Michael finally achieved his long-held ambition: to run his own show. Then in his early fifties, Robert’s eldest son had apprenticed for three decades under his father and various advisors. In great physical condition from his long-distance running, Michael felt up to the challenge and had plenty of reasons for optimism. Perhaps most encouragingly for Michael, his father’s attentions were engaged elsewhere.
Robert had chosen a trash-strewn lot on the wrong side of the tracks for his first big philanthropic project. Situated in the dusty city of Napa, bordered by a tire store and notable mostly for its burned-out barn, the twelve-acre parcel he bought had little going for it except that it was on the banks of the Napa River, which flowed from Mount St. Helena to the San Pablo Bay. At the turn of the century, the river had been beautiful; winding through a dense canopy of willows and cottonwoods, it had once brimmed with Chinook salmon and steelhead trout. But by the mid-1990s, polluted by fertilizer runoff and choked with sediment, the Napa River was an eyesore.
A bend in the river known as the Oxbow was where Robert decided to build his new, as yet unnamed center for wine, food, and the arts. Once again, the Baron Philippe de Rothschild was his inspiration. The baron had spent his final years gathering wine-related artifacts and artwork to display in the new museum he’d built at Mouton. Robert, too, wanted to create his own museum, in keeping with his missionary theme that wine was an integral part of culture spanning back to Biblical days. To fund the project, Robert’s advisors set up a $17 million charitable remainder trust, funded by his Robert Mondavi Corporation stock. With that seed money, they solicited contributions from other people in the food and wine world. In February 1996, the company announced that Adams would step down as Robert Mondavi Corporation’s executive vice president and instead take on the job as the center’s executive vice president.
But his tenure was brief. In late 1996, one of the board members of KQED, the San Francisco Bay Area’s public television station, went public with ethical concerns over the funding of a proposed documentary about the Mondavi patriarch’s life. What by then was known as the American Center for Wine, Food and the Arts had provided the first and only outside financial support for the project, some $50,000, even though KQED had long been prohibited from accepting money from companies to safeguard its editorial integrity. The allegation made by the KQED board member was that to get around this rule, Mondavi had channeled the money to KQED through the nonprofit American Center. While Adams attempted to defend the gift, suggesting that there was no quid pro quo on the part of the center for a favorable profile, critics nonetheless interpreted it that way, and the Mondavi Corporation indeed planned to use it in its marketing. Amid an embarrassing public outcry, KQED was forced to drop the idea, deepening the schism between Adams and Michael, who had supported the project.
At the same time, Robert realized he needed someone more experienced as a fund-raiser for the job as the American Center’s executive director. Using a headhunter, they turned to Peggy Loar, who helped organize Smithsonian traveling exhibitions and was in the final stages of opening the new Wolfsonian Museum and Research Center, a quirky museum devoted to the decorative arts in Miami’s Art Deco district. The recruiter called her and asked, “Do you like California?” Loar said, “Sure,” and soon she was on her way to Oakville, to meet Robert.
Another in a line of strikingly beautiful women who’d passed through the arches of the Oakville winery over the years, Loar wore a skirt suit and high heels for her first meeting with the by-then famous vintner, not realizing her heels would boost her above the five-foot-eight-inch vintner. Nearly running into Robert in the hallway, she recognized his famous Roman profile from photographs and said, “Mr. Mondavi, I’m Peggy Loar.”
Robert, who enjoyed lovely women as much in his eighties as he had in his younger years, tilted his head up and kissed both of Loar’s cheeks, European-style.
Loar tried to recover her balance by making a joke: “Does this mean I get the job?”
“It does if I have anything to do with it,” replied Robert.
Michael, meanwhile, was on a roll. Investors had pushed Mondavi’s stock up from a low of $6.25 a share in August of 1994 to $33 a share in late 1996. Not only was the company well-positioned to benefit from the trend of Americans moving upscale in their tastes from jug wines to premium wines, but at a time when the industry was struggling with a shortage of high-quality grapes, Mondavi seemed well-prepared to ride out that storm. By snapping up land in Central California and the coast, it more than doubled its vineyard holdings in just two years to more than five thousand acres, acting on the belief that owning the land would give it better control of its grape supply.
