Bringing innovation back to value wine w/ Dom Engels, Bronco

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Today, our guest is Dom Engles, the CEO of Bronco Wands. And we're going to be talking about a dynamic market for two-butt Chuck and commercial wines. Could you please give me and Peter a brief overview of your background? Surely. So I am a lifetime committed executive to the consumer package world and retail world. I started out my career in the golf business and worked at McKinsey and Company. And served a lot of different retailers across the world during that time. And then continued on to work for families and founders. Post that at the wonderful company in Los Angeles for almost 12 years. I ran Stone Brewing and Stone Distribution and Stone Hospitality worldwide for four years. That was really my first beverage alcohol experience as in my responsibility. I also ran Revolution Foods for three years, which was a public benefit corp and B-Corp serving fresh meals to kids all over California. Folks might wonder why that's related to some of my other experiences. And it's all because of distribution companies. At Revolution, we had 150 trucks on the road delivering meals every day to schools all over California. And more broadly. And it was also another situation where I took over a business from a founder. So that's another piece of my expertise is working with founders and families. And that really led me to the Bronco experience. Bronco is in a state of major transformation against the backdrop of an industry in major transformation. And it's working with a family, of course, because it's family-owned. And so a lot of those things come together. Bronco actually has a number of hard assets, quite definitely a scaled winery, a top 15 winery in the US. And we also have our own distribution company in California, which some folks still realize. So a lot of the same themes keep coming back over my whole career, hard assets, distribution, beverages, food, families, founders. So there you go. So Bronco is best known for its ownership of Charles Shaw or, you know, locally known as Too Back Chuck. But as much more than that, can you give us a sense of the overall business in terms of scope and scale? Yes. So like I said, Bronco is a top 15 winery in the US. That means, you know, we're doing millions of cases of wine. We're doing millions of cases of wine in our own brands. We have a house of brands right now that numbers well over a couple of hundred. So we have many brands. We're sort of a multi-brand winery, of course, Charles Shaw's, among our most known and most widely distributed brands. But we have others as well. And we operate a large scale winery in the Modesto, California area. We have another very large scale bottling facility in Napa, California. And then through a recent acquisition, we acquired a more boutique winery in Santa Rosa, California. In addition to that, the company and family own upwards of almost 40,000 acres of land in the state and have farmed vineyards on close to 30,000 acres of that in our past. Currently we're farming about a four-figure amount of that acreage right now, just given some of the industry contraction, which I'm sure we'll get into at some point. But we are a truly vertical company going from growing all the way through to self-distribution in California, and then partnering with other distributors around the country. We also have a well-developed logistics business. And what that really means is it's all of the logistics related to the ag side, the juice side, the movement of physical goods in California. We do a lot of that work ourselves. And so we actually have a sister company called Bivio that does all of that activity. So it's a very vertically oriented, sprawling wine enterprise. Wow. Yeah, I don't know if there's too many other wine businesses, oriented businesses that are that sprawling outside of Gallow, of course, which also makes its own glass and everything else. Correct. We're very familiar with those folks. They're actually related to some of the family on the Broncoside, the Gallow family. And they're just about 20 minutes from where we sit. This is actually, it's an interesting, I sit in generally in series, California outside of Modesto. And it's pretty fascinating because this part of the world has a lot of the, you know, I don't want to, it's not in a pejorative way, but it's the industrial wineries of the United States are all here. Gallow, Trancaro has a large facility. The wine group has a large facility here. Delacados just up the road. These are some of the, you know, original, largely Italian families that build wine enterprises in the US. It's all around here. Wow. And for some of our listeners who may not be familiar with the story of Charles Shaw, can you give us a brief rundown of the history and its rise of prominence? Certainly. Charles Shaw as a label and as a brand was not created by Bronco. It was acquired by Fred Franzia, who at the time was the primary of the three founders. That was running the company, the Bronco wine company. And so the Charles F. Shaw brand, as it were, was a very prominent, successful premium, Napa Valley luxury brand. And it was focused on burgundies. First vintage was 1978. And by the mid 70s, it was, you know, well-established luxury Napa Valley brand. It unfortunately fell in some hard times financially. And ultimately, this was in sort of the 90s and it went into bankruptcy actually. And I think, you know, Fred Franzia, as I say, the sort of the core of the three founders that founded Bronco wine company contacted Shaw and Charles F. Shaw and said, "Hey, you know, we'll buy your label." And so they hammered out a price. And I believe Fred acquired the trademark to Charles Shaw in 1999. And the first product hit the shelves in 2002. And it was sort of the shot hurt all around the world, right? $1.99 for some incredibly tasty wine. And I don't know how long it took to come up with a memorable name that will be probably passed on for generations, but two-bucked Chuck was born. Pretty exciting innovation for the industry. And I think, you know, it's going to continue to kind of hold a place of generally a fondness for really approachability and access to wine, great tasting wine