Striving to give landmark winery bigger place on map
Mondavi is one of the biggest names on the wine aisle. Then there’s Peter Mondavi Jr. and his family’s little winery.
He looks over the millions of dollars of restoration underway at the historic Napa Valley operation and recalls how his grandparents worked so hard to reestablish the Charles Krug wine label.
“They were doing this in the 1940s and 1950s when our own family name had no significance in the wine business,” Mondavi said.
Now Mondavi and his brother Marc are in possession of some of California’s greatest wine assets, including more than 500 acres of prime Napa Valley vineyards and a landmark winery. In a twist of fate, they are the last branch of the family that still owns the right to put the Mondavi name on a wine label.
Together, they are leading a resurgence of the Krug winery and the Mondavi labels it produces. Their premium Charles Krug Peter Mondavi Family wines have won favorable reviews in recent years and are selling out months in advance of the new vintage’s annual release, a healthy sign for a winery.
Their less expensive CK Mondavi also is gaining in the face of stiff competition from industry giants E&J; Gallo Winery of Modesto and San Francisco-based Wine Group, billion-dollar companies with offerings in the same price range.
Although profitable, the brothers’ winery, known formally as C. Mondavi & Sons, is tiny by comparison, garnering just $60 million in annual sales. It has 100 employees.
The Mondavis trace their wine roots back to grandfather and patriarch Cesare Mondavi. He was one of the first to recognize the value of Napa Valley after Prohibition ended. After buying a small winery in the region in 1937, he purchased Charles Krug Winery -- Napa Valley’s oldest -- for $75,000 in 1943.
His son Peter Mondavi Sr. experimented with different white wine cold fermentation techniques and was an early advocate of aging wine in imported French oak barrels, now industry standards. Robert Mondavi, the older son, proved that Napa Valley could compete with the great wine regions of France and made the Mondavi name synonymous with fine California wine.
Then the family fell victim to California wine society’s version of a Shakespearean tragedy.
Robert and Peter couldn’t get along after Cesare’s death in 1959 and the elevation of his wife and their mother Rosa to president. While Robert took over as general manager, he chaffed at the criticism Peter heaped on his management style and business plans. During one argument, Robert struck Peter. Rosa put a stop to the fighting by making Robert take a six-month leave of absence with pay.
Robert never came back. He borrowed money to buy choice vineyard property in Oakville and opened what became Robert Mondavi Corp. in 1966. That winery flourished and transformed the Mondavi name into a wine legend. Peter Mondavi’s Charles Krug business lived on in mediocrity.
It was a big fall for the Krug winery, which before the brothers’ breakup “was one of the leading labels in Napa Valley,” said Darrell Corti, a longtime wine judge and gourmet foods merchant who runs Corti Bros. in Sacramento. For decades Krug produced few notable wines, Corti said.
“We fell behind,” Peter Mondavi Jr. said.
The ascendancy of the Robert Mondavi side of the family would last for more than three decades. But then infighting between Robert Mondavi and his sons combined with poor management and financial choices to destroy the new Mondavi empire.
Constellation Brands Inc., the world’s largest wine company, acquired Robert Mondavi Corp. and the right to use the Mondavi name for $1 billion in 2004.
There was nothing in the transaction to stop the other side of the family from using the equity built up in the Mondavi name to help push their wines. When Cesare Mondavi’s grandson meets with restaurateurs and retailers he introduces himself as Peter Mondavi and asks if they would like to “try some of my family’s wine.”
The wine is something he is proud of. Mondavi started working at the winery when he was 8 years old, unwrapping glasses purchased for the tasting room. He joined the business full time after graduating from Stanford University in 1981. There are 400 wineries in Napa Valley, he observed, but only three are still in the hands of the same families that helped restart the area’s wine business after Prohibition: the Nicolinis, the Trincheros and his side of the Mondavis.
“We are still one of the lower-priced wines in Napa Valley, but as our quality has improved, pricing has followed,” Peter Mondavi Jr. said.
The family has invested $21 million in the Krug brand over the last decade, mostly in planting vineyards with classic Bordeaux varieties of grapes. Almost two-thirds of their Napa Valley vineyards are organically farmed.
Others have noticed.
“There are some very good wines that they produce now,” Corti said. “The Cabernet Sauvignon and Sauvignon Blanc has improved dramatically.”
The red wines are “big but with better balance than some of the other wines coming out of Napa,” said Clark Wolf, a restaurant and food consultant in New York.
Such praise has helped the Mondavis build their premium brand back to sales of nearly 85,000 cases last year, a 14% gain from 2006. Because of price increases, revenue is growing by a faster 17% pace.
The brothers hope Charles Krug Peter Mondavi Family wines can grow 50% in five to 10 years, which would be about the limit of what the winery can produce from its vineyards, so that all of the production could be sold as “Napa Valley estate wines,” Mondavi said.
Marc, 53, runs the CK Mondavi brand while Peter, 50, focuses on the Charles Krug wines. They both go by the title of proprietor. Their 93-year-old father lives on the winery’s grounds but leaves most of the business to the younger generation.
For years Marc has focused on turning the CK Mondavi brand into a reliable and less-expensive wine that compared well with others in the $6 to $7 range. He built up annual sales to more than 1 million cases, and although that’s growing, it is still just a tiny fraction of what Gallo sells. Profit has been enough to enable Peter to reestablish the Charles Krug Peter Mondavi Family label as a premium wine.
Peter also is working to restore the family’s 19th century winery buildings.
The complex is at the northern end of St. Helena, a few miles beyond where the heavy tourist traffic along Highway 29 ends.
Mondavi believes that the interesting architecture of the buildings and their status as what’s left of Napa Valley’s first commercial winery would make Charles Krug a much bigger tourist draw. That’s something that would juice the winery’s profitable direct-to-consumer sales and give prestige to the brand.
It’s a $7.5-million project that includes bringing the 1872-built Redwood Cellar building up to modern earthquake standards.
“We will use it as our barrel room and eventually for a small winery to make exclusive lots,” he said. The building’s stone walls are almost 2-feet thick.
The project includes restoring the 1881-built Carriage House so that it can be used for meetings, charitable events and rented out for weddings. Both structures are state and federal historic landmarks.
“The heritage and the history of this winery,” said Mondavi, “will ring a bell in the mind of consumers as much as the family name.”
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C. Mondavi & Sons
A historic winery that competes against much larger companies with its Charles Krug and Mondavi brands.
* Peter Mondavi Sr., president and CEO;
* Marc Mondavi, co-proprietor
* Peter Mondavi Jr., co-proprietor
In 1858, winery founder Charles Krug used a cider press to crush grapes.