Can You Scale Up Fine Wine? In Conversation with Vianney Gravereaux, Dan Petroski & Joao Gomes da Silva Part Two

Welcome to the Aurene Global Podcast. Aurene is a global research and action institute for the future of fine wine. In this series we bring you conversations with thought leaders in and adjacent to the fine wine world to discuss how we as an ecosystem can ensure the collective future of fine wine. Hi everyone and welcome to this new episode of the Aurene Global Podcast. I am a host, budding vitale and today we are pleased to share a very special episode based on a really global latest inside series. So the inside series is our online webinars accessible to all and this is specifically the second part of our panel conversation called Can You Scale Up Fine Wine? And it's actually a first because we usually dedicate only one inside series topic but last December right after the end of the first part of the conversation we received so many messages and so many follow up questions that we decided to invite our panelists again and continue our exploration on the key topic of growth and financial sustainability in the context of fine wine. So if you've missed the beginning of this conversation so again that happened last December back in 2023 and want to know our experts inside on how to make money, generate profits and integrate financial sustainability at the heart of your business models. Browse your episode list to listen to it or visit our website Aurene.global if you would rather read the main takeaways or watch the webinar replay. For both this panels we determine that doing something at scale meant doing something and the required size to solve the problem. So quite logically in the first episode our panelists explore their main motivation behind the need to scale up from the need to maintain financial sustainability in the face of climate change to the world to increase quality and engage with a larger audience. So for today's panel conversation I am pleased to welcome back to our master silver chief commercial officer at SoGrap tuning in from Portugal. Viane Gravron sells and marketing director for all the lawyer and Mosetta tuning in from Italy and Dan Petroski Winemaker of Massacan tuning in from the US and with the three of them we are going to focus on the practicalities of scaling up now that we've determined why we need to scale and the main obstacles and challenges that wineries face along the way. Good morning, good afternoon, good evening everyone and a very warm welcome to all of you joining us today for the second part of our exploration on the topic Can You Scale Up Fine Wine? I am put in Vicar, I'm the co-founder and executive director of a really global and it's my huge pleasure to guide the discussions today. And today is the first not only it's the first insights theory of the year but we usually dedicate only one insight series per topic but last December right after the end of the first part of that conversation we received so many messages and so many follow up questions that we decided to invite the panelists to back again and continue our exploration on the key topic of growth and financial sustainability within the context of fine wine. So I'm thrilled to welcome back to all this silver chief commercial officer of SoGrap tuning in from Portugal how you're all. Welcome back. Thank you. Janne Gravaux, Serres and Marketing Director for Onelaya and Massette tuning in from Italy. Hi Janne. Good night Serra. Good night Serra. And Dan Petroski, Winemaker at Massacan tuning in from well actually New York but normally from Napa Valley in the US. Hi Dan. Good morning. Good evening. Brilliant and happy to be back. And last time we also had Evon Massou now with us who's the owner of the Belancu's estate in the Luar Valley but it could enjoy us today. It has shared some of his ideas that I will try to convey today and add to the conversation. Another key person to welcome today is Sarah Phillips. Hi Sarah. She's our head of membership and she's working in in the background. Sarah will post some key info on the chat as we go and some of our past works that might be relevant for today's conversation. And she's also here to answer all the questions that you may have on Arini, on Hurriol and how we work. Should you not know us already? So please on a seat day to communicate with her. So I believe that some of you in the audience quit not with us last December so just a bit of a recap on what we did last time. So Sarah will be putting the link on the chat for the recap and the main points that were discussed. And for those of you listening to the podcast we will also put all of this in the in the show notes and in the description. But basically what we did last time was to answer the key question, you know why do fine wine producers want or need to scale up. And we took the definition that doing something at scale was to do something at the size required to solve the problem. So we started by identifying what the problems could be. And so our panelists explore five main motivations behind the need to scale up from the need to maintain financial sustainability in the face of climate change to the world to increase quality and engage with a larger audience. So today we are going to focus on the practicalities of scaling up and the main obstacles and challenges that wineries face along the way. So as always please use the chat to share your expertise or comments. I