Beer & Wine Wine

How Family-Owned Wineries Are Adapting to Modern Markets

When “just” making wine no longer pays the bills, these wineries are forging new paths to success.

illustration - family wineries
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Liquor.com / Laura Sant

A decade ago, small-to-midsize wineries had a fighting chance of snagging shelf space at wine shops across the country, right alongside bigger players in the industry. It wasn’t an aberration to find a bottle of a 2,000-case Willamette Valley pinot noir at a wine store in New Jersey; but thanks to a spike in the number of American wineries (between 2009 and 2021, the number of wineries in the country has grown by nearly 75%, from just over 6,300 to more than 11,000) and a plummeting number of distributors (as of 2021 there were just over 900 in the U.S., compared with 3,000 in the mid-1990s), there are now many fewer reps to go forth and persuade bottle shops into putting a specific label on their shelves. Plus, fewer customers are even buying wine in stores. 

The model for small wineries’ success has been shifting for at least a decade. The ongoing pandemic, and the manner in which it changed the way the entire world recreates, travels, and makes purchases, has accelerated those changes. It took an alarming pattern and cemented it into a (perhaps permanent) economic reality. 

According to a WineAmerica survey released in June 2021, before the Delta variant surge put a pause on business once again, the median loss of visitors for the wineries surveyed was 93.3%; the average (mean) loss was 64.8%. Wholesale sales went down by 9%. About 13% of wineries surveyed halted production, and almost 52% slowed it down. 

But there were spots of hope, too. Direct-to-consumer (DTC) sales were up 66% on average. That increase translated to big bucks: U.S. wineries shipped more than $3.7 billion worth of wine to consumers last year, according to a DTC Shipping Report from Sovos ShipCompliant and Wines and Vines. 

That bright spot—finding new methods of initiating sales that depend, essentially, on a producer’s relationship with a buyer—is just one of the ways family wineries are learning to survive, and sometimes even grow, in a challenging and ever-shifting marketplace. This is how some wineries are finding ways to buck the trend and continue to grow. 

Investing in Infrastructure  

The old business adage that you “have to spend money to make money” is absolutely true when it comes to infrastructure, says Justin McManis, a fifth-generation farmer and the winemaker and operations chief at McManis Family Vineyards in Ripon, California. 

Justin’s parents, Ron and Jamie, founded the vineyard in 1990, determined to bottle some of the sustainably farmed (they are Lodi Rules-certified) grapes they grew for other producers, at a “reasonable price,” says Justin. McManis went from producing a few thousand cases to more than 450,000 per year by “investing in the infrastructure of making high-quality wine.”

In 1998, Ron and Jamie designed and built a state-of-the-art-winery so they could “control the quality from grape to bottle,” says Justin. But the biggest investment came in 2015 with the introduction of an in-house bottling line.

“Quality control is a huge part of the winemaking process, and having our line in-house not only allowed us to control inventory better, but it also allowed us to monitor the quality every step of the way, until it reaches the consumer,” says Justin. While the investment was considerable, he says it “paid for itself a few years ago. The way our family has succeeded is by constantly reinvesting in technology, making sure we have the best equipment. The line also significantly reduced McManis’ greenhouse-gas emissions because we’re not trucking our wine around as much, and that aligns with our values.”

At Knudsen Vineyards in Oregon’s Dundee Hills, Page Knudsen Cowles says the company has managed to grow through 50 years by first focusing on quality production and then focusing on meeting people where they are. For Knudsen, the infrastructure investment has been focused on the vineyard’s hospitality space. Founded in 1971 by her parents Cal and Julie, it was the largest vineyard in the Willamette Valley by 1972, with just 30 acres under vine.  

“We have long-term growing partnerships with Argyle and other wineries, and have for decades. But in 2014, we decided it was time to create our first label,” says Knudsen Cowles, a second-generation steward of her family’s winery and vineyards along with her siblings Cal, Colin, and David. “Our production is currently 2,000 cases annually, but we hope to get to 5,000. We are deeply invested in the community here, and we see our relationship to the community expanding with our hospitality space.”

Since launching the label, Knudsen has grown tenfold by word of mouth, and had hoped the space will take it to the next level. The years-in-the-making space finally opened in 2020—not an auspicious time. 

“We knew that the size and nature of our estate-grown line of chardonnays and pinot noirs meant that a relationship with our buyers was important,” says Knudsen Cowles. “And that really begins in a tasting room.”

The public responded positively to the newly built space, which fortunately has multiple pandemic-friendly outdoor spaces. “We’ve been able to hire 10 part-time and two full-time staffers because of the space,” says Knudsen Cowles. “And we’ve had a fantastic response, seeing a huge uptick in our wine-club sales and enthusiastic attendance at our vineyard hikes especially.”

