A Wine Family Feud : The Matriarch of the Sebastianis Makes Her Move, and Her Elder Son, Sam, Is Out of a Job
Some people think Sam Sebastiani displayed characteristic extravagance when he paid $595,000 for a mostly barren hill behind the family winery in Sonoma and then spent at least another $58,000 on a party last June at which the hill was renamed for the Sebastianis’ ancestral village in Italy. Sam’s defenders, who outnumber his detractors, disagree: They say the purchase of the hill, and the party, reflected his marketing flair, a talent that enabled the Sebastiani Vineyards to make headway after the death of August Sebastiani, Sam’s father, in 1980.
At the very least, the party showed off Sam’s promotional skills. Sam chose the hill because his grandfather, who founded the winery, had quarried stone there. By reaffirming the Sebastianis’ link to the land, Sam believed he was underscoring one of the winery’s chief marketing assets--its lengthy history of family ownership--while laying the groundwork for expansion. One day, perhaps, he’d construct caves or wine cellars on the hill, or he’d build a small restaurant that would become the winery’s entertainment center.
At the party, the 300 guests, including prominent local citizens, wine writers and family friends, were taken in horse-drawn wagons to the hill, where Sam had re-created an Italian marketplace. His wife, Vicki, the firm’s director of wine and food presentations, served 60 Italian dishes, including some based on recipes she’d picked up in Farneta, the village for which the hill was being renamed. Sam even flew in some relatives from Farneta and nearby towns; among them was a priest, Don Samuele Ricci, who by happy coincidence was both the nephew of Sam’s grandfather and the pastor of Greve, Sonoma’s sister city in Italy.
While a cameraman recorded the proceedings for inclusion in a promotional videotape to be shown to the winery’s distributors and retailers, Ricci dedicated a handsome cobblestone monument that Sam had installed halfway up the hill. The plaque at the base of the monument reads in part:
“On June 1, 1985, the Sebastiani family dedicated this hill Monte di Farneta, in honor of the birthplace of winery founder Samuele Sebastiani. Farneta, Italy, is where Samuele learned the art of grape growing and winemaking, and formed the idea of starting a Sebastiani family winery in America. . . . He worked the quarry on this hill to fulfill his dream of establishing the Sebastiani family winery in 1904.”
Sam, however, never got the chance to develop Monte di Farneta. Seven months later, on the morning of Jan. 2, his brother, Don, came to Sam’s house bearing a message from their mother, Sylvia, owner of 94.6% of the winery’s stock. Sam expected that Don would be relaying Sylvia’s decision about a long-term employment contract he’d requested. Instead, he was shocked to learn that Sylvia had fired him. Now the monument is less a memorial to the family legacy than to Sam’s foreshortened reign as winery chief. Don, who took over for his brother, says he may sell the hill.
The predictable theme of much of the news coverage of Sam’s firing was reflected in a San Francisco Chronicle headline: “Sebastiani Soap Opera Better Than ‘Falcon Crest.’ ” Even Don thought comparisons to the wine country television soap opera were apt, joking recently that “the only difference between Italian families like this and ‘Falcon Crest’ is that these families have dramatically more violence and dramatically less sex.”
Indeed, while sex and overt violence are missing from the Sebastiani saga, not much else is. A synopsis goes like this: August, the owner of the largest winery in Sonoma, dies, leaving majority ownership to his wife, Sylvia, now 69, and management to his elder son, Sam, now 45. The new president realizes that the winery is in trouble and radically shifts its sales strategy, upsetting Sylvia and other members of the family. He puts his wife, Vicki, in charge of the winery’s food presentations, provoking jealousy from Sylvia, who had played that part while August was alive.
Meanwhile, Don, 12 years younger than Sam, becomes a state assemblyman, a controversial one at that. When Don’s actions cause his political opponents to threaten retribution against the winery, Sam rebukes him for putting it in jeopardy. By 1985, Sebastiani wine is receiving critical raves, but the winery is losing money, and Sylvia’s distress over Sam’s spending grows. Finally, instead of confronting Sam, Sylvia consults Don, 33, and her daughter, Mary Ann Cuneo, 38. Together they decide to fire Sam.
