Keeping the family wine business is often hard

Fred Swan has recently noted that: “The vineyard and winery business in Napa Valley has, over the past 50-some years, largely shifted from small, family-owned wineries, to multi-brand corporate ownership, and then to proprietorships of uber-wealthy people who needn’t worry about shareholder dividends.” Some other parts of the world have followed the same path, notably Bordeaux and Burgundy, although most places stop at corporate ownership.

Nevertheless, throughout much of the world, vineyards and their associated wineries are often family-run concerns, either small or large (for the very large, see The curious dominance of family-owned wine businesses in the U.S.).

Indeed, it is often treated as commercially desirable that a wine business should be seen as family run, even after it has been bought by a large corporation. In this regard, Australia's Robert Hill Smith (who heads a family-owned wine business) has said: “I’m really sick of the latest trend for corporate misuse of the term ‘family’ when promoting wine brands that were sold by the family founders eons ago, and conning wine-loving consumers and trade alike.” Indeed, in Australia, you can consult a list of companies who do precisely this: Who makes my wine?

As far as families are concerned, Rebecca Gibb has noted that: “four in five family wineries in the US [are] still in the hand of first-generation owners.” One reason for this is that keeping the business in family hands is one of the hardest things to do, whether it is the wine business or not: “According to the Family Business Institute, 75 percent of businesses don’t transition to the second generation, and only one percent survive past the third.” For wineries, Fred Swan points out that: “For many long-term, family winery owners, the only way to fund retirement for themselves and their employees, divide assets among children, or fund improvement or expansion is to sell.” Indeed, Richard Mendelson is quoted as noting: “Winery sellers can be owners who need capital to expand but lack it, or lack the front or back office staff needed to expand. Sometimes, they are families whose 'next gen' are uninterested in staying on or can’t agree on how to run the business.” See also Brian Freedman's article on the topic.

This raises the interesting question of just how many vineyards / wineries have made it through several generations, and still remain in family hands today. For example, Italy’s Marchesi Antinori wine company is still family owned after 26 generations (as noted on their logo, shown above). This is in sharp contrast to, say, the Mondavi family's well-reported succession problems, which even became the subject of a book (The House of Mondavi: the Rise and Fall of an American Wine Dynasty. Julia Flynn Siler, 2007).

Some data

I would not even dream of tackling this question with reference to anywhere in Europe or North America, because the data-collecting would defeat me. So, I will adopt my tried-and-true approach of using Australia as my example — Australia has 25 million people to search among, not 350 million!

So, here is a list of current Australian wine companies that were founded all the way back in the 1800s, and which have maintained the same basic name, even if their associated vineyards have not been continuously maintained.¹ It is based on: Australia’s oldest wine companies or continuously operating brands.

Company Wyndham Estate Olive Farm Wines Houghton Yering Station Vineyard Sandalford Wines Oliver’s Taranga Vineyards Lindeman's Penfold’s Magill Estate Winery Pewsey Vale Vineyard Orlando Wines Yalumba Bleasdale Wines Seppeltsfield Winery Sevenhill Cellars Hardy’s Drayton’s Family Wines Normans Wines Mudgee Wines Chambers Rosewood Winery Gehrig Estate Wines St Leonards Vineyard Tyrrell’s Vineyards Morris Wines Saltram Wine Estates Jones Winery & Vineyard Mount Prior Vineyard Tahbilk Wines Hardys Tintara Winery St Huberts Goona Warra Vineyard Yeringberg All Saints Estate   Turkey Flat Vineyards Best's Great Western Henschke Campbells Winery Stanton [& Killeen] Wines McWilliam's Hanwood Estate Brown Brothers Milawa Vineyard Angove Family Winemakers Kay Brothers Amery Vineyard Pirramimma Wines

Year established 1828 1829 1836 1838 1840 1841 1843 1844 1847 1847 1849  AFFW 1850 1851 1851 1853 1853 1853 1856 1858 1858 1858 1858  AFFW 1859 1859 1860 1860 1860  AFFW 1861 1862 1863 1863 1864   1865 1867 1868  AFFW 1870  AFFW 1875 1877  AFFW 1885  AFFW 1886 1891 1892

The table lists all still-extant companies that were founded up to 1864. There were plenty of other companies founded during that time, but they no longer exist under their original name. For example, these companies have also operated continuously since their founding: Hope Estate (founded 1850) became Seaview (in 1950), before being absorbed into Treasury Wine Estates; Craigmoor (1859) is now Robert Oatley Vineyards; and Quelltaler Estate (1863) is now the corporate-owned Annie's Lane.

