Wine MBA Chronicle 5
2 May 2011
No Comment8 Apr 2011 by Laura Conway
In my opinion, one of the challenges of the MBA is in doing group work for both classroom presentations and in preparing more formal reports. Despite the benefits of diversity, when it comes to working as a group there are occasionally conflicts because of differing personalities, work habits, or personal priorities. As we all have come to know each others’ strengths and weaknesses, we tend to know with whom we work well and with whom we will have more difficulty. It has been useful to take advantage of each other’s strengths such as ease in public speaking, ability to create a PowerPoint presentation, quantitative skill, attention to detail, or ability to see the big picture. However, I have found it equally important to be able to mediate our negative behaviours such as lack of attention, interest and organisation.
It has been frustrating at times to have a group representative who has been particularly long-winded or irrelevant while giving a presentation. I have learned that we need to make strategic choices in how we work together and that it is to our advantage to challenge one another to improve our skills. For example, sometimes the less comfortable speakers (such as my Russian classmate, who has apparently improved both her English and her confidence) will surprise us in how well they make a presentation. And sometimes the people who seem most distracted will provide perspective and unforeseen creativity. One recent challenge was in completing our paper on wine markets. My group needed to negotiate varying expectations for our schedule, level of participation, writing style, and even grammar. We also struggled in communicating with one group member who ultimately did not contribute her section of the report, making planning all the more difficult. However, we were able to reorganise in order to complete the assignment on time. I definitely think that learning to collaborate, negotiate and make compromises with other people helps prepare us for business situations in the real world where conflict frequently arises from differing personalities or matters of opinion.
For our fifth class session, the Wine MBA group spent two weeks in January at the University of California, Davis, in northern California. Since I live in nearby San Francisco, this session conveniently allowed me to arrive by car instead of flying across oceans, as had been the norm. Although until this visit the school had primarily served as a checkpoint along the route to Lake Tahoe, I was really looking forward to familiarising myself with UC Davis as I knew it to be a well-regarded school for viticulture and oenology as well as the home of the impressive-looking Mondavi Institute for Wine and Food Science.
My classmates had probably anticipated sunny and warm Californian weather, but many of the days were foggy and drizzly and you can see from my picture here of visiting Benziger’s vineyards that we had to wrap up warm. Being American I arrived at the campus expecting to have an easier transition into this academic experience than I had experienced in Bordeaux, for example, as I was already familiar with the cultural norms. True to form, I found the atmosphere at Davis professional but ‘California casual’ (we often addressed administrators and lecturers by their first names). I very much appreciated the fact that the program was well organised and the facilities modern. The various logistics of meals, transportation, and IT support were excellent. Part of me missed learning foreign expressions and discovering unfamiliar culinary trends, but I was pleased that I had the chance to share California’s wine country and business practices with my classmates.
We began our session meeting Robert Smiley, our program host and Director of Wine Studies as well as Dean and Professor of Management Emeritus. He gave us an economic overview of the wine industry, noting facts about the worldwide industry and highlighting California’s role in the marketplace. He then shared the results of a survey he had conducted with winery CEOs on their thoughts about strategy, sales growth, and key issues impacting their business. The general consensus was that the recovery from the financial recession will be gradual but that they are already seeing improvements; social media will play a growing role in their business strategy; the US distribution system will continue to be a challenge; and that environmental issues such as having access to water and reducing wine’s carbon footprint will remain important. We then reviewed the industry once again using Porter Five Forces that shape strategy, taking the perspective of the various players such as wine producers, distributors, retailers and consumers.
Over the two weeks we covered a variety of business topics and their relevance in the wine industry, including entrepreneurship; the legal aspects of the wine industry (particularly in the US); an in-depth look at the US wine market; inventory management; and strategic management. We also endured a lengthy marketing exam case study and returned to finance, including such aspects as financial planning, cost analysis, cost accounting, and valuation. One of my favourite class topics was entrepreneurship because I enjoyed seeing the creativity behind new products or services backed by business planning that made those ideas a success. It was fun to watch entrepreneur James Nash get grilled on the British TV show Dragons’ Den on the details his ‘cup-of-wine’ invention (French wine packaged in an individually sized sealed plastic cup), which later became a huge success through retailer Marks & Spencer. I also appreciated learning about the legal aspects of the wine industry and financial accounting because they were taught in such a clear manner that the information was easy to understand and retain. During the inventory management lecture, Professor Woodruff recounted his shopping experience when a local store teller insisted on keeping separate lines despite his explanation that it was indeed more efficient to have a combined line that fed multiple tellers.
