this tool is probably most powerful that we as a society have had in our hands. So critical thinking, why Prove me wrong, prove me right. What are your sources? So from the sort of mind mapping gathering, be critical. I have a friend whose kids are entering college and I say, you know, that's a good time to study philosophy. Yeah.

58:15 And I'll remember to send you this link. There's actually this woman who has studied philosophy who does some groundwork. So for that part, just keep critical thinking. And then for the agent part, you can build anything in anything. Like you use an ocean, you use now the GPT agents. So it's all about thinking about the workflows in your business. What are the things that are done more than two, three times and how can you improve it? So it really isn't about replacing humans. There is going to be a shift. It's happening, but it's more about rethinking our business. If someone has to download a report, study the report and then have another action, 1, 2, 3. And that happens many times. You got a workflow that's just dying to be taken care of. That's such good advice.

59:14 And it's hard to think outside of your own box. But if you can look at your daily routine, just go look, where can I play with it? And then you have to play with it. This morning I sent an email out. I work with this group of guys we put on a car show every year and last year these guys are very good. They a piece of paper you send the form to fill out the form, they have to fax it back, they have to scan it. And so I'm using that same rabbi to write car entrant form online. And you just give them a QR code and they can fill in the form and then you don't. And then you can run the reports. You don't have to worry about anything. And I was thinking about it two days ago and I thought why aren't we using this? But you have to think about it. You have to think through where your workflow is and where you know in using all the tools and they're not all available the ones that you're going to want but you could possibly find something that will take two steps away instead of all four. Totally. I mean I, I'm just on boarding a new client. So he gives me his proforma five, five to 10 to 20 years pro forma and production plan. And a year ago I would have first of all checked all the, the, the formulas usually There are some mistakes. And then I would have. Then I would have built some CAGRs. Usually five years. Like, wait a minute, you want to produce, you know, 30% CAGR. And I could see the disconnect, but it would take me some time. Yes. Now I just upload it and like. Yeah, yeah. I would have got. So it's a fraction

1:00:48 of the time again, you know, stay critical. So I use two or three LLMs. I've wired Claude, you know, Claude to be contrarian, which is really annoying. The first thing you do in the morning. Prove me right, Charlotte. That's funny. Oh, wait a minute. I only had one coffee. All right, well, just so the listeners know, she's talking about Cloud, which is the AI thing. And it's a deep dive AI and you're adjusting the bias of it by telling you you're going to be a contrarian. One more thought. I keep coming with these thoughts, but I have to get to this tasting. But Tim Hanai, the Master of Wine, who will tell you that he's dyslexic, a recovering alcoholic and a severe adhd. And he credits his success in that. He went to a seminar that was to be on writing. Like English writing. Like English writing. But, you know, and he was late. It was a week late. He totally screwed up. And it was a critical thinking class. And so he took this seminar. He goes, it changed my life. Yeah. Because the reason I'm sitting here talking to you with the Master of Wine, even though I was the greatest failure that North America ever had in the first time around was I took that class. A critical thinking is completely underrated. I mean, we. We developed it as we go. I mean, I. I thought philosophy classes were an absolute bore. Yeah.

1:02:16 Well, I'm sure I passed, but now I'm fascinated by it because you start questioning not everything, but you question everything differently. Yes. And sometimes there's no answer. And you got to be good with that, too. But when we had a conversation. Why is Paul asking me this question? Right. And the more you practice it, the more. So this is definitely what to do. There's this guy called Ryan Holiday. I'll give you the link to. He had a massive failure. He was one of the rising stars of American Aperol, which is an LA story. Right. And probably burnt out and spent his whole life studying the rest of this format of yours, studying philosophy and making it more digestible.

1:03:07 It was my favorite class. And it's really interesting that you would bring that to the table for the wine trade, which is really taking a step back from the business of wine and applying some humanity to it and everything. Those thinking, those processes are so important and the only way we're going to get past some of these things that are happening. But it's such a pleasure to have you here. Sorry for the day. And then you lost your key. You found your keys. But it is. It is a safe bet when they close the door and it honks at you that, you know, the keys around. My car is a 2011, so it does not do anything. Oh, it doesn't do that. It just drives another one. This is fantastic.

1:03:49 Thank you again for being here. Thank you so much, Paul. We'll do it again for sure. Yeah. Up and down, but this time. Yeah. And. And we'll. We'll go see Pierre and Monique and Elaine, their daughter, because she's the one that makes the wine now. But what a story. Look forward to that. Yeah. Cheers. Thank you.