If all this makes soap opera allusions seem appropriate, Sam’s supporters suggest that the story has an element soap operas don’t: tragedy. In their view, the Sebastiani saga is similar to Shakespeare’s “King Lear,” with Sylvia cast as the aging monarch who favors two offspring over the third and most deserving child. “I have never met a man with Sam’s leadership ability and basic sense of honor,” says Al Graham, the winery’s vice president of human resources and administration who was fired soon after Sam. “I think the thing Sylvia did was unforgivable.”
In Sonoma, where Sylvia, Sam and Don all own imposing homes within a mile of the winery, the family rift caused a sensation. Many citizens quickly took sides while others declined to express opinions out of fear of angering the Sebastianis. Most people were surprised, for only a few family friends and high-level employees understood the dimensions of a conflict whose seeds were sown long before Sam took over the winery from his father.
It was August who, since 1944, had presided over the winery’s vast expansion into the eighth-largest in California and the 11th-largest in the nation in production. Riding the crest of wine’s burgeoning popularity in the United States, the winery’s production grew from 30,000 cases in 1966 to 4 million in 1975, according to one industry estimate.
By all accounts, August ran a seat-of-the-pants operation. He cultivated a country image, exemplified by the bib overalls he wore almost constantly. A friend and free-lance wine writer, Nathan Chroman, wrote after August’s death that what he liked best about the man was his simplicity: “No put-on, no superficial fanciness, no phoniness. An invitation to his table came with a hearty slap on the back . . . and August’s never-ending supply of warm, earthy stories.”
Not everyone appreciated August’s direct manner. Richard Paul Hinkle, a San Francisco Examiner wine columnist who worked for the winery in the early ‘70s, says that on several occasions August fired employees without notice or severance pay. “Friday he’d come up and say, ‘Here’s your check. Don’t come back Monday.’ Many of the employees were just cogs in the wheel (to August); they were not people, and yet he could turn around to his most faithful employees and be incredibly generous.”
Jim Carter, an executive at the winery from 1972 to 1985, describes August as “a rugged individualist entrepreneur.” His business strategy was based on low overhead: He produced cheap jug wine and eschewed frills.
“My dad grew up with the pay-as-you-go mentality,” Don says. “It’s that good old-fashioned rule of ‘Never a borrower or a lender be.’ ” Debts disturbed August because they implied an unspecified obligation to the lender; he was even leery of receiving gifts. Don recalled that when an employee gave August a book about birds, a subject that fascinated August, the winery owner instructed Don to rewrap the book and return it to the giver. “My dad just did not have a button on his control panel for how you receive a gift from an employee, because it’s like, employees provide a service, you provide cash, and that’s it,” Don says.
August could be just as callous with his family. Don, who describes his father as “very loving but very strict,” says, “You might do a good job, you might do a great job, that is 99% perfect, and he’ll talk about the 1%. My dad was not an approval giver.”
Of August’s two sons, Sam, the firstborn, seemed to receive harsher treatment. Says Hinkle: “August had his thumb on Sam.” A family friend says that while Sam was working at the winery in the ‘70s, he “was working largely for his father’s approval, which he never got. . . . Sam went through a terribly tough period. He had some good marketing ideas and his dad wouldn’t listen to him, but if some 30-year employee suggested the same thing, it would probably be fine.” Seconding that notion, Sam said his father “treated me like somebody who had to be 55 or 60 years old before he would be listened to and before he could have any credence on his own.”
After taking over the winery, Sam named his new premium grape-growing acreage the Eagle Vineyard, explaining that “as a family winery operating in a corporate world, we are an endangered species, just like the eagle.” The eagle seemed to signify something more to Sam, for he also made it his personal symbol, even wearing a silver belt buckle with an embossed eagle insignia. To the extent that the eagle suggests isolation and vulnerability, it seems an appropriate symbol for Sam, for many people considered him set apart from the rest of the family. To Don, Sam was the family’s “black sheep,” while to one winery employee he was the only one of August’s three children with “sensitivity.” The extent to which he differed from August became clear when he took over the winery.