that is at really affordable prices. I once read in a book that Charles Shaw was able to harvest, there was an oversupply of grapes, not unlike today, and that they were able to harvest the fruit for free. Like, as long as you could take it, they could have it. And we've been, we'll talk about this more, but we've had hundreds of thousands of tons of grapes unharvested over the last year and probably this year as well. Is that accurate? Did that actually happen, do you know? I think they were in a period of surplus. I can't speak to the kind of for free aspect of that, but the industry was in a period of surplus and needed relief to just bring supply and demand back into harmony. And so Fred was among many things, I would call him a genius of bulk wine trading, which is one of the activities that kind of happens behind the curtain, you know, a lot of American consumers won't understand what bulk wine trading means, but basically you've got growers like Bronco that produce more than enough liquid for their own uses and then trade with other growers/wineries, because you might, you might be long on cab, Cabernet, so when you're all, and you might want some, so when you own Blanc, and you can work out trades, there's all kinds of things that happen, and then there are obviously international markets to be addressed with US production. There's all kinds of interesting angles to the bulk wine trading market. And so Bronco being probably among the most expert in that category of activity, really understood the sort of surplus nature of the wine industry at that time, and so a lot of folks in the know in the wine business really tip their hat to Fred as someone that kind of figured out a solution to really accelerate getting back in balance between supply and demand, and that really happened through Troll Shop. And given its low price point, $2 back in the day, $350 or so now, can you help us understand how you're able to make the wine that cheaply, what doesn't it cost money for grapes and bottles and corks and all that kind of stuff, how is it able to be priced so low? In two words, concessionary margins, which is a fancy way of saying on any one bottle, Bronco, is conceding a margin, frankly, that we would normally concede in some of our other products. And that's a fancy business way of saying, we believe that product serves an important purpose for consumers and accessibility. And I think the industry has been negligent, candidly, and creating good, accessible, great tasting wine in order to build the next generation of consumers in wine. We really believe in that culturally here at Bronco. And so we give up margin that we wouldn't necessarily give up on any other wine that we make in order to continue to service this business and to create this opportunity. And I don't know if you've done it recently, but we do it all the time. And actually, I know Trader Joe's does this all the time. Internally, as they'll put all the wines they sell in brown bags and do blind tastings. And to this day, Trollshaugh significantly outperforms relative to the price. So it continues to be a value for consumers and consumers recognize that. I haven't actually tasted it in a while. It's probably been a decade since I have done lots of blind tasting, including of inexpensive wines from Trader Joe's and try to see the difference. Speaking of Trader Joe's, Trollshaugh is exclusive, right? And I think some people even have the impression that Trader Joe's owns Trollshaugh, which obviously isn't the case. What's the relationship with Trader Joe's and how did they help bring it to prominence? To me, it's really less about a formal relationship or any kind of contract per se. It's really just a shared belief in creating accessibility. Some of Trader Joe's earliest beginnings, I think they ran a wine shop in the valley or something at a certain moment. I know one of the founders of Trader Joe's even was known to go to Bordeaux and bring back wines and add incredible selection and kind of accessibility. And this goes back to the 70s, I think. And so I think it's just a really shared cultural overlap between the two companies where we're both enterprising. We're both interested in curating products that really over-deliver and get kind of recognized for the quality at a good price. And they're among the most fastidious in terms of curating their wine assortment. And that just ends up being like a good cultural match between the companies. And we do other wines with them beyond this. But the companies kind of found each other back at the very beginning in 1999-2002 as I outlined. And it's been pretty nice long relationship that continues to go really well. So you're saying that Brogol has multiple wines inside Trader Joe's that are at different price points? Is that what you're. Yes. Yep. Yep. The wine market has been experiencing what most call premiumization for about a decade now. With the low-end market contracting the higher and doing a little bit better, how has this impacted your business over the years? Well, first of all, we could probably have a separate podcast about this issue. But to me, I think to the wine industry's detriment, there has been this premiumization and almost a negligence or taking their eye off the ball of refilling the funnel with new consumers that need entry-level price points. They need excitement. They need innovation at the at the lower end. You could call it the commercial end. You can call it the value end of the wine business. So in the industry, they need to nurture that. And I think that that the seduction of higher price points and more dollars and trading consumers up is a good thing to do. But again, you also need to nurture the lower end. And like I say, refill that consumer funnel. And that hasn't been done. Bronco lives on the value side. We do have wines at other price points, of course. But through my arrival and joining the company, we've refreshed our commitment, our excitement, and our general recognition that we need to create appealing options at accessible or affordable price points that over-deliver and build future generations of consumers that enjoy one. It was interesting. In that comment, it's sort of implied that there was some demographics assigned to the price