know that some of you might be in similar situation that the panelists today so please let us know how you handle things. And all of your questions in the Q&A box. So as a reminder should you not know about all of the of the wineries today but we've got Joao and them their specificity is that they have some flexibility in sourcing for their wines and in sourcing grapes at different place. Whether Vienna and Ornelaian, the setter are quite restricted in their growth in terms of quantity and in terms of hectare and advance. So I'm going to divide the questions and the first round will be for Joao and them and the other outcome to you after that to compare and contrast because you're in slightly different situation. Then I wanted to start with you because as a reminder again you recently sold your brand to Gallo and we've explained that lengths why and why you've made the decisions and the reason behind this Gallo and if I remember correctly or when we prepare you mentioned that in terms of growth and in terms of size the production needed to go from 10,000 cases to 50,000 cases in five years and you know one of my exploration for today I would love to understand how does one find the perfect size between you know meeting the challenges that we've discussed last time and meeting the challenges of growth. So if you would like to start with how did you come with this volume so how was this growth determine where did you start with and once you decide on that number like practically what was the next step and what does it grow in town. That's a great question Paulian and I hope 3 to 5 to 7 years from now we'll be talking about Massacone 50,000 cases. I don't think it's unrealistic I think it's actually a low number I think it's a glass ceiling that we can blow through and the reason I say that is because a winery has to begin at your journey with the customer with trust. Customers have to trust that you're providing them with a quality product that they enjoy that is full of deliciousness and at a price they can afford and if we can continue to build more customers and more trust I think the opportunities are limitless. I also feel fortunate in that capacity because I'm working with a couple of great varieties that are in one side of the equation they're as riparian and not necessarily known by the consumer. These are the the town grape varieties that that have built the foundation of Massacone like a Tokai Fielano or a Rippo Lajella but at the same time I'm building the brand with the trust of grape varieties like 7 young Blanc and Pinocchio. White grapes in California are a potential wonderland of opportunity. They yield very well and they maintain their freshness. They have incredible deliciousness and I think that there's an opportunity there to kind of take a brand like Massacone that has been boutique that has been scarce. That has built trust not only with my peers in the industry who believe you know when we work with them from a viticultural side that we can we pay our bills on time and we don't ask for too much in the vineyard we want everyone to grow and be financially successful and then at the same time you know Somie's and wine buyers nationwide have enjoyed the wines because they can afford to put them on their table or afford to pour them by the glass and bring a unique experience that a customer who is a traditional California shard nature may not have ever experienced in the glass. So we kind of were winning along the way for and it's a 15-year journey that I've taken with the brand and now it's the opportunity to pay the real business model is how do we get to that 50,000 cases? How do we get to that scale? For me when you that number that number is just kind of a as I said it's I believe it's a glass ceiling I think it's something we can blow through but that's where it really makes financial sense. That's where you start to see the scale ability of packaging at 10,000 cases, 120,000 bottles that might be the first run of the ladder where you start to see price and come down with your glass and your labels and your capsules and your quarks but as you kind of go through it we can continue to hopefully keep price or lower price in the marketplace as we kind of pass through some savings moving forward. I've only built the brand through working with vineyards in Napa and Sonoma and we have the rest of California ahead of us so there's a there's better farming to the south and more organic or healthy sustainable farming and a cheaper cost. Not necessarily better than the vineyards in Napa and Sonoma on a qualitative basis but just with regards to how the cost of the cost of doing business. I'm excited about that opportunity because for me what has made Masta kind of 30 to 40 dollar price bottle wine has been the cost of fruit in Napa and Sonoma where speaking from a US tonnage basis we're paying an average of 3500 to $4,000 a tonne in Napa $3,000 a tonne in Sonoma to sell a $30 bottle of wine with the $4,000 or $5,000 shardonnay grapes going into it doesn't make a lot of economic sense to the bottom line so the breadth of opportunity in physical tour and vineyard sourcing with my partner's at Gallo is going to be a second to none and it's going to be a joyous experience for me as a wine maker to to kind of to go out and and venture a field. So I'm very curious because you've mentioned a couple of things you've mentioned the cost of dry goods and you know how you can