Mondavi had another advantage as the grape market tightened: its unusually good relations with growers. While many large wine companies viewed the farmers who supplied them grapes as their adversaries and feared that cooperative efforts between them would lead to higher prices, Mondavi, which worked with 150 or so independent growers, approached them as partners and encouraged teamwork. It chose an affable former Peace Corps director named David Lucas as head of grower relations. Hired in 1982 by Timothy, Lucas had managed teams of Peace Corps volunteers in Iran and India and built surfboards for a while before coming to California’s Central Valley to work as a fruit and vegetable buyer.
Lucas invited the growers to taste the samples of wine made from their grapes, which were intended to demonstrate the quality differences in fruit grown on different properties. By encouraging them to cooperate and share information with one another, his goal was to raise the overall level of quality from the region by discussing the rootstocks they used, methods of irrigation, and introducing such new techniques as leaf pulling, which promotes air circulation around the grape clusters and reduces diseases and pests.
The growers were willing to cooperate, in large part, because Mondavi paid as much as 100 percent more than other wine producers to ensure it got high-quality grapes. Unlike many wineries, which paid for grapes based on their acid or sugar content, Mondavi came up with incentive-based category pricing that linked price and quality, culling those growers who weren’t up to its standards. It also signed seven-to ten-year contracts, offering stability to growers. But almost more important than the higher prices and long-term contracts was the encouragement Mondavi gave them to take pride in the individual expression of place through their grapes. This was a radical notion in the San Joaquin Valley, where most grapes were blended into bulk or lower-priced wines, with little differentiation between vineyards.
Mondavi and Woodbridge were also unique among wine producers in inviting the farmers who sold them grapes to the Woodbridge winery or nearby hospitality room, known as the Apple House, to dine on white tablecloths with six wineglasses lined up in a row—a novelty at the time in Lodi’s grape-growing circles. They would also help organize trips to show growers how other regions had improved the quality of their grapes; groups from Lodi went to France and Australia in the mid-1990s. The Mondavi family’s hospitality became legendary, yet the business principle behind such events was to elevate the perception of wine as a high-quality product in a region where it was usually sold as a commodity. In admiration, some growers took to calling Woodbridge the “country club” winery.
At a time when “globalization” was the talk of management consultants and business professors, Mondavi decided it would go global as well. It began a series of international forays, sometimes with the intention of sourcing grapes outside the U.S. in the hope of making itself less vulnerable to swings in the prices of domestically grown fruit. That was the reasoning behind the company’s first venture into the Languedoc. Only a four-hour drive from Bordeaux, the landscape of this region in the south of France couldn’t be more different from France’s premier winegrowing region. With its warm, sunny weather, wide-open land, and herb-scented pastures, it resembled California more than Bordeaux’s changeable weather and inbred culture. Because of its rugged peaks and broad coastal plains, Languedoc was sometimes described as the Wild West of France.
Woodbridge’s manager, Brad Alderson, was looking for such a frontier. Against the backdrop of a poor harvest in 1996, with grape shortages causing prices in California to soar as much as 50 percent from the previous year, he and many other wine producers began searching for alternative sources. He found them in the Languedoc, a region whose role in French winemaking had traditionally been to satisfy the thirst of the French working class. During the past two decades, the European Union had ended up buying much of Languedoc’s low-quality juice and turning it into cleaning alcohol.
But Alderson had a more profitable idea in mind for it. He purchased six hundred thousand gallons of some of the better-quality 1995 vintage wine from the region, shipped it in bulk back to the fast-growing Woodbridge winery, bottled it there, and then sold it as Vichon Mediterranean. This initial foray was a success. Not only did the new label represent a promising brand makeover for Timothy’s troubled baby, but in the first full year after its launch, Vichon Mediterranean Chardonnay became the number-one French wine sold in the United States. It also made Mondavi one of the first American wine producers to strike a deal with foreign growers for bulk wine bottled in the U.S.