Sam always assumed that he would eventually run the winery. To that end he earned a master’s in business administration at the University of Santa Clara, then began working full-time for the winery in 1965. When August died of cancer at age 66 in February, 1980, Sylvia became majority owner and chairman of the board, and Sam became president. Sam had already decided that the winery needed dramatic changes and began introducing them.
One of his first steps was to demonstrate his commitment to the winery’s 150 employees by spending $11,000 to refurbish the room set aside for their breaks. According to Sam, demoralized workers had, out of frustration, kicked holes in one of the doors. Sam eventually carried out many more measures to improve work conditions: He installed fans, heaters and additional lighting in the bottling room; put rubber mats under work stations so employees would not have to stand on wet concrete, and adjusted the height of work stations to make employees more comfortable. Sam said his motto was “ ‘Safety, comfort, productivity’: Safety first, comfort second, then we worry about productivity.” Says one employee who worked at the winery throughout Sam’s tenure: “My sense was that he showed a genuine concern for the welfare of his employees.”
Sam also set about improving relations with the 6,850 residents of Sonoma. Even though Don says he believes his father did a better job of running the winery than Sam did, he concedes, “My dad didn’t even realize the category of community relations existed.” August thought that because the winery predated most of the town, the townspeople had no right to complain about its operations, even though the winery was only a few blocks from the center of Sonoma.
By the time Sam took over, the complaints focused on parking problems caused by tourists visiting the tasting room and on the noise made by winery operations and trucks. Antagonism toward the winery was so widespread that locals devised an acronym summing up their feelings: “ABS,” or “Anything But Sebastiani.”
Sam met with residents, then accommodated them. He improved the winery’s appearance and adjusted its working hours, bought electric forklift trucks, erected walls to reduce noise, built a parking lot for tourists and directed delivery trucks to use a longer route that avoided residential areas. Ever since, says Sonoma Mayor Jerry Tuller, “a great period of harmony” has existed between town and winery.
The biggest change Sam instituted was also his riskiest. In the ‘70s, the growing popularity of wine with affluent Americans had resulted in huge growth for the California wine industry. That development led to the winery’s surge in sales, but it also intensified competition. After Coca-Cola bought Taylor Wine Co. in 1977, launched Taylor California Cellars in 1978 and began running television advertisements calling Sebastiani wines inferior, Sam realized he lacked the money to compete with huge corporations for the low-profit, high-volume jug wine business. For one thing, he couldn’t afford a huge advertising budget.
Instead, accelerating a shift begun by his father, Sam decided to concede the jug wine business to the corporate wineries and to concentrate on high-quality wine. To succeed, the winery needed to improve its product dramatically. In Sam’s view, the winery’s equipment was “archaic,” causing such problems as a 1978 yeast bacteria infestation that led to the recall or destruction of at least $800,000 worth of wine. By his own estimate, Sam invested $6.5 million over several years in new equipment.
Underlining the difference between this approach and August’s, Carlo Gaines, a liquor distributor and one of Sam’s best friends, says: “Sam was always trying to get his father to upgrade the equipment, and his father said, ‘What’s the use? This is what the people want.’ Of course, Sam knew that it was reaching the point where people wanted more out of a bottle of wine.”
Sam also equipped a van with a scientific lab and used it to test the quality control at the vineyards whose grapes the winery bought. The success of Sam’s efforts was reflected in a March, 1985, Vogue magazine article that called the winery’s 1984 premium output “probably . . . the greatest quantity of absolutely first-quality wine made anywhere by a single producer in a given year” and in the 58 medals Sebastiani wines won at national, state and local judgings in 1985.