save with the scale and the price of grapes as well and your raw material and in practicality for me to be able to envision this. How do you work out like do you have a giant X-Out spreadsheet where you've got like complex formula that if you go over 120,000 bottles then your price of dry goods is you know your price of bottle goes from you know one dollar bottle to 80 P bottle of those kind of things and then how precise do you need to be like what kind of tools what kind of data did you use to arrive to that number? That's a great question and yes there is a spreadsheet that's spreadsheet started when I started Massacon in 2009 and I've updated it every five years throughout the business planning. It's pretty straightforward when you're dealing with a glass broker or a label broker for a decade or more so every year to ask them where the price break is at what level of volume do I need to hit to get this from being 26 cents per label to 20 cents per label and that way you can build that into your model into a kind of a repository a data inventory worksheet that you can pull from so as you start to source in California we have a thing called the grape crush report the grape crush report gives you the average value of grape sold in the state on an annual basis broken down by variety and by region so I can look at seven and blank in Lodi and see that the average value is X so I want to be an average winery no so I want to buy wine at the 90th percentiles or 95th percentile quality yes so I can actually build into a spreadsheet with that cost so every five years I would update my spreadsheet and make sure I was on target and that's basically how we can kind of look at the price to scalability ratio of your economic impact to your own line so once you've decided on this so you've made all your calculation you've made the Excel spreadsheet work what's what's the easiest part and what's the most difficult one because I would not really think that for example dry goods would be the easiest part because you just go back to your supplier and you say well instead of buying 10,000 bottles I'm gonna buy you know 50,000 but it seems that today getting your hands on dry goods might not be that easy and then I would think that you know sourcing the grape would be the most difficult part but from your experience what's the most difficult part and the easiest part to scale up once you've made those decisions you hit the nail on the head the easiest part is that spreadsheet the easiest part is asking the question about how much things cost sourcing has only been a problem in the United States during the pandemic there's never been a problem prior to 2020 with us getting glass or capsules or quarks is it back to normal now in terms of sourcing okay time is back to normal pricing is back to normal from my perspective everything I've experienced since 2022 last year's vintage being bottled in 2023 calendar year has been back to normal it goes back to the hardest part which was which I think you we hit in the top five of the recap of last conversation is the hardest part of sourcing wine it's that is it has been and always will be the hardest part everyone can have a great vision for a product and and put a delicious wine under cork but making sure they get in front of the right people the right audience of people that can and that person is not always the consumer that person is is the the in between middle man the distributor the importer the the Swami a the beverage director the the sales representative at a local retail shop so you have many customers along the pipeline and making sure you can get in front of the right ones has always been the hardest part so being able to differentiate yourself like Mastika has with our with our product line has given me a foot in the door I think quicker and easier than a lot of other peers in the industry from Napa Valley in Sonoma when there's you know it's like the Italians at the gate right like Napa Valley is 600 Cabernace you know so what does that line look like at the front of the retail shop or or 11 Madison Park which is right down the street like it looks like a bunch of people trying to get through a small door Mastika I can walk through that door pretty easily without without any competition on my side so how do you cover yeah how do you cut the line how do you answer into the club like what kind of shoes do you need to wear but it's funny it's I was you know thinking about this as you were speaking it's that the change of paradigm that we had in the last 25 years where what you saying it's it's now easy well kind of easy because we all know it's not that easy but to make a great wine but actually the challenge is really into selling it now I think we're going to talk about this with Vianne as well because getting up for you it's mostly distribution more than production but before we move to Vianne Jowell I wanted to to ask you because you're in a similar position than Dan you well you manage a large portfolio of wines at Sagar and when when we prepare that conversation you were very clear like you've established that your company's gross was closely linked to the growth of your prestige brands and and the premium brands that you have in your portfolio which I assume took a lot of strategy and meeting in your company but once you've decided this one it's established that prestige brands must grow to lead the growth of the entire company what are