The Rise & Fall of Robert Mondavi

Robert Mondavi (1913-2008)

Living in wine country Lodi, CA you cannot ignore the role that the late, great winemaker Robert Mondavi has had in our small city. His purchase of what would become Woodbridge Winery in the late 1970s helped transform Lodi from a century old grape town to a modern day boutique winery destination.

Even greater, Mondavi put nearby Napa Valley and its award-winning wines on the world viticulture map. Many Napa wineries now produce wines as good as France and Italy. Mondavi was the pioneer for their incredible success too through enormous vision and dedication. In so many ways, Mondavi was The Godfather of Napa Valley.

For the past few days I’ve been reading his fascinating autobiography. Born in Minnesota to Italian immigrants, he moved to Lodi at age 8, left at age 18 to attend Stanford University, then settled in Napa at age 24. He never left.

His great success (after 20 years working as a family partner @ Charles Krug Winery) came at age 52. It started when he got into a fist fight with his younger brother, Peter, over the purchase of a mink coat. True story. Banished from Krug for 6 months, Mondavi formulated a plan to start his own winery. In 1966 Robert Mondavi Winery was established, eventually changing California wine forever.

What was the rise of Mondavi? He had an insatiable goal to be The Best. Over and again in his auto-biography his words “The Best” are cited. He was relentless in his quest for perfection. The results, after many harvests, were wines that soon beat or matched the great French cabernets and sauvignon blancs.

“The Best” was his lifetime pursuit. And in doing so Mondavi, as generous, loquacious and well respected as he was, drove his family and staff relentlessly. Quick to criticize, he’d dress down a son or employee publicly and without mercy. As much as family and staff loved him, they also were hurt by his tongue and resented his barbed management style. He was blind, by his own later admission, to his often critical faults. Eventually, through counseling, self inspection and the breakup of a 40 year marriage, he made vital, personal life changes. But too much damage had been done over many decades; repairing relationships took time.

How did Mondavi fall? Two major, critical mistakes near the end of his life sealed his fate.

First, in 1993, he succumbed to the temptation of taking his company public to inject more cash into his expanding business, Going public meant selling stock, electing a board of directors, giving up a portion of control. This was the beginning of his downfall, but he didn’t see or understand it at the time. The stock immediately nose dived down. Through changes, education, promotions and hard work, the company stock finally went up, from $8 a share to eventually $50. Times were good, too good.

But therein was a second trap: Mondavi, generous to a fault and riding the wings of success, began to  pledge donations to UC Davis and Stanford, to the tune of $35 million. Though borne from great intentions, his pledges were gifted through stock donations. Then disaster hit in and around September 11, 2001. Like many businesses, the wine industry took a tumble, especially expensive premium wines. Mondavi stock began to fall, now $20 not $50 per share. Mondavi soon was insolvent, unable to gracefully back out of his gift pledges, which were worth far more than the stocks supporting them. He was overextended, badly. Plus, his company, run by eldest son Michael, was deeply in debt as it had overexpanded through failing wine partnerships overseas.

By 2003 Robert Mondavi Winery had reached critical mass. A family fight soon ensued involving all three of his grown children, each managing different aspects of the family winery empire. Sister and brothers taking sides, maneuvering, hovering behind the scenes to save themselves (or Dad), the winery and vineyards, or get their greedy slice of the pie.

The board of directors sold old man Mondavi out. They changed the voting rules, forced family members to convert and sell shares, then give up certain voting rights. In 2004, his entire global wine-making empire was sold by the directors to New York based Constellation Brands, a leading owner of wine, beer and spirits. What world renown winemaker Robert had worked nearly 40 years to achieve was handed over (for a significant sum) to far away strangers with one stroke of a pen. Mondavi was 91 years old.

He saved face, eventually, After debt and the slicing up of the sales price, his portion amounted to $70 million, not a small amount. He was able to cover his pledges and put money aside to live, plus pass on his estate to his Swiss born second wife, Margrit. He would die just 4 years later in 2008, one month shy of 95. Woodbridge Winery in Lodi, part of the corporate sale, is now owned by Constellation Brands.

Mondavi’s auto-biography was written in 1998, 6 years before the winery became a financial scorched earth. He finishes his tome with bright prospects and expectations for Robert Mondavi Winery. Again, wonderful intentions.

The edge of his cliff was not far away.

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