To benefit from upgrading the equipment, Sam also had to change the popular conception of the winery as strictly a producer of cheap wine. Wine drinkers are notorious for lacking brand loyalty, and wineries go to great lengths to woo them. In addition, the number of wineries in California had more than doubled during the ‘70s, and the victors in the resulting competition often were those who succeeded in associating their products with glamour. “You have to give the wine industry a taste of silver, a taste of success,” Gaines says. “In the old days you could get away with selling jugs. Nowadays you really have to sell the sizzle.”
The winery’s most marketable advantage over its competitors was its family ownership, which could be exploited to give distributors and consumers the feeling of a personal tie to the company. But whereas the spotlight had previously shone on August in his bib overalls and Sylvia, the devoted wife and expert Italian cook, it now shifted to Sam and Vicki.
The couple went on the road five to six months a year, participating in wine promotions and meeting with distributors. To develop the winery’s new marketing theme, “A Heritage of Wine and Foods,” they occasionally visited Italy, trying to show that the family’s heritage extended to the Old Country. When Sam and Vicki were in Sonoma, Sam says, they entertained winery clients at their home two to three times a week; during his six-year tenure as president, they entertained about 5,000 people at home. Sometimes the visits resulted in free publicity, as when Julia Child devoted a “Good Morning America” segment to the winery.
Putting Sam and Vicki in the public eye made demographic sense, since the yuppie consumers who were likely to buy premium wines were roughly the same age as the couple. Says Ed Everett, wine editor of Associated Beverage Publications: “Even if they had to go out to central casting, they would have had to get somebody like Vicki--she’s in the age and style bracket that a lot of people could identify with. For all her attractiveness, Sylvia just doesn’t reach that group on an immediate basis. She’s Mama.”
At times, Sam may have become overly convinced of his importance. At a harvest dinner, an annual event at a San Francisco hotel to introduce the company’s new wines, Sam held up his baby daughter to the audience and asked the members to salute her by shaking their champagne bottles until the corks popped off. A family member called the incident “weird.”
The other Sebastianis became resentful and wondered why they did not get to participate in as many glamorous promotions as Sam and Vicki did. The apparent answer was that Sam believed they were not effective promoters. Particularly divisive was Sylvia’s resentment toward Vicki, which grew until relations between the two women “stunk,” Don says.
A wine writer remembers that at Sebastiani functions, “all the daughters and daughters-in-law would gather around Mama, to the point of literally sitting at her feet. Vicki didn’t play that game at all.” It probably didn’t help that Vicki, whose ancestors are half-French and half-Dutch, was the only non-Italian in the Sebastiani clan and that she was Sam’s second wife. Vicki was so disliked, Don says, that “People in the tribe were all saying, ‘If we had any problems with Barbara (Sam’s first wife), they all look small by comparison now.’ ”
The biggest conflict of all was between Sam and his mother. Don says that when his father died, Sylvia “was looking for a new . . . pole to lean on, and my brother stepped in to fill that void right away. He would say, ‘Sign this.’ ‘OK, sure.’ ‘Sign that.’ ‘OK, sure.’ And then after the fog (of Sylvia’s grief ) lifted, it was more, ‘Sign this.’ ‘Well, let me look this over.’ Sam would get terribly frustrated, and so it would turn to, ‘Sign this, we need it, and it’s got to be signed by tomorrow at 5 p.m.’ At selected and probably very, very few times, it would be, ‘If you don’t sign this, I’m going to quit.’ ” Sam says he considered quitting twice in five years.
Some Sebastiani family members thought Sam was exacting revenge for his rough treatment by August. “Sam gave the impression that he felt he’d been stepped on, and now he was going to step on others in like manner,” Don says. Counters Al Graham: “It was my reading when I joined the company (in 1982) that Sam didn’t receive any support or recognition from his brother, from his sister, or his mother. I think he was a very frustrated guy in terms of needing his family’s support.”
One reason he felt entitled to it was that he was working extremely hard, even obsessively. “Sam would have millions of ideas, they’d just come blazing out of him, then he’d go into a stop mode,” Jim Carter says. “He worked so hard he’d get exhausted, then you wouldn’t see him for a couple of days. Then he’d come back and have a million ideas again.”
