CHAPTER FIVE
Crush, 1966–1972
The first few months at the Robert Mondavi Winery were chaotic. Carpenters, masons, plumbers, electricians, and the winemaker, Warren Winiarski, were all working on top of one another. By late summer, there were walls, but still no roof, catwalks, or ladders to reach the tops of the new stainless steel fermenters. Parts were missing and there was no place to do any lab work—let alone a lab technician to do it. Since there were no desks or offices or tables, Winiarski worked from a clipboard. Robert, who had a small office in a trailer, was seldom in one place for long. Winiarski would see him early in the morning and late in the day; the rest of the time, he was a whirlwind of energy, conferring with the builders, making deals for grapes, consulting, and purchasing equipment.
Robert’s energy was infectious and his aspirations heady. But he was strongly motivated to start making wine. Fired from Krug without any significant severance pay, Robert was under severe financial pressure. With construction costs mounting, he sought to produce cash flow as quickly as possible. So he set an ambitious timeline. He was determined to bring in the harvest that first year and crush grapes to make the Robert Mondavi Winery’s first vintage. From groundbreaking to crush, he had two, or perhaps three, months at most. Although Robert had probably not fully formed his intentions for the new winery in 1966, even by then the people who were helping him to make it happen recognized that his dreams were lofty. “It was not meant to be a small winery and it was not meant to be a family winery. From the beginning, the Robert Mondavi Winery was meant to reach out,” says Winiarski.
Once again, the friendships that Robert had built after twenty years in the valley came to his rescue. William Bonetti, by then the production chief at Charles Krug, helped Winiarski with some lab work, allowing him to come over and use the Krug lab to run simple analytical tests of the fermenting juice, as well as to borrow equipment and chemicals. Winiarski had assumed that Bonetti had gotten Peter’s implicit, if not explicit, permission to help out his brother, but it wasn’t exactly clear, since neither brother had spoken openly to Winiarski of the simmering feud.
Krug also crushed grapes for the Robert Mondavi winery’s first year, sold it yeast, bottles, and a labeling machine, and loaned the new winery a bottling machine free of charge. As a safety net, Peter and Rosa agreed to pay Robert a $9,000-a-year consulting fee after he was fired, although he never performed any consulting services for Krug. While they didn’t welcome Robert as a competitor, they also didn’t want him to fail. As Peter later explained, “We felt that he needed some support from the family inasmuch as he ventured, and we wanted to see him make a success of what he was doing.” Louis Martini and the winemakers at Beaulieu also pitched in to help out their old friend.
And when the time came to design the winery’s first label, Robert again turned to people he had worked with at Krug: a well-known local printer named James E. Beard and a graphic designer named Mallette Dean. Dean had done beautiful work over the years for Krug, including a delicate woodcut of a farmer tending grapevines that had graced the masthead of the Krug newsletter “Bottles & Bins.”
The label the pair created for the new Robert Mondavi Winery captured its spirit centered around Dean’s wood engraving of the Cliff May building, with its elegant arch and wings. But Dean struggled with a lack of vertical balance in the frame, which he eventually corrected by adding a flank of poplar trees to the scene. In the real setting, a series of trees planted on the walkway had failed to flourish in the 1970s, so eventually, to match the reality to the image on the label, the winery ended up planting poplar trees where Dean had imagined them. Dean’s label for the Robert Mondavi Winery quickly became one of the iconic images of Napa Valley.
The cool weather that year also came to Robert’s aid, pushing harvest back by several weeks. Fieldworkers picked the last Cabernet grapes on Veterans Day, November 11, in a season marked by tule fog and cool evenings that often cloaked the valley until ten or eleven in the morning.
To the astonishment of some of the friends and rivals who’d called him crazy, Robert managed to make wine that first year. In 1966, the new Robert Mondavi Winery crushed about 490 tons of grapes—even though there was nothing even close to resembling a building on the site yet. By the time the crush rolled around, there were only concrete slabs on the ground, foundations for the fermenting tanks. In the open air, Robert pumped the juice from the fermenting tanks into other tanks. As summer became autumn, workers were plastering the walls of the newly erected building, even as Warren Winiarski made the wine.
Returning to the rituals and ceremonies of the Roman Catholic Church, Robert marked his winery’s first crush of the grapes surrounded by his immediate family and his most supportive friends on a sunny morning in mid-September. Robert halted the whirl of painting, plastering, and sanding for a few hours. On a concrete platform surrounded by dirt, a group of a few dozen people gathered on the north side of what would become the winery. Father Levinus of the nearby Carmelite monastery, wearing a long black robe that fell to his ankles and a white cassock over that, faced the gondola that held the grapes. Marcia Mondavi, with her short-cropped dark hair and a ladylike knee-length skirt and sleeveless blouse, bowed her head and clasped her hands together. The priest began his benediction in English sprinkled with Latin words.