Finally, another great feature of our session at Davis was the interaction with a wide variety of local wine industry business professionals. In addition to visiting numerous wineries in Napa and Sonoma, we listened to several guest speakers in the classroom such as David Simpson, vice president of national sales for the Mendocino Wine Co, and Michael Jellison, CEO at Vinfolio in San Francisco. From discussing environmental issues with Mike Benziger, to learning about Vinfolio’s e-commerce sales strategy, we explored a wide range of business topics that influence today’s executives in the California wine industry. In my opinion, our session at Davis provided an excellent balance between academic theory and real-life professional experiences.
Our three days of winery visits took us to Sonoma, where we toured Benziger Family Winery, discussing environmental policies and biodynamics, followed by a visit to Gallo of Sonoma, where we focused on their international marketing strategy. Founded in 1933, Gallo wines have been sold in 90 countries for over 30 years, the UK being their largest export market. In addition to explaining that quantity does not mean low quality, Phil Klein, Regional VP Americas, noted that the key to growth in international markets is having a good partner. Currently their drive markets are China and Canada and emerging markets Russia and Brazil. Gallo wines are organised into three tiers: value, popular, and fine wine. Phil outlined the 50:50 strategy of social responsibility developed by the late Julio Gallo. For example, for every acre of land they plant with vineyards, they apparently set aside an acre for conservation. Also, in terms of packaging, Gallo has been a ‘fast follower’ in adopting lightweight glass as a way to reduce their wine’s carbon footprint.
Our second day took us to Napa and that region’s first winery, Charles Krug, where we discussed supply-chain management, tasting-room design and wine clubs (an important sales phenomenon for California wineries). Later at Opus One we delved into their history of sales management and compared their 1997 and 2007 vintages. Our third day of excursions took us back to Napa, where we met withDuckhorn‘s president Alex Ryan, who told us about their company culture and the factors of success in their business. Beginning in 1978, they focused on a niche market of high-end Merlot which was very successful in the 1980s. Despite their ensuing growth, they run a family-like operation that values relationships and is able to retain employees through difficult times. He emphasised Duckhorn’s belief in practising social philanthropy in counties that support their wine, and finally explained that one of their key factors for success over the last 30 years was in diversifying their risk by developing several brands (such as Paraduxx, Goldeneye, Decoy and Migration).
Some extra time in our schedule took us down the Silverado Trail to Mumm Napa, where classmate Kate Verstuyft had worked in finance for several years. After a tour and relaxing tasting on the patio we continued to Groth Winery (whose founder was one of the key architects that built Atari), where we tackled financial planning. Finally, we had one extra winery visit on UC Davis’ campus itself – the Robert Mondavi Institute Teaching and Research Winery along with the Anheuser-Busch Brewing and Food Science Laboratory. There are 12 acres of vineyards on campus in addition to an impressive array of new winemaking equipment for students to practise crafting their own blends.
Since January I have been preparing for our final class session in Bordeaux this spring. We will have exams in strategy and finance as well as give presentations of our international business plans (for my group, a high-end wine school in Montreal that also offers market research) and an update on our professional project (personal career trajectory). In the meantime we are also pursuing our dissertation projects. Many of us are developing surveys to gather data to analyse in the coming months.
For each of us, the dissertation projects have been an ongoing project since the beginning of the MBA. We are supposed to pursue a topic that is tied to our career goals. I think it is fascinating how our topics are so varied, reflecting that the wine industry involves much more than simply producing and selling wine. Richard, who is intricately involved with wine education and service, is focused on discovering how people best learn about wine and their motivations for involvement. Mona, however, is looking at neophyte consumers’ self-confidence as they select and purchase wine in supermarkets around Paris. Danny, who had previously worked at Benziger, is researching biodynamic winemaking practices across the globe. Some aspects of our research topics are very obviously allied to our career paths or personality, while the significance of other, less direct, aspects is revealed over time.
For my dissertation I am researching the impact of social media on wine consumers’ behaviour. This research topic relates to my personal interests because I want to specialise in communication and relationship-building as well as to have a solid understanding of emerging technologies. My research also focuses on branding and the influence of word of mouth via social influencers and opinion leaders. Some of the challenges of my topic are that it can be difficult to measure certain consumer behaviours or to strictly quantify the ROI for using social media. There are many intangible values that need to be observed in their long-term potential such as in building brands and developing goodwill. I have really appreciated gaining experience in research techniques as well being able to look at the subject from both an academic and a professional perspective.
The program has kept me busy, but that is what I expected. Now we’re off to France once again and in the home stretch… Wish us luck!
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Laura B. Conway
Wine MBA & WSET diploma