To head its new Vichon Mediterranean unit, Mondavi chose David Pearson, a San Diego native who had studied enology at the University of California and spent a year after graduation working as an intern on French wine estates. Pearson was working as a marketing manager for the Rothschilds in the U.S. when he was contacted by a recruiter for the Robert Mondavi Corporation. He joined the company in August of 1996 and twice helped land the Vichon Mediterranean brand on the industry publication Impact’s Hot Wine list. The French-speaking, thirty-nine-year-old Pearson crossed the Atlantic and settled in the Languedoc, just north of the city of Montpellier.
Mondavi hoped to produce both a small amount of high-quality wines from the Languedoc and much larger quantities of more affordable wines, essentially replicating its business model in California. Rather than finding a partner, as it had done with the Frescobaldis in Italy, the company decided to go it alone in France—and there were few, if any, high-quality producers in the Languedoc to partner with, in any case. Mondavi’s hope was to elevate the quality of the wines from the region, just as it had done in Napa and Lodi. In the meantime, before it planted vineyards and harvested grapes, it continued to buy locally produced wines for bottling in the U.S.
In 1998, Pearson bought around 440,000 cases to be sold under the Vichon Mediterranean label. But he ran into trouble: Not only did Languedoc’s local cooperatives supply him with mediocre wines, but many other producers from the region around that time also began flooding the U.S. market. Forced to sell off much of the French wine at a discount and the rest as bulk wine to custom labels, Mondavi took a $4 million write-down to its 1999 earnings, as well as a $1 million reserve to cover excess inventory it expected to be forced to dump. Overall, it found it had 475,000 gallons of imported wine inventory that was potentially unsalable.
Shifting gears, Pearson came up with a new plan to focus on higher quality, more expensive Languedoc wines. Instead of relabeling wines that had been produced by local cooperatives, he began looking for vineyards and production facilities that Mondavi could control. The goal was to make top-rated—and top dollar—vintages. “The midpriced varietals is Dead Man’s Land,” Pearson concluded. “In order to survive in Languedoc, you have to move upmarket.” Mondavi was convinced that with its experience in choosing the right land for vineyards and the winemaking process—emphasizing low yields and gentle handling of the grapes—it could produce superb bottles of wine from the region selling for $60 or more.
Pearson tasted wines and conducted geological surveys to locate top-quality wine real estate. What frustrated him was the small size of French vineyards. The average Languedoc grower cultivated only a few acres of low-quality grapes that he sold in bulk to be made into wine at a local cooperative. Pearson needed a tract of about 50 hectares, 125 acres, similar to the size of many smaller Bordeaux châteaus, to eventually produce 260,000 bottles a year. Finding the right terroir wasn’t easy, but Pearson finally settled on a swath of uncultivated hillside above the two-thousand-person village of Aniane, about fifteen miles northwest of the regional center of Montpellier. For $7.5 million, he leased about 120 acres. The local town council liked the idea of millions of dollars being invested in their village. It also approved of Mondavi’s plan to work with the struggling local cooperative to improve and market its output. The co-op would get $400,000 to modernize its equipment. Winegrowers who worked with the Americans would be paid about a 40 percent premium for their crop. And Mondavi would help young growers in the region also install themselves on the mountain site. Naturally, they were delighted, and in July 2000, Aniane’s town council voted to grant Mondavi a ninety-nine-year lease on the site.
Seven thousand miles away in Chile, Mondavi embarked on a similar quest: entering a promising wine region characterized by low-quality wines and helping it to produce world-class vintages. Mondavi’s interest in the region had begun several years ealier. In 1991, Robert and Margrit met with several of Chile’s leading wine-producing families—known as Apellidos Vinosos—during a trip to the country. A fellow Napa Valley vintner, the Franciscan Vineyards owner Agustin Huneeus, arranged for a young scion of one of these families, Eduardo Chadwick, to act as the Mondavi family’s tour guide. Chadwick, who was then thirty-one, drove Robert and Margrit in a four-wheel-drive vehicle though the country’s stunningly picturesque wine region, which was centered in a valley at the base of the snowcapped Andes. Robert was struck by the climatic similarities between this area of Chile and Napa: morning fog, followed by warm, sunny afternoons, and evenings cooled by breezes from the nearby Pacific. More than once, Robert remarked to his young tour guide that Chile reminded him of the potential he had seen in Napa Valley in the 1960s.