In the background, Winiarski operated the lift that raised the gondola filled with grapes and tipped them into the hopper. From there, the fruit moved along a conveyer belt to the crusher. The mechanics of the moment only hinted at the deeper transformations that would take place as the grapes moved toward their transfiguration into wine. The atmosphere was solemn: There was no round of applause or cheering as Robert’s partners Fred Holmes, Bill Hart, and Ivan Shoch stood watching, their families beside them. Also present was Charles Daniels and two of his sons. Daniels had been distributing Krug’s wines since the 1940s and was close friends with Robert. He wanted to support him in his new venture and offered to distribute his wines when they were released in the spring of 1967, even though he knew that support would infuriate Peter.
For growers such as Holmes and Hart, crush is a moment of death as well as birth. The life that they have nurtured from bud break through harvest is coming to an end; another is about to begin. “There is a death taking place here,” reflects Warren Winiarski, who later became one of the valley’s most famous winemakers. “It’s the death of the grape. I never saw a grower sad, but solemn. They’re glad that it’s happening but it’s a mixed feeling. They’ve worked all that season to make these grapes what they are and now they are being crushed, being destroyed in order to be reborn into a different substance. They’re glad but also a little bit mindful of destruction.”
But that moment of solemnity passed. Robert said a few words about a new beginning. The group included workmen clad in overalls and hats to shield them from the sun. Marjorie began pouring the white wine that had waited for the group beneath a folding card table in a plastic tub filled with ice. Looking cool and elegant, with her blond hair pinned into a chignon, Marjorie, like her daughter, had dressed for the heat, in a conservative A-line skirt that stopped just below the knee and white flats, even though miniskirts and go-go boots were shocking the nation elsewhere.
After the ceremony, the Holmeses, Shochs, and Mondavis gathered for a group photo in front of the grape-filled gondola. The adults held long-stemmed wineglasses. Robert smiled at Marjorie. Timothy, fair-haired and with the gangly look of a teenager, wore black-and-white-laced Converse sneakers. Then just fifteen years old, he, too, held a wineglass in his hand. Marcia, looking contemplative, sat below the row of standing adults. Perhaps in a foreshadowing of the family drama to come, Robert’s elder son was absent on that momentous day.
The new Mondavi winery was the most significant to be built in the valley since Prohibition, and with barely three dozen bonded wineries operating in the valley at the time, the groundbreaking marked a key turning point. “The construction of the Robert Mondavi Winery marks the effective beginning of American wine’s rise in both quality and prestige,” wrote the wine historian Paul Lukacs. “What happened there helped ignite the revolution in American tastes. It also helped change broad public attitudes toward wine in general and American wine in particular.”
That fall, however, the significance of Robert’s bold new winery—a venture that some dismissed as “Robert’s Folly” and others as an example of his hubris—seemed to offer concrete proof of the fissure between the proud and talented Mondavi brothers. Fellow vintners watched the rising feud between Robert and Peter with a mixture of sympathy and dismay. After all, Robert was building his winery just five miles south of Krug on Highway 29. The brothers were barely on speaking terms. Other vintners in the valley didn’t talk about it much; mostly, they looked the other way.
But what also caught everyone’s attention and provoked some amused comments was that almost as soon as he started his own winery, Robert began pronouncing his surname differently than Peter, Rosa, and the rest of the family. He restored it to “Mon-dah-vee,” which was how the name was pronounced before Cesare had Americanized it after immigrating to the U.S. Meanwhile, Peter and the rest of the family continued to pronounce their last name as they always had done: “Mon-day-vee.”
However slight the change, the new pronunciation had the intended effect of distinguishing Robert from his younger brother. When his longtime friend Charles Daniels asked Robert why he’d changed it, Robert explained with a straight face: “That’s the proper Italian pronunciation.” Daniels also recalled that around that time, some people in the valley began asking, “What is it with this Mondavi business?” referring to the rift between the brothers and Robert’s startling decision to Europeanize his last name. Robert never formally announced the change in pronunciation; it just spread through usage. In later years, his sister Helen would even jokingly introduce herself as “Helen Mon-dah-vee Mon-day-vee.”
And soon enough many people—and especially newcomers to the valley—started referring to the entire family as “Mon-dah-vees”—a galling, frequent reminder to Peter of Robert’s linguistic coup over the rest of the family.
The Robert Mondavi Winery’s growing reputation was built on fine wines, meaning expensive wines made almost exclusively from Napa Valley grapes. It was also built on Robert’s gift for hiring talented winemakers. Keeping those winemakers was another matter, though. For Robert faced an ongoing problem: With one son in the business and another likely to join, the family would always get the credit for the elegant wines that were produced at Oakville, even though it was often the staffers doing much of the work. And although Robert would pay employees 10 to 15 percent above other wineries’ wages and offered such perks as weekly wine tastings, there was a ceiling to any career ambitions that a staffer without the last name Mondavi might entertain at the winery. The family openly acknowledged this.
Michael, upon his return, worked hard and earned just $650 a week. To try to drum up business, he would sometimes drive slowly down Highway 29 from Rutherford to Oakville, waiting for cars to stack up behind him. Driving a pickup truck borrowed from his father-in-law, he’d then slowly make the right-hand turn into the winery. When a car or two followed him, as they often did, he’d jump out of his truck and stick out his hand, saying, “Hi there, I’m Michael Mondavi. Would you like a tour?” Yet, Michael also clearly enjoyed an advantage because of his last name, even joking about it at times. On meeting Michael for the first time for a job interview, one applicant asked if he minded that the applicant’s wife also worked at the winery. Robert’s elder son leaned back in his chair and grinned: “Nepotism can be a good thing.”