point. It's not just a cost. It's also who's buying at the age of the people buying that. Is that correct? It's probably demographics and ethnographics to a certain degree because I think there's been some media coverage on this too. But the ethnic makeup of younger generations is different than the boomer generation, let's say, even Gen X. So that combined with, I don't know about you, but I definitely had my fair bit of rebelling against my parents and what they do. And you gotta like, you gotta reframe things. I keep going back to something that makes me probably sound really old, but that campaign around not your father's Cadillac. But in our case, we can't just kind of put our parents' wine out there and expect younger generations, whether that's demographics or ethnographics or whatever it may be, or just simply kids versus parents to do the exact same things. And there's obviously a lot, a body of other dynamics going on in the world that are affecting these things. So it's not just down to these elements, but these are contributing factors to shifts in consumption patterns that if you're not paying attention to these things, then you're gonna lose business. And I would say for the industry in general, there's just, you know, with 11,400 wineries today in the United States, there's just a diffuse set of interests. And the industry has not stood up and really claimed the agricultural provenance, they're really the craftsmanship. And so wine just gets kind of looped into whatever, you know, the public view is or the articles around alcohol and health and these things. And I do think wine could separate itself more. And it hasn't done that because it's a diffuse industry. And this is also a major factor as to why folks have drifted away from wine. And then at the value end, the commercial end is we're calling it, this is where we need to really pay attention because this is the accessibility. I don't think a Jen's ear is gonna dive into a $50 bottle of wine for trial purposes, right? That's just not gonna happen. And what they are gonna get, they are shopping at Trader Joves. They are, you know, interested in exploring different options because there are many options out there. Have we, as an industry, done the best job of creating the compelling options for them to consider wine in their kind of top of mind consideration set, as they look for wherever they're gonna get their sort of social buzz from. I don't think so. So I'm curious so in terms of accessibility price point, where do you think wine needs to be at given, you know, given that like there's obviously there's things like inflation and things like that happening. Like what is that range of wines that you think is really a lock set accessibility? Well, I think the range exists already today. It's just about, are they in the right packages? Do they have the right labels? Are they communicating in the right way to kind of get attention? I mean, it's a difficult category to market in because there's not a lot of room for marketing spend. So you're kind of debt left to your label to create the trial and then your liquid to create the repeat and loyalty. So we're at the right price points. I mean, like I said, Charles Shaw in California is generally 349 a bottle. I don't think you need to be better than that, but that's a 750 bottle. You know, are there other formats that need to be part of the equation in the future? Perhaps, you know, are there other ways to present the brand to catalyze new users, new interest younger users? Perhaps. And on a pure price basis to that question, I think we're covering the right price points because they go up from there and they ladder up. They're four dollar wines or six dollar wines or seven dollar wines or eight dollar wines. I mean, you go up and up and up. The prices are covered, but that's not the only thing. So related to the industry periodization, do you think that the low in brands doing worse than the higher brands are the end of higher end brands are doing better? Do you think is that what you see from your business? Yes, but I see when I look at the most of the call it lower priced wines, I don't see great innovation. I don't see great marketing. And this isn't to disparage any of these brands, but if you think about a barefoot or a wood bridge, you know, some of these brands have been around for decades and have incredibly strong kind of core users, but in terms of dynamic marketing or compelling offer for new generations, potential consumers, not that's a much. Well, I was kind of wondering and I have this hypothesis that there's an element of some of the low end brands just getting more expensive. So I remember Lamarca a decade ago being like seven dollars a bottle or eight dollars a bottle, you know, at a Bevmo and now it's like 17. Yeah, 18 is the number one selling sparkling wine in the country. Incredible. Yeah, super. Yeah. I'm like, how much of the premiumization is people raising their price versus, you know, actually buying more expensive wines? Yeah. Well, that's a good question. I mean, I think it's a bit of both. I think they probably hooked a lot of folks at the seven or eight dollars and as those folks grew in their careers and their families and their earning power. And then as the producer needed to maybe raise prices for supply reasons or raw material reasons, you know, you can imagine that a narrative very easily there. And that's sort of sort of one evolution. But like I say, I think maybe that left behind an opportunity at that seven or eight dollar price point, Peter, you know, that we got to, we got to nurture those two, you know. and what you just described, I mean, that's very real, and that's what's happened time and time again. So we're recording this in early June 2025. It's very easy to say we're an uncertain macro economic environment at the moment with consumer comments dropping for most of the year. Are you seeing people return towards value and the low end of the wine spectrum with that uncertainty in the market? I don't see like broad, I mean, I certainly have wishful thinking around that candidly, and I see a lot of the logic pointing to that. I haven't seen a lot of green shoots out there. I do see some innovation, you know, brand like XXL, for