But unlike booming Napa, where new vineyards were being planted every week, the Chilean wine industry had suffered through decades of decline. In the early 1970s, under Marxist president Salvador Allende, most of Chile’s vineyards were expropriated and turned over to a National Wine Company, precipitating a steep drop in quality and productivity. When the government of General Augusto Pinochet wrested power away from Allende and returned the vineyards to their original owners, the industry continued to suffer from a lack of investment and know-how. Between 1985 and 1990, nearly two-thirds of the country’s vineyards were ripped out to plant more profitable crops such as nectarines and plums. At the same time, Chileans curtailed their wine drinking and prices plummeted. Most of the Chilean industry’s sales were exports. As Chadwick explained to Robert and Margrit on their bumpy Jeep ride, Chileans by then were accustomed to drinking oxidized white wine and few seemed to even realize this quality defect.
But Chile also seemed to offer a promising new land for Mondavi. Phylloxera hadn’t decimated Chile’s vineyards, as it had Europe’s and North America’s, and the country’s fertile soil and Mediterranean climate provided ideal growing conditions. Chile’s labor costs averaged just $2 per hour, one-tenth of those in California. Because it typically took three to five years for newly planted vineyards to begin producing grapes, most of Mondavi’s rivals were simply buying bulk wine from Chilean producers and bottling it in the U.S., similarly to what Mondavi itself had done at first in Languedoc. But Mondavi saw an opportunity to make a deeper investment along the lines of its partnership with the Frescobaldis. The company was interested in creating not only a world-class Chilean wine, but also a world-class Chilean winery, as notable as Opus One. Mondavi was not alone in its thinking: Kendall-Jackson, Lafite-Rothschild, Mouton-Rothschild, and Spain’s Miguel Torres were planting their flags in Chile.
Throughout the early 1990s, the Mondavi family hoped to form a partnership with one of the country’s larger wine companies. So when Chadwick, who’d become president of the family company following his father’s death in 1993, approached Mondavi about a possible joint venture, the Californians were not especially receptive, hoping for a more prominent partner. Although Robert saw something of himself in the handsome and well-spoken Chadwick, his family’s winery, Viña Errazuriz, was relatively tiny and most of the Chadwick family’s interests, such as its Coca-Cola bottling plant, brewery, and mining operations, were outside the wine business.
The Mondavis also saw another warning sign: The Chadwicks’ previous joint venture with Napa’s Agustin Huneeus had not been successful. Yet the young Eduardo Chadwick’s passion to learn more about wine struck a chord with Robert and when the men met again at Vinexpo, the giant industry trade fair in Bordeaux, in 1995, their negotiations with the other potential partner had fallen through. They struck a deal on a handshake, and formalized it in early 1996, calling for a $12 million investment to develop vineyards and build a winery by 1999. In the meantime, it would ship the Caliterra branded wines to the U.S. in bulk and bottle them at Woodbridge. Mondavi would also become the exclusive agent for Viña Errazuriz in the U.S. This time around, Mondavi cast itself in the senior, deep-pocketed role the Rothschilds had assumed nearly two decades earlier with it in California.
Soon after the deal was inked, Michael asked Alan Schnur to propose a list of qualified candidates to head up the new Chilean joint venture. Schnur came up with several possibilities. “You missed a name,” Michael told him. Schnur was sure he hadn’t. “Have you looked in the mirror?” Michael asked. As the company’s senior vice president of human relations, Schnur had grown closer to Michael over the past two years and spoke some Spanish, though not fluently. He also had never worked overseas before.
Despite these potential handicaps, Michael was convinced that Schnur’s expertise in human resources would help the company manage the cross-cultural issues that were likely to arise there. Schnur agreed to take on the assignment in addition to his job as head of HR, and quickly came up with a splashy way to build excitement for the new Chilean brand among Mondavi’s sales force: He convinced the company to foot the bill for flying the entire sales team of 122 people to Chile for a week, touring Errazuriz’s facilities as well as rival Concha y Toro’s. While the Mondavi staffers were exposed to Chile’s spectacular scenery, few of Errazuriz’s staffers spoke English, so the interaction was limited.