the next steps so you go out of that meeting you know that you need to go your prestige brand how does that work where do you start and and how do you decide the speed at which you can grow well we believe crystal ball you can make miracles now we can only wish that's that's the first time so I would imagine I think that there's a there's a preceding step I mean one needs to be sure and falling on down steps that we have the wines and that we have the wines inside the bottles and the bottles are caught that allows us to to go out and and once once we establish this will this this purpose for the business and it's it's actually about working on reputation and on distribution and before we aligned on the on this will that the the company as a whole should grow driven by the growth of our of our prestige portfolio as we call it we had to establish the reputation of the brands we had some brands we've established reputation already but we had to do a lot of work and we've been working on this for 10 years now and once we we felt that we had a reputational base that was good enough then we moved into distribution then moving to do it to shrink the product in the market we were I think we were fortunate because we this happened coincidentally during a period where tourism boomed in Portugal so we had access to an international audience of consumers which would otherwise have thought that Portugal was an exotic place somewhere lost in in an unknown continent not any longer I'm glad to say and therefore we we we have been able to ride that wave not just domestically with this tourism boom but also in international markets where we had door was you know narrowly opened if we would talk about this topic 67 or eight years ago not widely open by now but but open enough for us to have at least sometime in front of in front of the clients being able to plan our work both with with what we call key opinion leaders which are also important for reputation purposes but also in terms of clients and you have to expand your minds you have to you know you have to tell them why you believe they're different than not just another wine inside another bottle and I think that was the way now how probably come to a number we look at competition and not only to Portugal's wine competition but to international names with whom we like to compare ourselves we will all have tasting and if I can just interrupt here is that really interesting when you do your tasting and your benchmark like the club in which you want to rent out to take Dan's image in you know knocking at the door what are the wines I mean in terms do you compare by style of wine so because of your style of wine you will compare with I don't know you mentioned other wines from Portugal but will you compare with Cabinet from Napa or even the Ornelaia wines that that Viana worked with how do you establish your competition for lack of a better word but the other people that you would like to see sitting next to you we compare using two let's say two dimensions one is about reputation you know we want to have you know to have a reputation which is comparable to X, Y and Z and and we also compare with styles and the comparison with styles it's extremely important but even when you come from a less known production country like like Portugal if you if you're sitting even if you're sitting in front of a professional buyer let's say in the US market but you know in France or in Italy probably the very similar you need to be able to explain your wine not just on technical terms the person in front of you can relate to right yeah and in the US this is this is absolutely critical and obviously in the US you know the California taberness of the moles for a lot of high end door wines for example are important not for market value which has a particular particular profile but but for a lot of high end door wines this is this is critical and you have to describe it you know when you're gonna taste this wine it's gonna remind you of a certain way so so something that we know he's he or she can relate to and then we explain what the differences are right this comparison is extremely important otherwise it's as if you've been talking Chinese and they will take you but I that's why I ask you because sometimes you know as as a French person you know people sometimes say well you should stop comparing yourself to the French because until very recently people always use French wine or most of the time use French wines in different regions to compare themselves with and I was wondering for you in Portugal would your style compact because your styles are unique if you come from a country that has a great variety that's less known or have less you know international comparison a bit like you and you know you have other counterparts in the world but they're not as famous as cab or Shardinay or Pinot Noir or I think the trick is to be able first you always need to talk or speaking a language that you're you know you're your your your understand your counterpart understands And this has not only to do with speaking in English or in French or in Italian, but also speaking in a wine language that you should understand. And using comparables that we know are more familiar to the people we're talking to is obviously an advantage. Now talking about different regions in Portugal compare differently with world regions. I mean, we can use the dual-compared with the California