example. It's kind of focused on more higher alcohol. I think it's 16% or 17% ABB, and you know, creating a format that really resonates with, you know, at the value end and convenience and some of these other channels that where folks can consume wine. So I see little little pockets of innovation like that. I definitely see a lot of value wine continuing to be sold across the United States, but I haven't seen any kind of welling of new or anything like that. But one could imagine that to happen. But I still, you know, put a big premium on the industry, including Bronco, rising to meet that from, you know, creating the right price, label, format, distribution, whatever, all of those pieces have to work as well in order to make that that trend into much more of a reality. But it would seem like we're headed in that direction based on everything that's going on. Yeah, and it may be a different spectrums. It could be $50 people as you say going to 25 or 30 and maybe not all the way down the chain. I mean, I will also just say this and it's in it's a nod to, you know, another beverage alcohol maker, but I saw an ad from Jack Daniels. Right when I first joined the wine business that I really liked a lot and it said something like it turns out getting together with other people is healthy too. Yes. And I just think that like social social interactions and being a part of positive social interactions and enhancing social interactions, that's really important. And so I'll be the first to copy what I think is a great idea. And so I think about that literally every day. And the rally and cry that I bring to the company years, better times at every table. And it's just, you know, comparatively, can we make the times that you have at a table, which presumably, you know, you're circled around that table with your friends or your family? Can we, how can we enhance those times and just be a little bit more positive, you know? And that's what we need to do as an industry. Yeah, there's a similar, I think, a mission for Bernard Ricard, which is about conviviality. Yeah. And being the ex-McKenzie consultant myself, I have a handwritten slide that I haven't produced yet that has the connection between wine and, you know, increased relationships and that improving health outcomes and then why and less stress leading to less health outcomes, which the latter half are all proven through scientific research, right? They are facts. So it's almost like the, their facts and it's like the former part of the connection with wine to those things, maybe could, you know, be future studies that then bridge the whole thing, you know? Well, it's also in some ways what epidemiologically we know from like 8,000 years of taking wine or whatever, however long we've been drinking wine. I mean, it's been around for a long time. It's gone through ebbs and flows, but it's really part of our, you know, life is humans on this planet. So I think we know it as a society and as a culture, but for, you know, the World Health Organization and other scientific bodies to know it, some scientific research proving that only cements that in, I think. Yep. Yep. You know, as we sit today again as Robert said in June of 2025, alcohol consumption has been falling for a number of years and really starting to hit pocketbooks over the last few years of producers in the industry. What do you think are the core drivers for that? Well, for me, I think there's this dislocation. This is just one aspect that's top of mind for me. I'm been thinking about is just this dislocation between retail prices and retail prices on premise and retail prices off premise. I mean, where have things gone where like an IPA is, you know, $14, you know, where you could buy that a six pack for that in retail or cocktails for $25, you know, which is the price of an entree, you know, in on premise. Things are really dislocated between on premise and off premise. And to me, I think that's that's out of control. And we think a lot about hospitality at Bronco because we haven't done a lot of it in the past, but it's very much, in my opinion, an important component of being successful in wine or other businesses, frankly, where you need experiential component to your proposition for your consumers. But you don't want to aerinate people like that. I mean, like, think about it. You go out with your your spouse or a friend and two cocktails, two on trays, you know, an appetizer. I mean, we're you're your pump. The dollars are just out of control, I think, at neon premise world. And so we haven't done our own sales with any favors there. And I think that that that's been a contributing factor as much as any of the kind of health awareness and sober curiosity and buzz diversification and some of these other other aspects. I think we have to look at, you know, and it kind of interestingly, kind of comes back to kind of the theme of this conversation, which is, how do you bring value and a commercial orientation to these things that creates more business, you know. Yeah, I think the the rule of thumb used to be restaurants with price at like three times their wholesale price. And now it's becoming four plus and the yeah, the bottle is supposed to cost. Well, the glass is supposed to be the bottle price. That's that's my for buy the glass. Yeah, for buy the glass is like four or five times or more like five times five to six times. So that I mean, that just we were talking about this the other day and kind of a brainstorming session around hospitality where, you know, we and we were in a food proposition and everything and we were just not going to do that. You know what I mean? It's just like it's just you just just can't that that's the kind of thing where everybody does it. And yet, you know what that's created is operators and I'm not primarily a restaurant operator, but I've run a bunch of restaurants in my past and I can tell you that like it makes you lazy. You make a bunch of money on alcohol and you can keep raising those prices, but there is a consequence for that. And I think we're seeing that now. Yeah. And to be fair, the restaurants are making more money that way and those who actually try to price more reasonably or lower, they're not seeing more success from the restaurant