But this practice carried a sizable cost for the company: Ambitious employees often ended up quitting for better opportunities elsewhere. The first to go was Warren Winiarski, the academic refugee from the University of Chicago. Winiarski worked through the first two crushes at the Robert Mondavi Winery, amid the chaos of construction, and left shortly before the third in 1968.
This first year, Winiarski did much of the lab work himself as well as supervising crush, fermentation, and aging of the reds. Michael was doing his National Guard duty for much of the first year as the Vietnam War raged, so Winiarski took his guidance from Robert. In terms of the day-to-day production, Winiarski was in charge, without any sort of directions in terms of style from either Robert or Michael to produce, for example, Bordeaux-style wines. Because so much else was going at the winery—completing construction, negotiating grape contracts, and selling their first year’s wine—Winiarski was left mostly to his own devices. Yet by 1967, Michael had returned from the National Guard and become, in title at least, the winemaker at Mondavi.
That proved frustrating for Winiarski, who, despite his differences with Lee Stewart, had embraced his old boss’s style of paying close attention to even the seemingly most minor details of winemaking. Michael, in turn, had no formal training in enology or chemistry and while he had absorbed a general understanding of winemaking from his days as a cellar rat at Krug, he was not by nature highly detail-oriented. So when incidents occurred in Winiarski’s second and third years at Mondavi, such as Michael taking the valves off the tanks and not replacing them, thus inadvertently exposing the wine to air, Winiarski started to wish he had more control. “There were things he didn’t see because he didn’t care,” says Winiarski. “He liked wine but it wasn’t his passion.”
Winiarski had borrowed money in 1965 to buy fifteen acres of his own up on Howell Mountain, where he hoped to plant a vineyard. His first season in 1967 was a disappointment but he didn’t give up. The following year, his plans to start a vineyard of his own started to come together. So, hoping he could support his family as a freelance winemaker and consultant, he announced he was quitting the Robert Mondavi Winery, shortly before the crucial time of harvest. As Winiarski tells it, Michael was not happy about the timing of his departure. But “I didn’t come to California to be the number-two man in a two-man winery,” recalled Winiarski, referring to his relatively short stay at Souverain Cellars. “The same thing was true at Mondavi.” While Winiarski learned an extraordinary amount at both places, he bridled at working under someone else. “Everyone who is devoted to making something wants to have control of the material—finally and completely—and that couldn’t happen there because of Mike and Robert. It was their material,” meaning it was ultimately their grapes, yeast, barrels, and wine.
It didn’t take long for Robert to recruit Winiarski’s replacement: a talented Croatian immigrant named Miljenko “Mike” Grgich, who was then working at Beaulieu Vineyard for André Tchelistcheff, the quality-driven winemaker who demanded high standards of cleanliness and precision from his staff. Tchelistcheff was about to retire, but ironically his own son had applied for his job, which seemed to suggest that Grgich was unlikely to become the next winemaker at Beaulieu, the most revered producer of fine wines in the valley. Robert knew of Grgich’s situation and thought he might be looking for a new position. So the men arranged a chat in the fall of 1968, just a few weeks after Winiarski had left.
Grgich made the short, two-mile drive down Highway 29 and met with Robert on a wooden bench, near the Robert Mondavi Winery’s mission-style arch. It was a sunny fall day and Robert’s enthusiasm was infectious, as he explained to Grgich his dream of making French-style wines with the newest and most technologically advanced equipment available. Robert also explained that his son recently had returned from duty in the National Guard and was the vice president of winemaking. “I need someone to help my son Michael, who is very young,” Robert told Grgich. While his job title would be head of quality control, in fact he would run the winemaking operation for the family and be the actual winemaker, in a deus-ex-machina fashion. In return, Robert offered Grgich the opportunity to build his reputation as one of the finest winemakers of his generation.
“Mike, if you join my company, I’ll make out of you a little André Tchelistcheff!” he promised him.
It was an irresistible offer, made more so because of Robert’s evident passion to make the Robert Mondavi Winery America’s finest. Grgich accepted and got to work, introducing—among other methods he had learned at Beaulieu—malolactic fermentation, a technique that lends a soft, buttery quality to wines by converting hard malic acids into soft lactic acids. Every Monday, led by Robert, the staff would have their own blind tastings of Mondavi wines against the best from France. It entered into company legend that the winery was California’s largest importer of French grand crus because of these competitive tastings. Robert showed up at the winery nearly as early as Grgich, at six or seven each morning during crush, to taste the progress of the fermenting juice from the barrels or discuss a technical issue with his winemaker.
The very first Cabernet Grgich made for the winery, the 1969, was entered in a blind tasting—which meant that the wine labels would be hidden from the judges—against several other Cabernet Sauvignons from California. Organized by the Los Angeles Times’s wine writer, Robert Lawrence Balzer, the judges, who included Tchelistcheff and Robert, had made most of the wines being tasted that day. When the judges voted the 1969 Robert Mondavi Winery Cabernet as the very best, that decision led to a rush of favorable publicity for the young winery, catapulting it overnight into the ranks of such revered wines as those made at Beaulieu.