That linguistic disconnect hailed other problems ahead. Almost as soon as the first wines from Errazuriz, sold under the Caliterra label, began arriving in the U.S. as a Mondavi import, Schnur, who continued to work at Latour Court in Napa, began fielding complaints from distributors that that the bottles had scuff marks on the labels. He soon realized that the problems were more than superficial: corks had been inserted at different depths, the bottles were filled to different levels, back labels were crooked, and there were mistakes in the translation of the language on the labels from Spanish to English. Schnur called Chile and demanded to know how these mistakes were being made. The answer he got was even more troubling. The Chileans had checked the shipments, knew about the defects, yet released them for export anyway. When Schnur asked why, his Chilean counterpart asked, “Who’s going to notice?” It was an inauspicious start for Schnur’s first move from a staff to an operating role at Mondavi.
Schnur issued a general recall of the Errazuriz wines, overcoming the Chileans’ initial hesitations. He also quickly dispatched several staffers to Chile to investigate the problems, including a bottling manager and a member of Mondavi’s accounting staff. Once there, Mondavi’s bottling manager discovered that many of the bottles had dust particles in them and others were spoiled by poor-quality cork or oxidation. To tackle these and other problems, Schnur and his team decided to introduce to its Chilean partner Mondavi’s thick procedures manual, which ran several hundred pages long. That alone came as a culture shock to Chadwick staffers, who were use to a more intuitive style of problem solving.
Likewise, the vice president of the Chilean venture whom Mondavi had installed, John Adriance, was viewed suspiciously and isolated, not only because he lacked fluency in Spanish but also because he, like the other Mondavi staffers, was insistent on trying to improve quality, which the Chileans viewed as an implicit criticism of the way they did things. He also struggled with the Chadwick family’s young heir, Eduardo, as well as the Chadwicks’ similarly youthful chief of operations, whose egos, he felt, were bigger than their experience in the wine industry warranted.
The partnership hit a low point after the harvest of 1997. With foreign sales of Chilean wine booming, Errazuriz unexpectedly found itself without enough production capacity to handle the entire harvest that year. Scrambling to find an outside winery that could crush and process the grapes, it was forced to turn to one it had never done business with before for its Merlot Reserve, a superpremium brand in a booming category. By that time most Chilean wineries had converted to stainless steel fermentation tanks, but this particular one used unlined cement vats. To monitor quality, Errazuriz sent a winemaker once a week to test the fermenting wine. One week, the test showed serious contamination, leading the partners to realize that not only did the winery not have a clean facility, but it even lacked enough running water. The Chadwicks and Mondavis had no other option but to dump that year’s entire production of Merlot Reserve.
What became known as the “lost Merlot” incident shook Mondavi’s confidence in its Chilean partner. Typically, a wine producer would carefully line up the production it needed in advance of harvest, based on detailed forecasts. But that had not happened in this instance. Likewise, there was a great deal of confusion and angst over whether the partnership could properly call certain wines Merlots after discovering that, in fact, the grape that was used to make them was a different varietal called Carmenet. With all of these problems, Schnur, for one, began to doubt whether the ambitious plan to build an Opus One–style winery on a short deadline was realistic. The six-hundred-hectare site the partners chose in 1996 was in the Colchagua Valley, an isolated area about three hours south of Santiago with no access road, electricity, or irrigation. The partners budgeted $6 million for the new winery, to be called La Arboleda, which means “the arbor.”
The Mondavis and Rothschilds, on the other hand, had chosen a site for their showcase winery that was along a major highway, with ready access to power and irrigation. Even then, the construction of Opus took longer and cost far more than first estimated. Based on optimistic sales projections, the partners decided to forge ahead with their Opus-like Chilean winery, building roads and infrastructure, constructing homes for the on-site managers, and planting costly, high-density vineyards. This long-term investment seemed to make sense when so many other parts of the Mondavi empire were booming.
But the new pressure from shareholders to grow sales forced Mondavi to look for quick returns from Chile. In one year alone, 1996, when California was experiencing its grape shortage, the venture nearly tripled its sales volume to 620,000 cases, up from 245,000 the previous year. The sales pull came from Mondavi, which became convinced there was a large potential market for Chilean wines in the U.S. But the surging sales strained the partnership, forcing it to rush to fill the production demand at the same time they were struggling to build an entirely new winery from the ground up, with little or no tradition of quality winemaking in Chile to draw upon.