capital. We can use for the wines in a lentagio a more new world style and therefore we can use new work comparables. When we go to the down, a lot of times we use the wines from Portugal as a comparison as well. It really depends. And then you have to introduce what different shade to and that's where you see the local varieties. So you find what connects you with people. And going back to that question of scale and what's the next step once you decided, and also how you, you know, because you know, growth take resources and investment. So you have to prioritize investment. Is it like is that one year I'm going to invest in viticulture and make sure that the quality will stay and we've talked about climate change and the new waves of investments that you have to do to just maintain quality. And then one year you invest on reputation, is that that kind of building up or you kind of do everything at the same time? How do you prioritize? That comes a time when you have to invest pretty much, you know, 260 and you're investing in all in all areas. But if you're looking to a business that is more at its early stages, investment comes first and foremost at the vineyard and at the winery because that's what ensures that you have the consistency that you need. And then you start investing in reputation. And then gradually you increase your investments in sales and distribution and communication when reputation is already part of communication. I would say it's probably the sequence which is the most traditional. Once you get to a certain stage of maturity because it's not to say that you can stop investing in the vineyard or at the winery because that's an ever ending process, you come to a stage where you're investing in everything. And nowadays I'm not sure if this is common to everyone but in particular, it's particularly common exactly because of this booming tourism that we've been going through and the fact that we are such a relatively small production country in comparison to the size of the world market that we want to face. The importance of people that visit us, being them professionals or final consumers is of such relevance that we need to invest a lot in capacity to welcome people, wine tourism in general. Which is also linked to the reputation, I guess. The biggest repetition is quite logical that more and more people want to come and visit you in a small fashion. With your capacity to tell a certain story and to hold that story at a certain level. Before I go to Viennese and ask him about distribution, I'm sure you've established. But if you consider some of the investment that you are currently doing and if you can give us some examples that'd be amazing, how long will it take you to see return on investment? So how do you integrate, how do you measure that notion of return on investment? How do you calculate it? It's easier to say how we calculate it because that's traditional. We use traditional discounted cash flow methodologies for investments. And therefore, in that respect, very standard. Now there are certain investments where, and this is the fact that we are a family on business is so important. The fact that we have a certain scale and therefore financial resources that allow us to make and back to Dan's arguments at the first stage of this conversation, allows us to allow for certain investments with very long payback periods on a almost thinking not on a discounted cash flow basis, but on an asset value. There are assets where we have invested that we know we're invested for the next generation or the following generations. So we're looking at 15, 20, 25 years periods of return. And that's a massive reasoning that goes well beyond discounted cash flow. And that is in particular for investment that are related to this generation. Well, general definition of one tourism. If you're investing in the property, an estate house that is a manner that is going to stay there for the next 50 or 100 years, you can't really apply discounted cash flow as if you been investing in a vineyard or a one-week equipment that you know that it's going to be outdated five or six years from. So there are different ways of doing this, but I would definitely recommend that you do not abandon careful financial population when you're looking at investment. It's a bit of a boast. Thank you. So Vienna, as I was saying in the introduction, in your case, you can't really increase production. You're more or less stuck with a number of hectares that you have because in Bulgaria, you can't really buy vineyards very easily or freed very easily. And you wouldn't want to buy anything anyway. You want to be very specific about the ground and the land that you buy. So when we talked, you mentioned that for you, scaling up is mostly about distribution. Can you tell us a bit more about this? What does it mean to scale up distribution? And again, when we start with that paradigm, what are the next steps, the first steps that one takes? Oh, that's a pretty broad question. Oh, no. Indeed, of course, we have rich people problems. In the sense that, as you rightly said, we're going really growing volume. We could argue that we could make a bit less of second-value and a bit more of first-win, but we're not getting into this. That's not the point. And as I said last time, I think Bulgaria is about the size of Margo, 1,200 hectares more or less, 80-something producers, and very, very, very little in terms of