Though Grgich had made the wine, Robert took credit for it. The Balzer tasting, as it came to be known, was the first big publicity breakthrough for the winery, sending its sales soaring. It helped attract the attention of the European wine trade, which, a few years later, in 1976, would organize a blind tasting that would have an even more significant impact on Napa Valley.
Yet Grgich, like Winiarski before him, grew frustrated with the fast pace of growth and attendant chaos at the winery. In contrast to the orderly calm of Beaulieu, where experiments took place one at a time, allowing the winemakers to gauge their success before proceeding to the next step, everything seemed to happen at once at Mondavi. Some people in the valley began calling Robert’s place the “test-tube winery” because of its rapid embrace of new ideas and technologies. Robert would credit the quality of the wines one year to his new roto-tanks, automated fermentation tanks that would rotate at the push of a button, and then the next year attribute it to a centrifuge, his latest purchase. The following year, he’d have forgotten all about the new tanks and the centrifuge and enthuse over a new type of filter. “He was just charging forward. For me it was a little faster than I would do myself,” Grgich said.
The fast-moving atmosphere was driven, in part, by the leap in demand for Robert Mondavi wines. The winery was crushing five hundred tons of grapes in Grgich’s first harvest in 1969; four years later it was crushing five thousand tons, or ten times as much. “[Robert] was so successful that I, as a precision winemaker, could not take care of all his wines; it was just too much wine for me.” So Grgich asked Robert to hire another winemaker to handle the lower-quality wines, while Grgich would tend to the Cabernet and Chardonnay. Robert resisted Grgich’s plea.
“Mike, I know you can handle it,” Robert said.
“I know I cannot, because I am not happy if some mistake comes and I cannot control it. I want to have total control and perfect wines,” Grgich explained in the thick Croatian accent he never lost, echoing the desire for control that Winiarski also felt. Although Grgich hired an assistant, Zelma Long, after his first two years on the job, the workload for both of them was extremely heavy. At the same time, though the Mondavis left day-to-day control over the winemaking to Grgich and Long, they were not generous in acknowledging their contributions to the winery and instead claimed the glory for themselves. To Zelma Long, “it was always the family member that was the winemaker.”
At around that same time, two men from Los Angeles approached Grgich with a plan to revive Château Montelena. They offered him complete control plus a small equity stake. When Timothy graduated from UC Davis, there would soon be three Mondavis actively involved in the business and Robert had made it clear he would not offer a nonfamily staffer shares in the winery. Grgich accepted the Château Montelena job as its winemaker in 1972. The Mondavis had lost another talented winemaker.
Mondavi would reap the benefits of having employed Winiarski and Grgich several years later, when a young Englishman named Steven Spurrier, who owned a wine shop in Paris called the Caves de la Madeleine, and an adjacent wine school, organized a blind wine tasting of French and California wines. On May 24, 1976, Spurrier brought together nine French judges with impeccable wine credentials, recalls George Taber, the sole journalist who covered the tasting that day at Paris’s Intercontinental Hotel. The labels were covered so the judges would not know if they were drinking a wine from America or France. About halfway through the tasting, Taber realized the judges were getting confused. They were identifying California wines as French. As Taber wrote later,
Raymond Oliver, the owner and chef of the Grand Véfour restaurant in Paris, one of the temples of French haute cuisine, swirled a white wine in his glass, held it up to the light to examine the pale straw color, smelled it, and then tasted it. After a pause he said, “Ah, back to France!” I checked my list of wines twice to be sure, but Oliver had in fact just tasted a 1972 Freemark Abbey Chardonnay from California’s Napa Valley! Soon after, Claude Dubois-Millot of GaultMillau, a publisher of French food and wine books and magazines, tasted another white wine and said with great confidence, “That is definitely California. It has no nose.” But the wine was really a 1973 Bâtard-Montrachet Ramonet-Prudhon, one of Burgundy’s finest products.
The French judges ended up picking two California wines as the best at that day’s tasting. They were a 1973 Château Montelena Chardonnay, made by Mike Grgich, and a 1973 Stag’s Leap Wine Cellars Cabernet Sauvignon, made by Warren Winiarski. These Californian upstarts beat such fabled producers as Haut-Brion, Mouton-Rothschild, and Meursault-Charmes. Time’s modest June 7, 1976, story, written by Taber and headlined “Judgment of Paris,” announced “the unthinkable happened: California defeated all Gaul.” The tasting represented a turning point for California’s wine industry. For the first time, the wine establishment, rooted in Europe and the East Coast, began to take California producers seriously.
Although Robert’s own wines were not chosen for the tasting, his cash-strapped winery shared the glory, since it had been one of Grgich’s and Winiarski’s training grounds. Although neither had been able to tolerate for very long their lack of control at Mondavi, their alma mater nonetheless reveled in the attention, becoming known as “Mondavi University”—an experimental hotbed producing not only America’s finest wines but also some of its finest winemakers.