The Mondavi men were in expansive moods. Timothy had convinced a Napa judge to grant him a bifurcated divorce from Dorothy, allowing him to work out the financial details with her after their marriage was legally dissolved. Timothy was in a hurry because he planned to wed Holly Peterson on June 21, 1997, in the beautiful town of Positano, Italy, on the Amalfi coast. In order for the wedding to take place, he needed legal paperwork to show the Italian authorities that both he and Holly were legally single and free to marry. As well, Timothy took a precaution before slipping the wedding ring on Holly’s finger: The couple entered into an antenuptial agreement on May 30, 1997, in which Holly, who had never been married before, agreed to waive all claims to Timothy’s shares in the Robert Mondavi Corporation.
The wedding was a far grander and more elaborate nuptials celebration than the quiet ceremony that Timothy had had with Dorothy in 1976. The festivities lasted for three days, and the couple arrived for the ceremony in a horse-drawn carriage, clopping through Positano’s cobbled streets. Afterward, they were honored at a wedding dinner where five courses of beautiful food were paired with exquisite wines. Costing more than $70,000, it was a fitting celebration for the union of two members of America’s wine aristocracy.
Michael, too, was enjoying his life as chief executive of a publicly traded company. Although he’d cut off his ponytail, he continued to ride motorcycles, on one occasion in a group of leather-clad bikers who flew from Sonoma along back roads at high speeds. Another time, Michael and some other biker friends roared up to Opus One on their motorcycles, startling the tourists, who at first didn’t realize the group included Mondavi’s CEO. In a photo of the group taken after that ride, Michael grinned widely and held a fat stogie in his right hand.
Yet despite these signs of a prolonged adolescence, Michael was serious about being a good parent and he guided his only son, Rob, onto a path very similar to his own. Rob, too, attended Santa Clara University, graduating in 1994 with a degree in English literature. During the summers, he commuted back to Napa to work at the company, as Michael himself had in the late 1950s and 1960s. But Michael was determined not to make the same mistakes with his son that he was convinced his own father had made with him. For one thing, he expressed physical affection toward his son: In front of his colleagues, Michael would tenderly kiss Rob, even when his son was in his twenties.
Unlike Robert, Michael also took time away from his work to spend with his son. One of Rob’s happiest memories was of spending the morning of his fifteenth birthday, in October of 1986, duck hunting with his father. “It was five-thirty a.m. Cold. We had a little sip of Scotch from the flask. Then, he lit up a cigar,” Rob told a reporter. “I felt bad the rest of the day, but it was such a great memory. And ever since then, we’ve been smoking cigars. It was a way we communicated.”
Michael insisted Rob work elsewhere before formally joining the Robert Mondavi Corporation. With that in mind, he helped arrange for his son to apprentice at Southern Wine and Spirits, under the guidance of his old friend Ted Simpkins. About a year later, Rob headed south to Panama, to spend a year observing the business run by his mother Isabel’s family, which were involved in real estate development and restaurants. While he was in Panama, he met people from the Dominican Republic who grew tobacco. That led to Rob’s founding the Napa Cigar Company, with some help from his father and Mondavi’s human resources head, Alan Schnur, who helped him write a business plan. He also got a line of credit from the bank, but when Michael saw the high interest on the loan, he offered to cosign, helping him to get a lower rate.
The Napa Cigar Company, which he set up in 1996, got off to a fast start, and to some people at Mondavi, Michael’s son seemed to grow cocky with his early success. One executive recalled Rob, then in his mid-twenties and not yet employed at Mondavi, popping into his office and telling him, “You know, I like you. I think I’ll keep you around.” Although Rob almost certainly meant that as a joke, the comment seemed outrageous to the mid-forties executive, who thought to himself at the time, “I’m going to take the kid out back and beat the shit out of him. Somebody’s got to do it.”