grape or land transactions. So what does that leave us with? Of course, the quality of the distribution. And that goes through working hand-in-hand in some very obvious way, with your distribution network. And the amount of time we spend reviewing where our bottles are distributed by our distributors is very, it's quite long. It's quite heavy. It's a big pile of two periods in the year, with the whole team and with the team of the distributors. It's also helped by having people underground. In particular case of Ornalaia, there is one person in Northern for North America, one person covering Asia, Middle East, Africa, and Latin America, and two people covering Europe. So when we look, when we take a deep-hard look at our distribution, we have the input of all these people, it's not just me and my crystal ball, as I was saying. And we try to base it on experience and numbers. Of course, there are things we'll miss. But it's also about the landscape of distribution is changing. So the more fingers you have in the plug, the better info you have and the hopefully better decisions you can make. Again, a very naive notion that I had is that with the fact of scaling up, come the necessity to let go or to loosen control. But it doesn't seem, it's almost the contrary for you, is that you even more invested in controlling everything right? Because we're not scaling up by volume. And even if we were, and this is a discussion always, I often have, and we've had Bolin, not comparing quite often people to compare great wines to luxury products. But the big difference, I mean, we always look with the team, we look for ideas, we try to have our noses of the window. We look at what some factory luxury brands are doing, but the big, big, big difference between top and wine and luxury products is that we do not control the point of sale. I'm not including the California must be maybe a bit different with mailing lists. And at Saturdays, but overall, we do not control the point of sale. We do not control the last contact between the product and the consumer. And the consumer. So we have to accept that, it's a fact of the life, that we have to be even better on the upstream part, because we know that we won't be there for the last mile. So. How do you relate with that is growing? Is that notion of loosen control or keeping control? How do you manage it? Because you're going to grow exponentially. Can you keep controlling everything like you did before? What are the safe guarding things that you put in place to manage that notion? Again, we're not growing by volume. That's one thing. So we have a set amount, calling a set amount, very full vintage to vintage, but overall, we have a relatively constant amount of wine. We are fortunate enough that they encounter a growing demand, which gives us for lack of a better word, more power. And it gives us the ability to be more selective in our distribution. So the, of course, I think it's Dan who is talking about 11 Madison Park, and you know, the 800-pin-up producers lining up to the front of the door. Everybody will tell you they want to be in all the three-mish and stars of this world. The world is not limited to three-mish and stars, and thank God. Even though God knows we have great experience of that. But there's more to it. And you have to know in your market where There are, you know, you have the three mission stars of this world, but you also have the places where the wine lovers go. I could give you a few addresses in Paris, which are not three mission stars, but you will find amazing wine lists and theorist wine lovers going there to enjoy and share. It's important to be aware of these places and also to be there, because you will meet some theorist wine lovers there, not only in the three mission stars. So coming to allow me to be a bit more philosophical here, but one of my masters, the guy who invented the black swan idea Nikolas Taled, had a beautiful chapter in his before last book about the Vianicativa, the idea being that what you don't do is sometimes as important, if not more, as what you do. And already taking care, and as Steve Jobs was saying, who you are not selling to is probably as important as who you're selling to. So having all these boots on the ground, and that's not a nice way of talking about my great team, because they're way more than boots on the ground, but who know what's happening in the markets, who know what the summaries are saying, who know who's moving where, who knows what's who, who know where is the coolest place to bring great white wine in Hong Saitra is a first step. And who knows, you know, sadly, there are places where probably the presence of your wine is less desired. And so it's as important to know what are these places than what are the ones you want to be into. So what other, if I were to ask you, what's the biggest risk that you are risking? Like what keeps you awake at night? What kind of mistake are you afraid of making? And I'll ask you the same question then, for that. Let's say that a couple of years ago, I stumbled upon an offer of Masetto from a perfectly legitimate merchant who was making perfectly normal margins, who is respected in his country and on his continent. But for whatever reason, I thought it was a good idea to have an offer to private customers with slash prices. That is the kind of thing that goes viral online and can do. It's not that it does damage, but the amount of fire fighting