In the spring of 1967, Joseph Alioto took a trip to Paris, a city he had loved all his life. One evening, he went to dine at the famous Parisian restaurant Maxim’s with his newlywed son, John, and John’s wife, Madeleine. When their French waiter asked the party what they would like to drink, Alioto replied that he’d like a bottle of Charles Krug Cabernet Sauvignon. The waiter looked confused, so Alioto explained that Charles Krug was a very fine California wine.
“Monsieur,” said the waiter, drawing himself up in a haughty manner, “we only use California wines for cooking.”
The group from San Francisco laughed at the waiter’s dismissal of their state’s product and drank Bordeaux with their meal instead. California wines were not considered good enough by many Europeans to be included on the wine list of one of their fine restaurants. And indeed, the leading California wineries at the time were consciously patterning their winemaking styles on French models.
At about the same time that Alioto was visiting Paris, Robert invented a faux French name as a way of glamorizing the everyday Sauvignon Blanc grape. Much of the wine made from the Sauvignon Blanc grape in those days was of poor quality, but Robert took the crop provided by his growers and aged it in French barrels. Modeling it after herbaceous whites from the Loire Valley, as well as softer, oak-aged ones from Bordeaux, Robert transposed what was known as blanc fumé in France, and marketed it, in a twist, as Fumé Blanc. It was the first of many such marketing coups for Napa’s newest winery.
When Alioto returned from his trip, his focus on Charles Krug began to wane as he got swept up in a mayoral race. After an electrifying fifty-five-day campaign, he was elected in 1967 to the first of two four-year terms as mayor of San Francisco. After only six months in office, the city’s ebullient new mayor began jockeying for a vice presidential spot alongside Hubert Humphrey on the 1968 Democratic ticket. Although U.S. senator Edmund Muskie of Maine got the nomination, Alioto delivered Humphrey’s nomination speech at the Democratic National Convention that year. He then turned his sights to running for governor of California, but was knocked out by a devastating 1969 article in Look magazine that alleged that he had mafia ties. It took him more than a decade of wrangling in the courts, but Alioto eventually forced Look, in 1980, to pay $350,000 in libel damages.
The mafia allegations were not Alioto’s only worry in 1969. That same year, he was indicted for kicking back a legal fee. Alioto eventually won a civil trial stemming from that charge and a judge dismissed related criminal charges brought by the federal government, but Alioto’s legal and personal woes ultimately drained the energy from his administration. The fact that Rosa and Peter’s champion had plenty of troubles of his own as he moved more deeply into politics and headed toward a bizarre and bitter end to his first marriage would all prove a fatal disadvantage to “Mama Mondavi” and her youngest son when their family feud exploded in court.
Charles Williams made a linguistic faux pas when he interviewed for a job at the new Robert Mondavi Winery in 1970. A tall, straight-talking man who’d been born and raised in Lodi, Williams walked into Robert’s office, stuck out his hand, and called him “Mr. Mon-day-vee,” which is how the family’s name had always been pronounced back home in the Central Valley. Williams realized his mistake when Robert chuckled good-naturedly and pronounced his name “Mon-dah-vee.” Propping his feet on his old wooden desk and leaning back in his chair, Robert was relaxed during the chat, spending most of the time talking about himself and his business philosophy. The two men hit it off. “I fly by the seat of my pants, but I fly so fast and so low, nobody notices,” Robert confided in Williams, before offering him a job.
Robert was being candid. The early years of the Robert Mondavi Winery were indeed fast-paced and chaotic. What Robert had originally envisioned as a small, 20,000-case winery for his son rapidly outgrew that modest vision. In 1967, the winery sold 2,579 cases of wine. The following year, its case sales nearly quadrupled. They tripled in 1969 to more than 30,000 cases. By 1973, they had tripled once again, approaching an astonishing 100,000. That growth, however, did not correspond with steadily rising profits.
From the very beginning, Robert spent freely on such state-of-the-art equipment as jacketed stainless steel tanks, Austrian-made rotating dejuicer-fermenters, known as roto-tanks, and expensive French barrels. While the Robert Mondavi Winery quickly gained a reputation as being technologically advanced, it didn’t have the careful planning and administrative controls that more established wineries relied upon. As a start-up, decisions were often made on the fly and were not carefully thought through—the same unruly entrepreneurial energy fueling the explosive growth of nearby Silicon Valley at the same time.
An early example of this start-up mentality occurred when a flood of growers sought to sell their grapes to the new winery. Robert wouldn’t refuse and ended up crushing more than a thousand tons of grapes in 1967, more than twice as much as the previous year. He faced a difficult choice: selling all the extra wine he’d made or letting his contracts with these new growers lapse, opening the way for them to sell their grapes to rival wineries. Instead, he and his partners decided to look for an outside investor.
Ironically, the partner for the man who would soon make the words fine wine and Napa synonymous came from the brewing industry, and specifically the Sick’s Rainier Brewing Company, a relatively small, family-owned brewery based in Washington State. Rainier was looking for a way to diversify its interests in a related field that was not yet dominated by a few industry giants, as the brewing industry was even then by Anheuser-Busch and Coors. Its advance scout in Napa Valley was Alan Ferguson, the grandson of Rainier’s founder and its president and CEO at the time.