With Mondavi’s long record of success, a culture of entitlement had set in. Two-hour lunches where employees lingered over a $50 bottle of wine were not unusual. On Fridays at four P.M., some staffers in the finance department would pour themselves a glass of wine and bring it back to their desks. Underworked by the hard-driving standards of 1990s corporate America, some Mondavi employees did outside consulting using Mondavi resources. With a tone set by Robert and Margrit, Mondavi employees enjoyed company cars and lavish expense accounts; instead of staying at budget motels, where staffers from Gallo stayed, Mondavi employees stayed at the Hilton in La Jolla and other four-or five-star spots.
The Mondavis readily adopted some of the fine trappings of the aristocratic wine families, even though the Robert Mondavi Corporation was now publicly traded. Michael, for one, looked to the Frescobaldis for a model of how a family business dynasty should operate and embraced such status symbols as the use of limousines and private jets. In the early autumn of 1997, the partners threw a lavish party in Italy to launch their new wine, Luce, the first product of the Mondavi and Frescobaldi joint venture. The festivities were no less than a coming-out party for America’s first family of wine. The Frescobaldis raised a stream of colorful flags and banners and threw open the doors of their Renaissance villa to Italy’s winemaking royalty: the Antinori family and the Folonaris of Ruffino, as well as Spain’s Miguel Torres. Italy’s foreign minister was on the guest list as well as other dignitaries. Michael declared to a reporter, “Our objective is to be the preeminent fine wine producer in the world. We don’t believe anyone is there yet. It is totally available.”
Michael delivered a similar message to the company’s shareholders at its 1997 annual meeting, an event that more resembled a social gathering than a sober corporate meeting. Although other wine and brewing companies began courting shareholders with parties and perks around this time, the Mondavi family took the idea and raised it to a whole new level. It introduced its “Partners Circle” in 1996, offering shareholders an array of special events and discounts, including dinner concerts under the stars and special savings on wine purchases.
Under clear blue skies, it began the meeting with café lattes on the Oakville winery’s lawn. Some shareholders who’d signed up for the Partners Circle arrived the weekend before it took place, paying to take part in activities the winery helped organize, including croquet at the Meadowood resort, a private luncheon at Thomas Keller’s acclaimed French Laundry, and dinner at Opus One. At one point during the festivities, Michael joked to investors, “You’re having too much fun—this is business!”
Both the Mondavi family and Mondavi shareholders were in a good mood. The company’s stock price hit a new high of $56.75 in October and the company’s financial results for the year were strong: Sales jumped 25 percent to just over $300 million, far outpacing the industry’s growth, and net income jumped 15 percent to $28 million. Mondavi sold over a million more cases of wine in 1997 than it had in 1996, and was aggressively investing in the second phase of its Woodbridge expansion, as well as other capital projects. During a forty-five-minute slide presentation, Michael highlighted the joint ventures in Italy and Chile and announced that the former Vichon winery on Oakville Grade was being recast as “La Famiglia,” devoted to producing wines from Italian varietals. It was Timothy who unveiled a capital-intensive project close to his heart: a $15 to $20 million renovation of the flagship Oakville winery, displaying a three-dimensional model of the To Kalon project.
During the question-and-answer period, when one of the six hundred investors who attended asked if there were any problems on the horizon for the company. Michael thought about the question for a moment and said, “Well, Prohibition would be a disaster.” The answer touched off an explosion of laughter and the meeting adjourned for a preluncheon wine tasting, followed by fennel-crusted lamb served with Pinot Noir and a choice of touring Oakville, Opus, or La Famiglia, or listening to a lecture on the history of wine in California.
The one executive missing from that annual meeting was Cliff Adams, who was on the East Coast trying to drum up funds for the American Center with Marcia. When Adams returned from his trip after the annual meeting had ended, he made his way to Robert’s office. Their conversation turned to the struggle to raise funds for the center, and Adams explained he’d found it difficult because of the lack of a clearly stated mission. Robert looked past Adams’s concern and spoke to the real problem: “I don’t think you really have your heart in the project,” he said. Adams had to agree. Robert and Adams agreed he should step down from the center and when Robert asked him if he’d like to remain on the company’s board, Adams said he’d prefer to leave it as well. After years of juggling the interests of the family members against those of the company as a whole, Robert’s loyal counselor had finally had enough.