Sic Transit Westwood http://ift.tt/W56pMz

Sic Transit WestwoodBy the time I post this I will no longer be a partner in the investor group that owns the Westwood Winery and Estate vineyard. I have stepped aside as winemaker, general manager, vineyard manager, and head of marketing and PR — all the hats I have worn for so many years here — and have sold my interest in favor of a new investor.

Just now all three of my regular readers are perhaps saying “wha… WHAT?” After all, I have been keeping Westwood alive since 1994, when winery founder (and my friend) Bert Urch made his untimely passing. It’s a long row that takes 20 years to hoe. As one might expect I’ve got mixed feelings about this transition: frustration and anger, sadness, relief, and excitement — all at the same time.

The Backstory

My investors are a great bunch. We met at a charity event in the mid-90s when I was working at Sonoma-Cutrer. Everybody had high hopes and big plans back in 1998, when I presented the group with the opportunity to acquire the land that would become the Estate vineyard. We bought below market, and land values were appreciating rapidly as money fleeing the burst of the dot-com bubble flooded into real estate. We closed the deal to merge the winery and vineyard operations in 2002 and starting moving everything from the Sierra Foothills to Sonoma, completing that move, opening a tasting room, and doing our first production in town when the vineyard started to give us grapes in 2005.

There were a few hiccups. We lost some of the 2001 and 2002 production to a refrigeration “failure” at the old winery in Shingle Springs (yes, there’s a story behind that), and then we weren’t able to close a badly-needed round of funding when a potential partner got cold feet at the 11th hour. But we were growing direct sales and wine club as well as expanding into new markets, working with a fine group of passionate distributors and brokers who were repping small, specialized books where our little brand got the attention it needed.

Troubles In Paradise

Then the Great Recession crashed around us. We experienced negative cash flow in the third quarter of 2008. Everybody’s investments took a big hit. One investor simply ran out of money. Capital infusions needed for improvements and to plug holes in the operating budget — a fact of life in the long and drawn-out business of establishing a winery — that had been fairly regular became sporadic.

Every one of the small distributors we had cultivated relationships with either went out of business or was absorbed by a much larger distributor who promptly dropped our tiny brand from their books. Yet, though I got knocked by the heels with a serious health scare just before the 2009 harvest, we were still growing revenue every year on direct-to-consumer sales — just not fast enough.

The partners began to express frustration that created discord over not only Westwood but other dealings as well. At the beginning of 2014 it looked as though the partnership was heading for dissolution, and Westwood for liquidation. When most of the partners were ready to wind everything down, one saw an opportunity and made a dramatic proposal.

Resetting The Clock

This one partner, who had made a relatively small initial investment, offered the rest — including me — a deal where he would make a major commitment to shore up the company’s finances, plug the holes, and fund the manpower and capital improvements that had eluded us for the last five years, in return for a controlling interest. The remaining partners would suffer a serious dilution. Turnaround 101 — I was offered an exit deal, which would allow the new majority partner to bring in his own team to manage production and marketing, a deal which I accepted.

Mixed Feelings

Of course I had seen this as a probable scenario. My own frustration over the chronic under-capitalization of our operations had been festering for years, however well-compartmentalized I had kept it. I admit that I initially felt a good deal of anger and resentment that this deal had been in the works for months before it was presented to me as a fait accompli. I wasn’t blindsided, or unprepared, but the timing was difficult with harvest imminent.

Timing issues aside, it is frankly a bittersweet relief to be able to un-shoulder the burden that maintaining the status quo had become for me. My own ego aside, I am thrilled to see so many of the things I had hoped for Westwood finally happening: a smart new winemaker with a full staff working for him under the eye of a halo consultant, important upgrades to capital equipment that will make it easier to produce top-quality wine from the top-quality vineyard we built, and — finally — an actual dedicated marketing and PR arm with a mandate and a budget. These are all really good things.

The new team is talented, committed, and well-funded. The 2014 vintage promises to be a good one and I believe these people will make the best of it. Over time I expect the character wines will change somewhat, as well as what is produced, and probably the overall direction of the brand is going to follow a new tack. All in all I’m confident that Westwood remains in good hands.

The Road Goes Ever On…

For the time being I’m still here. We are all working to make this handoff smooth and amicable. The partnership has hired me as a consultant through the end of the year to facilitate the transition. In the meantime I’ve launched a new wine company (more on this later) and am busy preparing for harvest. I am proud of what we accomplished when I was part of Westwood, to the point that I am looking to the Estate for some of the grapes for my new project. Looking forward I’ve got a lot to do to get licensed to produce and sell, and to start to build a new clientele. I’m back in start-up mode and it feels very exciting.