Nicknamed “Ferg,” Rainier’s chief executive had just sold the company’s baseball team, the Seattle Rainiers, and had $12.5 million in cash to invest. He learned through Chuck Daniels, Krug’s longtime northern-California distributor, that Holmes and Shoch were getting nervous about ever seeing a return on their $25,000 investments in the Robert Mondavi Winery and were somewhat unnerved by Robert’s large ambitions for the business. They realized he wasn’t satisfied with just running a model winery for their real estate project, but more ambitiously wanted to compete with his brother.
After visiting a number of Napa Valley wineries, Ferguson paid a call on Robert Mondavi in the spring of 1967. During that visit, Robert explained his philosophy of “being the best, not the biggest” and spoke convincingly of the growing market for fine wines. Ferguson raised the possibility of Robert selling out to Rainier entirely, but Robert was not interested. Still, the two men developed a good rapport. From Robert’s perspective, he was bringing in another family operation as a partner that shared his drive to excel in quality.
Ferguson went back to Seattle and drafted a proposal to Rainier’s board. In February of 1968, Rainier’s directors approved a deal to buy out Shoch and Holmes’s stake and leave Robert with management control. Robert had insisted on this after his banishment by Rosa and Peter, since he was determined never again to repeat the experience he’d had of being ousted at Krug. Both Robert and Michael Mondavi agreed to work under management contracts. In order to obtain the capital they needed to grow their winery, they gave equal say in it to Rainier. The bargain was that Rainier, in turn, would provide the cash to help them rapidly grow their young company. Rainier’s goal was for the Robert Mondavi Winery to eventually sell two hundred thousand cases a year—an ambitious goal, considering that Mondavi’s sales had barely topped ten thousand cases in 1968. Charles Krug, in contrast, was selling more than half a million cases of wine a year by then. But Rosa and Peter still viewed Rainier’s backing as a threat, since the Seattle company was proposing an enormous, twentyfold increase in sales over the decade, a goal that would certainly test Robert’s stated belief that growth did not have to come at the expense of quality. Considering the valley’s small size and how quickly news traveled, Robert’s family almost certainly knew of his plan.
Was sibling rivalry fueling Robert’s drive to build a bigger operation? Or did he simply need a deep-pocketed investor if the winery was to keep its creditors at bay? As the head of a family enterprise himself, Ferguson was no stranger to the emotional undercurrents that influence so many business decisions. He entered into the arrangement with Robert and Michael with a full understanding of the family politics at play. He realized there was a simmering feud between Robert and the rest of his family and knew that this feud could well erupt into a legal battle that would challenge everything from Robert’s right to use his own last name on his wine labels to Robert’s equity stake in Krug. He may have hoped that by buying an investment position in Krug, he could help pave the way for family reconciliation.
But Ferguson, a good judge of character, also recognized that the same ambition that fueled Robert’s entrepreneurial drive also led him to spend freely and without self-restraint. One example of this was Robert’s stance on the construction of the columns of the new winery. To save money, Cliff May had suggested they could be made of boards covered in chicken wire and then stuccoed. But where quality was at stake, there was no choice. Robert insisted the walls be solid, even though that meant they’d cost more.
Knowing this, Ferguson installed Daniels as vice president and treasurer of the Robert Mondavi Winery and senior vice president in charge of vineyards. Daniels also became the third member of the winery’s executive committee, along with Robert and Michael. Daniels also was instrumental in helping the young winery purchase an additional 230 acres of the To Kalon vineyard after he learned that the Stelling heirs wanted to cash out, as well as helping to buy another 550 acres nearby through a new subsidiary called Robert Mondavi Vineyards and Company. Some old-time farmers viewed the well-dressed Daniels suspiciously, referring to him as one of the unwelcome breed of “suede shoe boys” coming to the valley. But Daniels helped put the pieces in place for the Robert Mondavi Winery’s breathtaking ascendancy as Napa Valley’s most innovative winery, with its success adding fuel to the Mondavis’ smoldering family feud.
Although he’d been reelected to the board of C. Mondavi and Sons continuously through the 1960s, Robert had no longer bothered to go from late 1966 onward; it was clear to him that he was not welcome. Joe Alioto generally attended the meetings both as a director and as C. Mondavi and Sons’ general counsel in the early years, but Robert was barred from having his own legal counsel at the meetings and denied even the most basic information about Krug’s operations and finances.
But not long after Rainier bought into his winery, Robert began attending board meetings at Charles Krug again. The impetus for his return was the possibility, at least in Robert’s mind, that Rainier might serve as a buyer for any Krug shareholders who wished to sell out to it on a fair basis.
Often held around the long wooden dining table in Rosa’s great room at her home on the Krug Ranch, the family board meetings were called to order by the Mondavi matriarch. Then, she’d turn the proceedings over to Fred Ferroggiaro or Joe Alioto and promptly disappear into the kitchen to continue rolling pasta and simmering sauces. As it turned out, the real discussions among the “majority directors” often had already taken place out in the garage before the formal meeting even began.