For Bryan Babcock, the winemaker at Babcock Winery & Vineyards near Santa Barbara, California, redefining hospitality at his winery also helped him reconnect to what he loved about the business in the first place. Interestingly, it had nothing to do with growing the business end of things; just the opposite. 

Bryan’s parents, Mona and Walter Babcock, established Babcock in 1978 when they purchased a 110-acre property that was part fallow land and part lima-bean plantings. Bryan joined the family business in 1984, turning what was a garagiste-style experimental brand into a cult winery with a global following and pushing it to 25,000 cases in annual sales. 

“I was completely invested in growth. We were gearing up to go to 40,000, but then the 2009 recession froze everything,” says Bryan. “It seemed the worst thing at the time, but looking back, it was the best thing that happened to me. The distribution game is a rat race, and I was not happy. My wife encouraged me to cut my production, and focus on what I loved, which is farming and making wine, not being in the business of selling wine.”

He slashed production in half, to 12,500 cases. His wife Lisa, a fashion executive, decided to follow her own advice and in 2012 invested in what she loved.

“Because we cut our production, we had a 5,000-square-foot warehouse to play with,” Bryan notes. “Lisa came on board and transformed the space. It’s like nothing I’ve ever seen; she has such a vision. People say they feel like they’re being hugged when they walk in, and that’s exactly what we want.” It’s a tangible version of what Bryan tries to create with his wines: a snapshot of a year’s weather, of the Sta. Rita Hills (which Bryan helped push toward AVA status), of his soul’s fingerprint. “It’s an undulating, conceptual piece of art, in a tasting room,” he says. “There’s wine, great music, couches to hang out on, vintage art, antiques and clothing. Photographs, picnic food. It’s soulful and genuine.”

Keeping the Soul While Evolving the Brand   

Inheriting a legend is not without complications. Several family brands have grappled to find a way to honor their winery’s founding ethos while aligning it with current market expectations and reality.

“My grandfather was a dreamer and a pioneer and a farmer,” says Jessica Thomas, the granddaughter of Sweet Cheeks Winery’s founder, Dan Smith, and its general manager. He planted a vineyard in 1978 in Crow, Oregon, and went on to help create the Willamette Valley’s winemaking scene.

“He was very old-school and not at all invested in e-commerce,” says Thomas. Smith died in 2018, and Thomas took over at age 26, alongside Smith’s stepdaughter Katie Brown. “We work with Katie’s mom, Beth, who is the CFO,” says Thomas. “We all want to honor Smith’s legacy while creating a more modern approach.”

Thomas has done that by growing the company’s wine club 50% and zeroing in on DTC and e-commerce, which she credits with saving it during the pandemic. “My grandfather was about the wine, and we want to maintain his dedication to place and quality while reaching folks in a new way,” she says. 

Over in the Anderson Valley, Lulu Handley is walking the same tightrope at Handley Cellars. Her mother, Milla, died in 2020, and Lulu took the reins.

“My mother was a visionary, a creative force and such a fearless woman,” says Handley. “In 1982, she became the first female winemaker to establish a label in her own name. My decision to continue the brand is not logical, it’s personal. It is a way of honoring her and her relationship to the community and the land.”

Handley is working with winemaker Randy Schock on how to honor her mother without making any dramatic changes. “My mom was such a dynamic person; if we stood still as a brand, that wouldn’t feel authentic,” she says. “Randy and I are working on our first white pinot noir, which is really exciting. And we have also started canning wine with Maker Wine. I love the team there, and I feel like we’re going to reach an entirely new group of people with canned wine.”

Not that the transition has been entirely smooth. “COVID definitely threw us for a loop,” says Handley. “We lost wholesale accounts. Whereas we used to sell about half of our wine DTC, now I’d say we sell 80% to 90% DTC. That required some adjustments in our marketing strategies.”

Janie Brooks took over Brooks Wine in the Willamette Valley in 2004 after her brother Jimi died unexpectedly, but in some ways, the transition still feels fresh.

“Everything I do here is about still turning Jimi’s legacy into action,” says Brooks. “Our nonprofit partner is Kiss the Ground, which we linked up with in 2019 as part of our push to donate 1% of our profits to a nonprofit. Their healthy soil and regenerative farming activism inspires me, and really reminds me of Jimi, and why I’m here. His son Pascal is also part of the decision-making process, and is just as invested in carrying his legacy forward.”  

Part of that is through farming and charitable initiatives—since 2004, the winery has become certified Demeter Biodynamic, B Corporation and members of 1% of the Planet—and part is through business decisions. “It was really important to Jimi to make sustainably farmed, affordable wine,” says Brooks. “We realized we had to significantly increase volume if we didn’t want to increase prices.” The winery now make around 16,000 cases annually, up from 2,500. 