perspective. No, you know, making more money or, you know, having higher return rates and things like that. No, because there are other factors, but I do think an orientation around selling two drinks versus selling one drink, you know, kind of a thing and more dwell time. And I think over time, it's the right orientation to have trying to make more money by, you know, working on other aspects of the business too and making those instead of being kind of hit in the I just glib, but like hitting the lazy button and just, you know, five X in your your by the glass price from your bottle or whatever, you know, like that kind of idea like that's just lazy. Yeah. So as Bronco lives in the more lower priced higher volume world and the world of wine, how do you think about navigating an environment with lower volume? Yeah. Well, I think we've all we've all got to be more more efficient. So look, there's oxygen leaving the room in the line business currently, you know, we're in a period of contraction. And this is really, I'd say, hit the industry relatively in a relatively flat-footed sense because there are senses have been kind of dulled by consecutive years of category growth and things kind of being, yeah, it's been easy. And so this is really a really interesting time from a business perspective to be in the wine industry. I'm really excited about it. It's part of the reason why I joined Bronco in the first place is that other than probably Gallo, but I wouldn't say Gallo's immune to these same, same dynamics, we don't know really how to operate in an efficient way in general. I mean, some of us know how to do it better than others to be sure. Some of us have the benefit of more volume than others, which can help with efficiency, of course. But the industry in general has a lot of maturation to experience and we're seeing generational change. We're seeing lots of CEOs and leadership coming from outside of the wine industry, join the wine industry. This is a period where these kind of recipes for success in a future where you need to be more efficient. These are being written right now. And since it's really, it's really kind of, really kind of interesting and exciting. And are there particular parts of the business where you see area much bigger opportunity for efficiency? Well, it's interesting because I think most are dealing with capacity utilization generally as a winery being probably sub 50%. I'm just going to say as an industry, like far more capacity than that's needed. And that's a really hard place to be because if you've got fixed assets in place and sort of an infrastructure and even if you it's all paid for, which by the way, there's probably a fair amount of of wineries that have financed their infrastructure, which is obviously a dangerous place to be, because they probably financed it five years ago when the industry looked different than it looks today. So, warning flag for some, but even if you have a paid-for facility and it's operating at 50%, it wasn't designed necessarily, unless you were really good at design to operate at 50%. And so, there has to be some kind of re-wiring that occurs. Some are better than those. Humbly, I would say Bronco has done an incredible job investing on the infrastructure side. It does have great capabilities in this regard, but I wouldn't say that's everybody. And when you're, you know, crushing a fraction of the grapes you used to crush or fermenting a fraction of the juice you used to ferment or bottling a fraction of the wine you used to produce, getting to the right size and getting that to be efficient, those are pretty heavy challenges. But so, you think it's more on like the wine making side versus the viticulture or distribution or retail or anything like that? I think it's on the wine making side. I wouldn't diminish some of these other aspects. It's a good question. On the viticulture or ag side, that's something farmers are used to, you know, up, down, surplus, demand. You go through those cycles and generally with crops that require three or four years to develop, you're going to have these swings just because you can't turn on a dime and plant something new the next year or not plant the next year, takes a while to build these things up and takes a while for these things to come down. And so you're always kind of chasing different dynamics there. That's ag and that's kind of normal, I would say, for ag in general, just based on my experience across many different crop types. But when you get into distribution, I think that's a very interesting discussion. And when you get into retail, I think that's a very interesting discussion because each of them are also struggling with efficiencies. I mean, look, look at the news this week with R&DC in California. I mean, when do you have a distributor of their scale, aka Young's R&DC, literally just pull stakes and say, we're out. I mean, that's a black swan event. I mean, that is like unbelievable. Like three weeks ago, so I'm going to tell me that I know it's been brewing for a couple months and contemplated different times. But man, that's a big deal. They're about a thousand distributors in the US. Like I said, there's 11,400 wineries in the US. There's only so many linear feet that a retailer is going to dedicate to these really impossible to merchandise wine sets. All of that needs to be figured out too. And I'm very curious about how to merchandise wine more efficiently. That's kind of one of my things that I spend a lot of time stalking strangers in grocery stores trying to understand how they're buying wine because I mean, look, I would say humbly just above average smarts. And I would tell you that like, it's confusing as hell, you know, like trying to get to the label that you want to buy. I think that and cheese are probably the most two most difficult parts of the store to figure out how to build a brand or creating a loyalty or demystify it for a new user. So there's a lot more to be done. That's almost where brand is critically important when you're lost in the sea and you recognize a brand. Yeah. That's when people pick it up. Yeah, the triple cream French stuff is stuff that I recognize instantly because of the brands that, you know, I know in that particular category of