Decisions that the “majority directors”—meaning Peter, Rosa, Mary, and at first Helen—had taken would then be announced to the larger group, consisting of Robert, Michael, and Robert’s attorney, Cliff Adams. If Robert objected, Alioto’s tactic was simply to cut him off as he started to speak, refusing to allow him to ask questions or make suggestions concerning Krug’s operations.
The bitterest moments of these tense and unhappy gatherings often involved the feast that would take place afterward. Throughout the meetings, wonderful smells of roasting meats and sautéed garlic would drift into the great room, making the directors’ mouths water as the midday meal approached. Generally, Michael, Cliff Adams, Alioto’s associate Rick Saveri, and any other lawyers who were present in the room sat in chairs behind the table where the principals were seated. When the time finally came, “it was very clear that Bob and Michael were not welcome to stay for lunch,” says Cliff Adams. The small band supporting the sole “minority director” would rise from their chairs, leave Rosa’s home, and walk the short distance across the lawn to Robert’s house, where Marjorie would have prepared the midday meal for them.
Robert tried to soften Rosa’s position, often wandering into his mother’s kitchen in the early mornings before the other directors had arrived, ostensibly to have a cup of coffee with her. But his attempt at approaching Rosa as a mother rather than as a company president did not produce any visible détente in the boardroom.
If anything, the situation grew worse. Minor issues, such as Peter’s refusal to authorize payment for maintenance or repairs to the home on the Krug Ranch where Robert and his family still lived, took on a life of their own. In turn, when Robert delivered his sales pitch to wine buyers, explaining that he wanted to make wine that would “stand in the company of the world’s best,” Peter and other members of the family interpreted it to mean Krug was lackadaisical about quality. Misunderstandings like these became symbolic of the much larger ways in which communication between the Mondavi brothers was breaking down.
In 1972, Peter made an explosive move. At his initiative, the “majority” directors approved a new family partnership. The new entity boosted the payout to the participating family members—to everyone, that is, except Robert. The complex scheme, which involved shifting company profits to the new paper partnership, led to what would become perhaps the longest and most brutal inheritance battle in Napa history.
The Mondavi family partnership had begun in 1943, when Cesare had set up an entity called C. Mondavi and Sons. Its assets consisted of Cesare’s various business interests, including the Charles Krug Winery. The patriarch had envisioned the partnership as being a vehicle for all of his children and grandchildren—not simply for one branch of the family. That wish was expressed in the partnership’s paperwork:
“Whereas the said Cesare Mondavi has formed the said partnership for the purpose of assisting his sons who are general partners, and his daughters who constitute the limited partners herein, in building up an estate for them and their children.”
The next event had occurred four years later, in 1947, when the C. Mondavi and Sons partnership transferred most of its assets into a newly created corporation in exchange for ten thousand shares of stock. That meant that the old family partnership’s main asset was its shareholdings in the corporation. Typical of closely held family companies, the expectation was that the shares would be gifted or willed to the next generation of Mondavis. In case a shareholder decided to sell or transfer shares to an outsider, the partnership’s bylaws gave the shareholders right of first refusal to buy each other’s shares at book value. This restriction was added in case Cesare and Rosa’s daughters decided to sell their stock after they married.
In the late 1950s, Cesare and Rosa had gifted some additional shares to their children. The shareholdings shifted again after Cesare died in 1959, when his interests went into a trust, controlled by Rosa. By the early 1970s, the ownership of Charles Krug hadn’t changed very much from Cesare’s original plan:
But what had changed in the intervening decades was a phenomenal spurt in the value of those underlying shares. By the early 1970s, Napa Valley had left behind its rural past of prune trees and walnut orchards. It was becoming a glamorous destination for urban refugees, as well as a hunting ground for conglomerates seeking diversification. In 1971, Switzerland’s Nestlé bought Beringer, and two years later Pillsbury snapped up the small but prestigious Château Souverain. By then, the value of vineyards and well-known brands in the fine wine industry far outstripped their book values.
Charles Krug had a book value—the value of its assets as carried on the balance sheet after depreciation—of around $6.5 million in the mid-1970s. But its actual value was at least three times that much—and probably far more, if the offers batted around by potential buyers were a reliable guide. Put differently, while the book value of shares in the family partnership was worth around $650 per share, their market value was probably far north of $2,000 per share. With Rosa, Robert, and Peter each controlling 24 percent of the shares, the book value of their interests was around $1.56 million.
Conservatively estimated, the company’s market value approached $5 million, and possibly much more. For Robert, who had been sorely cash-strapped ever since his banishment from Krug, that paper wealth was agonizingly close yet hard to reach. Robert could only sell to the family and only at book value. What Cesare had envisioned as being reasonable—never having imagined the huge run-up in values or the possibility that his sons wouldn’t get along—had become unconscionably unfair in the intervening decades to a family member who wanted to sell out.