“We also flipped our selling model by building a hospitality space,” says Brooks. “We were 20% DTC and 80% regular distribution, but now we’re 80% DTC. I feel so connected to the community this way. During COVID, I started to sit down and write an email to everyone on our list every Sunday, and they have responded with personal notes, phone calls and incredible support. That mutual support carried all of us through.” 

Going Big in New Markets

“My folks started Elk Cove in 1974,” says Anna Campbell, the creative director at the Gaston, Oregon, family winery, which now produces about 45,000 cases annually. “We’re fifth-generation Oregon farmers, and that is what we’ve always focused on.” It took her parents 15 years to even turn a profit, she says, but now the wine is available in 49 states and overseas.  Her brother Adam took over the winemaking in 1999, and he has continued to push Elk Cove’s farming philosophy forward while also encouraging growth; when he took over, the winery’s annual production was at about 15,000 cases. Each year, Anna’s parents, and now Adam, plant 5 to 10 acres of new vines. Currently, Elk Cove has about 400 acres under vine, with vineyards that show a “breadth of terroirs and vine age,” according to Anna. 

While the winery now has enough grapes to meet its own needs, it didn’t want to “abandon the 20 or so growers we’d been working with,” says Campbell. “The way Oregon is now, the economics of it, it’s next to impossible for a regular person to come in and just start a brand. Part of what makes the community so dynamic, though, is the new and young brands. So we launched our own sister brand, Pike Road Wines, in 2016, as a way to support new and established growers in the wine industry.” Pike Road now produces about 15,000 cases annually. 

In Mendoza, Argentina, the Bousquet family has aggressively grown its production and reach, without sacrificing its founding ethos, says Anne Bousquet, the CEO of Domaine Bousquet. “When my father [Jean Bousquet] first came to Argentina, he fell in love with the land, and saw enormous potential here,” she says, explaining that her father wanted to grow grapes 100% organically, something that was very challenging in Languedoc, France, where his family had farmed for generations. “We were one of the first ones to plant here in Mendoza, we had to dig a well. When my father bought here, the land was selling uncultivated at $1,000 a hectare. Now, it’s selling for $25,000 a hectare.”

At the time of her father’s investment, Bousquet was working as an economist, and her husband Labid Ameri was at Fidelity, but both were financially, intellectually, and emotionally invested in a project that so many dismissed. “Everyone thought it was too cold to grow grapes here, but my father saw the potential,” she recalls. “There was no electricity. There was a single dirt road leading to the vineyard.” 

Ameri, meanwhile, was so confident in Domaine Bousquet’s promise, he began actively courting members of the industry. “In 2005, I went to [wine trade fair] ProWein to introduce the wine to the market, and the response was outstanding,” he says. “We opened 11 new markets there.” 

But the biggest takeaway was Ameri’s meeting with Madeleine Stenwreth, Sweden’s only Master of Wine. The Swedish government buys the wine that lands in the country’s supermarkets, and Stenwreth helps arrange potential placements. “She asked me if we would be able to ramp up production and provide them with 250,000 bottles if we won the contract,” he recalls. “I said ‘yes,’ even though we were only making 30,000 bottles at the time.”

Domaine Bousquet won the contract, and by 2006 it managed to increase production tenfold by maximizing its own vineyards and working with a network of growers whom it had been cultivating and converting to certified-organic growth practices. 

“Sweden consumes almost all organic food, but until then, the focus was not on organic wine,” says Ameri. That began to change when Domaine Bousquet arrived, and through Sweden and other new markets, including the U.S., the Bousquets have grown their small family winery into a global juggernaut producing more than 7 million bottles a year. In addition to having almost 1,800 acres under vine, they work with a network of growers, dozens of whom they’ve helped convert to organic agriculture.

“We’re already the leading organic wine company in Argentina, but we’d love to become the leading organic wine producer in the world,” says Ameri. To help accomplish that lofty goal, the family launched their own Miami-based import company, Origins Organic, to distribute other organic producers from Spain, Italy, and elsewhere within the U.S. Bousquet is also introducing a line of canned wine and has found phenomenal success with its recent Bag in a Box launch. And the list goes on. 

Perhaps that’s the point. Successful winemakers have to think like entrepreneurs, salespeople, operation managers, and marketers as well as oenologists. And clearly the ones mentioned above do: While none would share precise numbers, all said they were able to grow their sales during the pandemic through their various efforts. But those evolutions of their families’ wineries were essential: “Just” making wine these days doesn’t cut it.