I started writing this post on July 15th — the day after the other partners informed me of the new regime — but really I’ve been writing this chapter for the last five years. It’s part of a book I started writing when I took a job in a wine shop in Davis, California in 1985 — the ninth chapter in that book, in fact. Now I’m busy writing the tenth.

I can’t wait to see how it turns out.

Thoughts On The Napa Earthquake http://feedproxy.google.com/~r/winemakernotesblog/mnYV/~3/I4TrrsIG4ak/thoughts-on-the-napa-earthquake.html

Carneros highway break, Elise NerloveEarly Sunday morning the earth ruptured about 15 miles from my home. I was awake when the quake hit. It was twenty seconds of increasingly violent shaking that had me racing to the back of the house to get everyone under the doorways. Then it was over.

I was in the lab at UC Davis during the Morgan Hill event. I felt the building sway and worried a little that the gas cylinders next to me were clanging around but otherwise had no idea of the extent of the devastation suffered near the epicenter.

I was driving down the Silverado Trail when the Loma Prieta quake hit. It punted my truck into the oncoming lane. Fortunately there was no oncoming traffic (though perhaps they might have been pushed off the road by the same shockwave) but I was mildly alarmed that the announcer on the radio station I was listening to had time to say “what was that…?” before the signal turned to static.

But this was the strongest quake I have experienced, the first one where I felt fear for the lives of my family and friends. I’m forever grateful that nobody died, or was seriously injured. Given the damage that we saw in some of the barrel cellars… Broken Barrel, image by Carole Meredith …it is just very damned lucky that this quake hit at 3:20am on a Sunday morning, and not at 3:20pm on a workday. A full barrel weighs 600 lb. and has steel-reinforced sharp edges at both ends. People working in those cellars that suffered the kind of damage we’ve seen in images like the one above would have been maimed or killed.

Sunday wasn’t over before the punditry in media started hyperventilating. One that got my attention was an article in the Sacramento Bee, crying that the quake should be a “wake-up call” for the Napa Valley wine industry. Quoting Tom Rockwell, a seismologist at UC San Diego,

“…this could have been a much larger earthquake. What I mean by a wake-up call is I think it’s important for the industry up there to realize they do have an active fault that goes up the valley. It could produce earthquakes that are even larger than this.”

My first thought was “brilliant analysis, Mr. armchair quarterback 520 miles away.” I’ve been through the planning and permitting process for several wineries, and seismic risk is always taken into consideration. The West Napa Fault — the likely focus of the rupture — is identified as a zone of special investigation according to the provisions of the Alquist- Priolo Earthquake Fault Zoning Act of 1972. ABAG West Napa Fault shaking map This shaking intensity prediction map for the West Napa Fault provided by the Association of Bay Area Governments (ABAG) is evidence that anyone applying to build a structure in Napa likely doesn’t need a wake-up call when it comes to seismic risk.

Corison Winery in St. Helena was well out of the zone of most intense shaking, but like many of us winemaker Cathy Corison felt the quake, and posted on Twitter @cathycorison to reassure friends and family: Cathy Corison I was at Stag’s Leap Wine Cellars when Loma Prieta hit, and our barrel stacks — like those at Corison — didn’t budge. Contrast this with barrels Steve Matthiasson @matthiassonwine had stored at one of the facilities in the damage zone: Matthiasson So yes, maybe the wine industry does need a wake-up call. Not a general wake-up regarding seismic risks, but a very specific call to stack our barrels more safely. I spoke with Chris Cotrell (@FineWineSpecilst) — Morgan Peterson’s assistant @BedrockWineCo — after the quake and he said he’s never been more relieved that they switched to 4-barrel racks from the 2-barrel steel racks most commonly used in the industry. Even these 2-barrel racks can be constructed to enhance earthquake safety. It should concern all of us in the wine cellar that these features are not incorporated into our work environment.

In the meantime, friends and neighbors continue to clean up, pull their lives together, and get back to harvest. Napa schools are open today, and most grocery stores are cleaned up and re-stocking. But over a hundred buildings and counting are being red-tagged as uninhabitable. Some of our friends and neighbors have lost much and some of them are among those with the least wherewithal to rebuild. Like some of my friends I made a cash donation to Community Action Napa Valley (canv.org) and am taking a big bag of non-perishable items over to their food distribution center today.

Right after I get back from sampling a vineyard. After all, there’s grapes to be picked — earthquake or no.

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