Two years after Rainier entered the picture as an investor in his brother’s winery, Peter agreed to meet with the brewing company. In April of 1970, Peter led Alan Ferguson and Charles Daniels on a tour of the Krug winery. Although Peter made it clear he wasn’t interested in selling at that time, the three men discussed the family’s cash problems and the estate tax issues that would arise upon Rosa’s death. Ferguson and Robert were also invited by Rosa to have lunch. Rainier’s interest in Krug later led to inflammatory charges by Peter and his lawyers that Ferguson and his company were out to “bulldoze Mother,” “capture the fine wine market,” take over Krug, and destroy their winery. But the truth was that Krug was simply too big and too expensive for Rainier to seriously consider buying.
In the meantime, far bigger companies than Rainier’s had caught a whiff of the family troubles at Charles Krug. Peter had been approached on several occasions about selling out, but he had until then rebuffed such inquiries. It was not until the Schlitz Brewing Company of Milwaukee, Wisconsin, approached the family that they realized that the true value of their shares might be much greater than their paper worth. On September 3, 1971, a Schlitz representative sent a letter that dangled a tempting offer before the Mondavis:
“Peter, you and your family may tailor this offer to best fit your situation. Part cash—part stock, management contract—whatever you deem reasonable—and with you as the controlling factor in the production of all wine.”
Peter did not immediately reject Schlitz’s offer, so the big Midwestern company began courting Fred Ferroggiaro, who offered it counsel on how to woo the Mondavis and even agreed to present Schlitz’s offer to the Krug board in December. But the corporate minutes of that meeting make it clear that Rosa rejected the idea of a sale almost immediately. Peter, Mary, Helen’s son, Peter Ventura, and Fred Ferroggiaro all supported the matriarch by voting with her, while Robert abstained. At the same time, everyone in the family except for Robert voted yes on a motion by Peter to further restrict family members from pledging their stock. Robert’s was the sole no vote on that motion.
Six days later, Robert wrote a letter to his sister Mary, who was the company secretary, asking for a written copy of the motion that had been passed: His request implies that Peter and the rest of the family had kept the dollar value and specific terms of the Schlitz offer secret from him.
They had several reasons for keeping quiet. Schlitz was offering $32 million for Krug, which meant that Robert and Peter’s stakes—at least theoretically—were each worth $7.68 million. But the Schlitz offer was alarming as well. Rosa, who was then eighty-one, owned shares worth some $3.84 million and controlled a trust with an equal value. When she died, the estate taxes on those shares would be high. The new awareness of the family’s wealth carried with it a fear that they’d have to sell off vineyards or other estates to make the payment when the time came. Peter immediately asked Krug’s outside accountant to investigate the estate tax problem.
After the lean years of the late 1950s and early 1960s, Krug’s after-tax earnings had been rising fast. Between 1967 and 1971, its profits had more than tripled to $875,000 from $237,000. The accountant advised Peter that “since Napa Valley wines have attracted nationwide attention, they may presently be considered a glamour industry, and accordingly its stock would have a relatively high [price to] earnings ratio.” Assuming that the Internal Revenue Service chose to use this method of determining the value of the family’s shares, the Mondavis were facing a potentially crippling tax bill when the time came.
One strategy for cutting that bill would be to reduce the size of Rosa’s estate through gifts to her children or grandchildren. Another possibility was to dampen Krug’s earnings by stepping up the winery’s program for repairs and maintenance, planting more vineyards, and hiking salaries. Peter and Rosa ended up adopting a two-pronged plan: slash Krug’s reported earnings and build up Rosa and Peter’s liquid assets so Rosa’s family could pay the inheritance tax.
Despite being rebuffed by the board, Schlitz remained in the background that spring, reiterating its desire to consummate a “marriage between the Mondavi and the Schlitz families.” Meanwhile, though, a new suitor had appeared: the Quaker Oats Company. Peter had turned down its proposal as well, indicating that the family would entertain no thoughts of selling until it had worked out its potential estate tax problems.
Further complicating the matter were Rosa’s feelings. As Alioto recalled it in later years, Rosa was dead set against ever selling the Charles Krug Winery, no matter how high the price. When he broached the idea with her—Rosa barely five feet tall and Alioto towering over her at more than six feet—her stance was unshakable.
“Mrs. Mondavi,” Alioto said, “you really ought to think about this seriously, particularly in view of the dispute that’s going on. That’s one way of settling it.”
“But my Cesare always told me never to sell the winery. Never to sell the winery!”
“Yes, I know,” said Alioto. “But when he told you that, he was thinking that maybe somebody might offer you the same kind of terms on which you bought the winery, might offer you a couple of hundred thousand dollars payable over five years or ten years. They’re offering you thirty-two million dollars in cash, and you really ought to think seriously about it.”
Rosa paused for a moment. She finally said, “Mr. Alioto, what am I going to do with thirty-two million dollars? Right now I have this winery. I enjoy inviting my friends to my Sunday lunches and maybe we’ll just keep it the way it is…. Can I do anything more or be any happier than I am right now?”
In later years, Alioto could never forget Rosa’s stubborn insistence on keeping the winery, regardless of how much money she might get. Alioto realized that Mama Rosa felt she had no need for more money. “It was just the dispute that was driving her crazy,” he concluded.