Sylvia was concerned partially because she was accustomed to August’s manner of running the winery, then was confronted by Sam’s radically different ways. As early as 1980, when Sam refurbished the employees’ break room, Sylvia opposed Sam’s spending plans, just as August would have. Sam says: “She constantly told me, ‘You don’t have to spend this--don’t, don’t, don’t!’ She’d get upset because I bought $40 worth of petunias for the tasting room, and she thought that was too much.” Sam found Sylvia’s objections to insignificant expenditures particularly frustrating because they implied she didn’t understand his larger objectives.
Sylvia also was offended by Sam’s practice of referring to her by her first name instead of “Mom.” Sam invariably did this in the passages he wrote for the winery newsletter; Don says that at Sylvia’s house he found copies on which his mother had crossed out “Sylvia” and “August” with a red pencil and substituted “Mom” and “Dad.”
Sam says he thinks his failing was simply that he wasn’t August. Sylvia expected Sam to give her end-of-the-day reports on winery activities, as August had, but instead Sam went home to Vicki and his children. In addition, Sam said, “Everytime I told Sylvia something, it was apparent that she did not understand, but I continued to tell her, and she would react irrationally. When the sales were down and I had advised her of it . . . , her reaction was that we should fire a secretary or a gardener or something. She’d want to start chopping.”
Sylvia frequently approached employees to ask highly charged questions, Graham says. “You had to be a skillful politician to understand and give an answer that didn’t incriminate yourself, which usually meant you had to side with her.” She sat in on Sam’s meetings with his vice presidents, often interrupting to ask what struck Graham as irrelevant questions. “Oftentimes in these meetings we would be discussing a particular marketing strategy, and she would say (something like), ‘We don’t have our wines in the Nut Tree.’ ” The Nut Tree is a popular restaurant-store complex on U.S. 80 between San Francisco and Sacramento.
Yet another irritant to Sam was Don’s political career. Elected as a Republican to the state Assembly in 1980, Don made headlines three years later by sponsoring a state reapportionment initiative that induced panic among Democrats before it was ruled unconstitutional by the California Supreme Court. That inspired the Alameda County Democratic Central Committee to sell buttons showing a red diagonal slash superimposed over a wine bottle with a skull and crossbones on the label and the word Sebastiani underneath. And when in the midst of the reapportionment campaign Don told a reporter that he supported the idea of women astronauts “as long as they have a one-way ticket,” the National Organization for Women responded by picketing the winery for several hours and threatening a boycott.
All this infuriated Sam. Fearful that Don’s activities had imperiled the winery, he sent Don a telegram: “I will do everything I can to see you defeated. I cannot tolerate your active abuse of my efforts and our good name.” Under prodding from Sam to give up his political career, Don instead severed his ties to the winery.
Sylvia apparently sided with Don. “Don could do no wrong in Sylvia’s eyes,” says a former winery official. “When he made that outrageous comment (about female astronauts), her attitude was, ‘That’s just Don--he just says those things sometimes.’ When Sam would say something questionable, it had to be analyzed and dealt with.”
The growth of the California table wine industry reached a plateau in 1982. Industry analysts gave many explanations, including the increase in the value of the dollar, which lowered the price of competing European wines; the national recession, and the possibility that the market had been saturated during the rapid growth of the ‘70s. For the Sebastiani winery, in the midst of an expensive plan to upgrade its product and revise its marketing strategy, the timing could not have been worse. It lost money in 1982; by 1984, the loss reached either $1.7 million or $2 million, according to separate winery sources, and in 1985 it lost another $500,000. By then Bank of America, the winery’s long-time lender, had financial problems of its own and intimated that it might not continue backing the winery.
In addition, Jim Carter suddenly left the company in early 1985. Carter says he resigned to attend to family problems caused by his father’s death; Graham says Carter was fired. His departure was a shock to Sylvia, who regarded Carter as “almost like family,” Don says. Sylvia thought Sam should have told her about the conflict with Carter before Carter left the company. Graham says, “The reason Sylvia wasn’t told that Carter was being fired was, I don’t think Sam wanted to have the decision countermanded.”