In the table, I have highlighted in boldface those companies that are are still in the original family's hands today (8 out of 32). To them, I have added the other continuously family-owned companies that I know of that were founded before 1900 (another 10). Note that some of the other companies listed in the table are currently in family hands, just not the hands of the founding family.²

That's not a bad list, really, since it adds up to 18 Australian wine companies with continuous family ownership for more than a century.

Organizations

There have been a number of organizations gathering together families who have made it through several generations of winery ownership. For example, in Europe there is Primum Familiae Vini (founded 1993; currently 11 member companies); in New Zealand there is the Family of Twelve (founded 2009); and Australia has Australia's First Families of Wine (founded 2009; currently 12 members).

Obviously, it is the latter group (abbreviated AFFW) that is of relevance to the discussion here; and seven of the 12 member companies are highlighted in the table above. The group name is a bit cheeky, as it cannot refer to the "first families in time", given the number of other long-term ownerships listed above. The five AFFW companies missing from the table were sometimes founded much more recently:

Company d'Arenberg De Bortoli Family Winemakers Jim Barry Wines Taylors' Wines Howard Park (Burch Family Wines)

Year established 1912  AFFW 1928  AFFW 1959  AFFW 1969  AFFW 1986  AFFW

Nor can the group's name actually refer to "first in quality", in spite of the fact that their stated primary aim is to promote high-quality Australian wines:

The underlying rationale for the formation of Australia's First Families of Wine was the realization that export markets had either lost sight of or had no way of knowing about Australia's rich history, it's diverse regions and wine styles, and the fierce personal commitment of the best winemakers to the production of high-quality wines true to their variety and geographical origin.

The criteria for membership are relatively straightforward, including: being family controlled (in a legal sense); having a history of at least two (preferably three) generations involved in the business; the ability to offer a tasting of at least 20 vintages of one or more iconic brands; ownership of established vineyards more than 50 years old and/or distinguished sites that exemplify the best of terroir; a commitment to environmental best practice in vineyards, wineries and packaging; and long-term commitment to export markets.

However, there are other family-owned wineries who meet these criteria, and yet who are not members. Grant Burge Wines (founded 1988) is an obvious example, with its Meshach Shiraz (first vintage 1988), with grapes sourced from the Filsell Vineyard (established in the 1920s). However, many, if not most, of Australia's iconic wineries do not have vineyards that are 50 years old (yet).

However, the sticking point for membership seems to be the criterion that I did not list above: family member service on wine industry bodies. This is an impossible ask for most family-run businesses, because most of them are relatively small — the time commitment is often simply not there, even if there is a family member willing (or able) to take on the task. Most family-owned Australian wineries are thereby excluded from the AFFW, because they are not large enough.

Finally, it is ironic that their bid for international recognition of the quality of Australian wines pits the AFFW squarely against Australia's largest family-owned wine company: Casella Wines (founded 1969). It is the great success of Casella's Yellow Tail (the best-selling imported wine brand in the USA) that has given Australian wines their 21st century reputation as easy-drinking and innocuous. So, it is a group of 12 families against a single family (plus all of the large corporations).

Mind you, all of this it still leaves us with a moot question: Should you join the family business?

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¹ Some of the names have changed a bit over the years. For example, just the other day Brown Brothers changed its name to Brown Family Wine Group.
² I should note that the founding date for Best's is stretching the definition a bit. The company was in the Best family's hands until 1920, when it was bought by a neighboring family, the Thomsons, who had founded their own winery in 1893 — they have owned Best's ever since. Tulloch (founded 1895) is another tricky case, the company having been re-purchased by the Tulloch family in 2001.