cheese. Same thing goes for wine, you know, certain labels really work. I love the science of labels. I think there's a lot more to be done on on wine labels. I mean, how many look exactly the same, you know, the same font, the same white label, you know, the same little emblem, the same obtuse name, you know, all these things. And I can't even tell you today, now I'm just going to rant here for a second, but I can't even tell you today why, why is Josh seven or eight million cases? Like look at the label of it. I mean, it's pretty ordinary, you know, I have invested a lot in marketing and then tick-tock has helped recently as well. Yeah, those are some muscles that could be used more broadly in the industry for sure. Anyway, I think there's efficiencies on the distributor side. We're seeing that actually. Distributors are unwilling to carry the same amount of inventory and you see this anytime an industry slows down, they don't want to be long on inventory. Well, what does that do? That results in stockouts at the distributor. Well, if you have stockouts at the distributor, what happens next? At the bar where you bought the glass of wine or that whatever you prefer that you always do, every week when you go there with your spouse, there's something else or there's not, you know, and then then you've dislocated that loyalty or the shelf that's missing and they'll try and sell you on something else. You know, the whole, the dominoes are falling right now and so ultimately, there are probably too many brands in the United States and there's probably too many linear feet of wine in retail and then the lists are too long and on-premise, but it's very hard to go through that Darwinism process, you know, the strong survivor, whatever it's just it's and so it's going to be inefficient for a good spell. And you mentioned that, you know, we as an industry need to engage the younger consumer better and bring them in. Do you think that's the biggest thing as an industry we need to tackle to write a ship or is it one of several priorities? I think that's as far as like commercially, that's that's the biggest priority to be honest is to work on that generation because I do believe they will drink wine, but I don't believe and then they're even open to considering drinking wine, but I don't, I still don't believe we've done enough to demystify it, normalize it, make it a viable option from a packaging format standpoint, be in the distribution points and it needs to be and create the experiences that need to be created. I do believe that is like the crux of the issue. So part of that for, you know, is Gen Z and their consciousness around health and things of that nature, I'm a big proponent of more transparency on labeling like ingredients in full, a full nutritional panel just like with food. I think that would benefit wine if you had, if you were able legally able to have like potassium and things like that that are, you know, good things in wine that are there not saying it's healthy or anything, but do you think that that would help with Gen Z, especially coming from the producer of, you know, large, large quantity wines? I think transparency on the label is always good, you know, transparency on the provenance, transparency on the ownership, transparency in general, it's kind of demanded, you know, it's interesting. It's interesting. Bronco has several successful other successful labels like Crane Lake, Sam and Creek, Carmine, you might not even be familiar with these brands, but there are, you know, hundreds of thousands of cases of this wine being sold across the United States. None of them had websites. None of them really had any backstory, you know, since I've gotten here with, in partnership with their great marketing leader, we're like, we need back, we need, we need more to these brands if they're going to be really fulsomely considered because those younger generations will look for a website or will look for more of a story or will look for the transparency and if it doesn't exist or it's incomplete, I agree, you're going to, you're engendering mistrust or distrust, you know, not, not allegiance and loyalty and then they're not going to, in some cases, they don't have anything to share with somebody else to inform them about why it's good or why it's bad or the kind of retelling of stories is also the chances of that get red diminished, you get diminished more. So it's, I think transparency is important. I just don't think that's like the only thing, but I think that's a good idea. I mean, I, you know, I think the format thing is also really interesting and I don't have any, like, brave new ideas today to talk about on that, but Boxed Wine in 2025, to me, is a very different proposition from 20 years ago and I think you're seeing Boxed Wine at different price points, not just, you know, sort of value oriented Boxed Wine, I think that's really interesting. I don't think the last chapter in Can Wine has been written. I think there's format means a lot in terms of queuing consumer interest and wine is not done enough there. Absolutely. Yeah, we had Jason Hasselth of Tabos Creek, which makes a very high in Boxed Wine. Yeah. On to talk about that. Do you think there are other Alcbev categories or brands that the wine industry can learn from to resonate with younger generations? That's a good question. I mean, actually learn from dues and don'ts, but I came from, you know, from craft beer and the craft beer had a very similar trajectory to wine in some ways, right? You know, decade-long, double-digit growth. A lot of crappers became successful in the US, not by virtue of being great businesses, but a rise in category. So Bronco is also one of the largest vineyard landowners in California. Several industry analysts have called for another 50,000 of acres of vines to be grubbed up. How are you thinking about that for your vineyards? Are you staying the course? Are you looking at contracting? Like I say, we could farm upwards of 30,000 acres as a company. We have, we're farming a reasonably sizable four-figure amount of acreage currently. What we've done is, you know, the industry term is mothball, but we essentially put to sleep acreage. We can't bring back that acreage in a year, but we've