On top of this, Sam began prodding Sylvia last summer to give him a 10-year employment contract. His rationale was that once Sylvia died, the rest of the family might not back him as president. According to Sam, the proposed contract contained a clause stating that Sylvia could cancel its provisions at any time by giving 30 days’ notice, reflecting Sam’s confidence that Sylvia would always support him; the clause would lapse when Sylvia died. Sylvia, however, considered the proposed contract an affront and put off dealing with it.
In October, Sam and his vice presidents held a weeklong series of meetings to modify the winery’s long-range plans. During the fifth day, Sylvia came into the meeting room. Don was going to run for lieutenant governor, she told the executives, and she wanted it understood that nobody at the winery was to say anything critical of his campaign. Sam was flabbergasted. He and Sylvia argued. Sam says that after Sylvia departed, he told the executives, “I’ve just had my day ruined,” and left.
Sam went on vacation in Baja California. When he returned, he met with Don and Mary Ann. Don says Sam told them he’d decided to quit the winery; Sam says he proposed only that the three of them agree to sell it. Soon afterward, Sam says, he had a meeting with his mother at which she rejected both ideas and told Sam she supported him as president. Sam renewed his pitch for an employment contract and got the impression that Sylvia would give it to him.
Instead, the request for the employment contract was “the straw that broke the camel’s back,” Don says. A source close to the family says that during this time Don urged his mother to fire Sam, and now she agreed. On New Year’s Eve, Sylvia signed papers making Don the new chairman of the board and chief executive, and two days later Don told Sam that he was fired.
Says Don: “My mother was pleased with the movement of the company in the direction of premium wines, but she was extremely distressed by the continual losses at the bottom line.” The reasons for the dismissal, Don says, included Sam’s “extremely excessive” expenditures, the company’s poor performance and the “deteriorated” relations between Sam and his mother and sister. While the third explanation is undoubtedly true, the first two are arguable. The winery seemed to have weathered the industry’s difficult times better than most of its competitors; analysts say that while California wine sales declined by 4% in 1985, Sebastiani’s volume increased by 6%, and winery officials projected a $2-million profit for 1986.
Among Sam’s “excessive” expenditures, Don says, were Sam’s purchase of Monte di Farneta and the ensuing party (which Don says cost $100,000, not $58,000 as Sam stated), Sam’s $255,000 salary and Vicki’s $38,000 salary, a winery-funded $220,000 renovation of Sam’s house, and Sam’s frequent use of chartered planes and helicopters. Don also charged that the winery employed six to 12 people to take care of Sam’s and Vicki’s needs.
Sam looks on those expenses differently. His salary was $245,000, not $255,000, he says--similar to salaries of presidents of comparable companies, and less than August received. Sam says the money he used to renovate his house amounted to $125,000, not $220,000, and was borrowed from his mother, not taken from winery funds. The chartered planes and helicopters were required, he says, because of great demands on his time. Sam says he doesn’t know who Don’s “six to 12 people” referred to, but presumed Don meant members of the marketing and public relations staff, which, Sam says, existed to promote the winery, not him and his wife.
Deprived of the personalities who were the heart of its marketing efforts over the last six years, the winery faces an uncertain future. Don believes that the firm has been “top-heavy” and will thrive once it cuts costs. Others predict that the winery will be sold in two or three years. “It’s odd for a family business to run even beyond one generation,” says Jim Carter. “To get to three is very strange.”
After Sam’s firing, the two brothers made fitful attempts to negotiate Sam’s severance agreement, then reached an impasse. Sam intends to start another winery, while Don says he feels “a degree of exhilaration” at returning to the family business. He is now a candidate for state controller, and he has picked a new president, A. Martin Adams, to manage the winery day to day. A source close to the family says Don believes his assumption of power at the winery has aided his campaign by giving him exposure and showing fellow politicians that he is skilled at handling family politics.
Of the three principals, only Sylvia has chosen not to speak out. Asked why, she said: “I love my children equally.”