basically, you know, there's a lot of capital in putting vines in the ground and laying out a vineyard. And so we don't want to walk away from all that capital, but at the same time you don't need the grapes. So what you do is you mothball the vineyards or you kind of wait for demand to return. So we've done that with an extensive amount of our acreage. So what do you mean by mothball vineyards exactly? You cut the buds down pretty much to the vineyard itself. It's not going to produce any fruit, but you still got the vineyards in the ground. And within a year, two, three years, you could bring that vineyard back online and have it be producing grapes again. Okay. Yeah. So we're not turning the earth and planning cabbage or something. You know, of course, you know, that would be, I think that would be unwise. And like I say, there's a lot of capital in putting a vineyard in the ground. And so you don't want to necessarily walk away from all that. So as a kind of a step down from farming it, you go into this kind of mothballing orientation. So we've done that with some acreage. We would certainly far more if demand required it. We really enjoy the farming activity and really think we do a good job on that side. But yes, you know, and I live through this in pistachios just as an example. You know, it's kind of fascinating. But you know, if you think about like the 99 or really the five in California north to south and then west of the five, there's not a lot of water out there. But a lot of stuff got planted out there in pistachios when everybody saw the kind of grow returns that you could make on pistachios. Now a lot of that acreage is getting pulled because there's not enough of water. And so when you see big demand and ag products, you see sort of perimeter growing areas get planted. And so that's mean, when you talk about acreage that needs to get removed, it's sort of like, oh, well, get the backside a slow, you know, towards the valley. And you know, like that acreage for grapes, probably not the same magic as to where like Justin's growing, growing, you know, in Paso. So, you know, there's areas that get expanded in those years and you get attracted. I would tell you that like current county wine growing, I mean, I don't know anybody that's growing that there's a moment that was really kind of an expansion. I don't know if anybody's growing grapes down there at this point. So that's acreage that, you know, probably deserved to get pulled. But, you know, you can look at Lake County or some of these other counties that are in the perimeter. Those have been overdeveloped maybe and now are in a position to be kind of vulnerable. So of the 30,000 acres, roughly, if you were to high level estimate percentages, like if you're allowed to say, like, what is the percentage that has grapes versus nothing versus mothball? Yeah, I'm not going to get into numbers on that. Those are one thing you learn in the farming businesses. Farmers don't like to talk about, you know, what they do. It's all part of the art and science coming together. But we're long on farming. We're among the largest farmers. All of our acreages sustainably farmed. We even have some organic acreage in our numbers. We're definitely all about the land in California as some of our colleagues are. But in terms of how we break that down, we're not going to get into that. So maybe we can do something more. So in terms of you shutting down a vineyard versus mothballing it, like how do you evaluate that choice to make? Is that like in terms of how much how much of an investment is it to mothball and to keep that running for future, you know, boon versus like it's you're to still spend money, you know, for sure. Because you're going to still spend money when you have a portfolio, just like I let I described on a statewide basis, you can apply it to an operator basis, you know, any farmer, right? All land is not created equal. And so you go through all these choices. What are water rights? How's the soil? Is it contiguous? How's the yield? You know, what's the age of vineyard? And so we have a very statistically driven process that as we steward all of our land, we're making all these trade off. So you never you never mothball your primo cabs off, you know, that's delivering 4500 pounds a acre, whatever. And you know, you're getting incredible yields and incredible bricks and it's you're never going to do that first, of course, or your low die ground that's next to the river, you're not going to get rid of that first. You're going to look at your tertiary areas, you're looking at your water rights, you're looking at what the viability of that land is and you're making decisions. And also, so we're also a farm manager or vineyard manager, I'm not going to necessarily have like a parcel way out in the middle of nowhere that's nowhere near all my other farms because that's going to be inefficient for me. And maybe I can find someone else to do it, yes, or maybe I just don't want to go through that. And I just that's an area that I'm going to step away from because I'm going to kind of concentrate my my footprint. So these are all questions. We have a very elaborate view as most do of our decision rules, you incorporating some of those those factors I mentioned. And in terms of, I know you said you're long on farming, but in terms of what you're seeing in the industry, do you think there's going to be an over correction in terms of removing the vineyards or is this something that is welcomed in the industry? I don't believe there will be an over correction. I think fundamentally, there's too many vineyards and some need to be reduced like I described, but I don't think there'll be an over over correction. And that's partly because I know that the industry can respond through some of these these mothball vineyards in relatively short period of time, not in a year, but in a short period of time. So I don't believe there will be an over correction. So do you think that California want is able to compete at the lower end price point versus lower cost areas like Chile or even some parts of Italy or France or Spain? Well, we can't compete on labor. So that's that's one, but we can't compete on quality, on provenance and all of those things. And and Bronco historically, we've never put offshore wine from any of those growing regions. And our some of our competitors choose to do that, but we have not done that. I think there's perfectly good good liquid in some of these other areas, but we'll be challenged. I think even with tariffs because of labor differences, international wine, international juice will still come to the US. It's that much of a gap. So I don't think you solve some of those gaps ever. And so then you really got to lean on quality, provenance, differentiation and taste and in some of these other aspects in order to compete. So in Europe, there's always been lower cost local wines that are quite enjoyable. I'm curious on why has it been so difficult for the US to kind of deliver a similar product for for their consumers? We have. It's true. You guys have. But I think in general, why do you think the industry at large has struggled with that aspect? Well, I think part of it is it's my understanding that there are some pretty significant subsidies like we do for corn or for sugar in the United States that Europe does. And that really helps democratize the product. I lived in Belgium for four years with my family and we go to our local pizza place and it was like, do you want red or do you want white? That's it. And it was delicious. Yeah, I think Fred, a Franzie actually believed in that very strongly. And that's why he, part of why he did Charles Shaw the way he did was he said, everybody deserves to have good wine. And it should be all this razzle dazzle and all this premiumization. And here's how you do it. But I don't know. 10% of the beer consumed in Connell Europe is non-alcohol. Well, at every 10% of the US, I'm willing to bet. No. I mean, there are going to be differences across regions in different categories. So I think some of those things will probably never change. So you mentioned tariffs and we mentioned we're in June of 2025 right now where there's a lot of uncertainty with global trade and the people with tariffs and who knows what is going to be. Maybe there's at least a potential for threats of high tariffs on other wine producing countries like Europe and South Africa and other places. How do you think that will impact American wineries if it happens? And at different levels, maybe like a 10% versus 50% versus 200 is totally different, I think, in the ballgame of how it impacts things. Yeah, I don't know to be honest with you know, there was a period there earlier with regards to China where we were really scared about getting glass. We sources are fermenting glass from China. That's kind of subsided for the time being. When you look at like a Voo Kliko or Lamarca, like we were talking about, I think it's going to be really fascinating to test consumer elasticity because I know prices will ultimately change and will those brands continue to, you know, garner sales and consumer loyalty. I think all of that is interesting intellectually but ultimately the tariffs are kind of interrupting some of our business but it's more of like some brands export a lot to Canada. That's stopped, you know, what do you do? And that's pretty fascinating, you know, the conventional wisdom in Canadian businesses for US companies is like 10% of your business is done in Canada but I know wineries that have like 40% of their business in Canada. Major issue for the US market though, for the US consumer, I think and for the US industry, it's probably a good thing all and all, you know, I mean, I know material costs will go up in certain areas but if more US wine, more California wine gets consumed, I think that's okay. I think that's good for us. I don't see seismic change from these tariffs though. I see disruption, interruption, bubbles, stockpiling, out of stocks, different kind of things like that but I don't see like structural change. Yeah, I think it depends on level and how long they last. Yeah, of course. When we have 25% tariffs from France and Germany, I think in parts of the EU for the air bus thing but not Italy, Italy went on the rise right and the others contracted a bit but I think if you're talking about 200%, right, that shuts down the market completely, you have a lot of American importers and others going out of business or completely needing to pivot and change what they do. I mean, 10% is like nothing, 10% is just inflation, right? Yeah. I think it'll be a little bit higher and people will adjust on the margin but that will have very much impact. - Yep. - So we'd like to wrap up each episode with a personal note. What is the most cherished bottle of wine in your personal cellar and when do you plan on drinking it? - That's a really good question. There is a, and I'm embarrassed about this because it's not a bronco wine. I'm gonna be, but I had a bottle of this sub-brand from prisoner called Blindfold. And there's a white Pinot noir in there that Blindfold makes and it's not break the bank or anything crazy like that. But it's the first one I've had in a while where I was like, whoa, this is really delicious. So I only have a few bottles of it. I probably won't go out of my way to get more of it, which maybe that's a reflection of consumerism in this business, but I really, it's my most prized bottle. So, but it's not gonna be, like I'm not gonna drink it either. I'm gonna probably maybe even get to it this weekend. So it's my most prized, but I'm also gonna drink it 'cause that's part of the fun of it, right? Not to look at it, but to consume it. Exactly. And consume it with other people, yes. 100% on that, 100% on that. Don, we wanna thank you for all your time, and all your knowledge and sharing everything. That's happening at Bronco Wines. We really appreciate it. Lots of great takeaways in this episode. Yeah, pleasure to meet you guys, love spending time. Appreciate the questions, cheers. Thank you. Hey listeners, if you love the show, support it by buying a show notes book. They not only compile two years of episodes, but also organizes them into themes for better learning. They can be an inspiration to listen to or relist into an episode or provide a quick reference of the key learnings from a show. Go to xchatto.com and click on the store page for easy links to buy. Thanks for listening. [BLANK_AUDIO]