you have to do afterwards is taxing. It's not going to bring down the name. But if they multiply and if you don't take action, it's not a good thing. And it means that maybe we were wrong in working with this customer. Everything said, all the pointers were good. But when I saw that, it really drove me mad. Of course, then there are things you can't absolutely control. Imagine if there was no murder or it's committed with a broken bottle of fire, or it's caught on mobile phone. Or if there's some major drug law that is arrested with a cell phone or your mind, and it goes on TV. But that's what you can't control. So we were full of focus on what we can control. That keeps us busy enough. Dan, what scares you the most? When you look at what you have to achieve, and I'm sure there's so many parts of that that's very much exciting to throw your brand. But the part that you think will be the biggest obstacles that are in your way, if you had to describe them. Well, first of all, I just want to say to Vianne, thank you for making me laugh about the drug-loaded comment in the seller. Because I do think the wine industry, a fear of mine is the wine industry, lacks a lot of fun. And that's a conversation for another seminar. But I'm going to say something that actually was a qualitative thing that scares me and keeps me up at night, but it's also a business decision. When I was making 4,000 bottles, up to 84,000 bottles, I believed fine wine. We did it to be under natural cork. Mossecon is an aromatic white wine brand where if you look at the bottle the wrong way, it'll be shy, and it's a Roma profile, and it's a Flavor profile. So it's a very delicate, very fragile relationship with the consumer and the glass. So I was up at night, every night, knowing that each natural cork is unique unto itself. And it would not be molded with TCA, but it was going to have a variable impact on the bottle of wine. So I would have 84,000 bottles of wine where I would be worried about being presented properly to the end customer. Because sometimes you have one shot, one impression. So I, but I had to, I had to be fancy and I had to be fine wine. I had to put it under natural cork. I needed to make it feel expensive. But the move to technical corks has been a financial windfall for me, saving 40 cents plus per cork. And hours of sleepless nights have now been passed aside, where now I know that these technical corks have a consistency and a lack of variability across the board. But they are also, they're also very much being accepted in the, in the world of fine wine. Dominique Lafayne, I think, started in 2014 putting his, his wines under DM. And I think this is, you know, those are, those were at a price point that the, the world of consumption in the fine wine space is going to start to realize that this is, this is an acceptable option. So I think that's, you know, I went from, from a qualitative fear to a business decision that, that, that felt quality of fears, but also increased my margins, which was probably the smartest thing Masecon has done in the last three years. I hope you won't mind me asking, but you know, it's just a small conversation between us. I know that there was a project to do a Masecon wine that would retail at $75. And you were not really in favor of that project when it can be easily argued that you would have the market for this. Can you, can you tell us why you didn't choose that option as a growth pass? I'm, for sure. I'm, I've never started Masecon as a, as a means to a financial end. I started it as a means to accessible lines on the table, white table lines. I did not choose to write white table lines on my, my bottles in 2009, 2010, because I felt the consumer marketplace didn't understand what that name, what that meant. And even the, even the summaries on the wine buyers back then, it's like the white table wine, even though it was purely an alcohol classification. So and I think today putting the alcohol on it is, is all about transparency. There was a movement of the C&N United States, I talked about low-alcohol wines, but as neither here nor there. But for, for me, I looked at, this goes back to Jow's conversation. There's some chat about like fine wine and it's competitive theft and how you think about that. I looked to Enzo Pantone and Italy's Northeast and Freulian, his Mianny wines. And Mianny wines, his white wines were, you know, Tokai Fielano, base wine, Semenjans, Robolas, they are, you know, some of the most expensive United States white wines of those grape varieties in the $100 retail range. And his production has always been minute. It's always been 800 cases, you know, 10, 12,000 bottles. And there's a business model there, but it's not my business model. It's not my ethos with the brands. My brand is about, I think scale and reputation. I love the Jow rep, the idea of reputation. It can be about, you know, a unique cultish reputation, but to be a true, really recognized brand, it's about scale. It's about how many bottles you can put on tables. And then you can create a windfall of, of, of reputational value that'll carry the brand through a velocity of increased production. But for me, $75, there are great wines in this world that I want to drink for $75 and they're not mine. And I'm not dimining my wines or, well, my brands at all. I'm just saying that this wine is built for people that will want to strive aspirationally to pay 30 or 40 or 50 US dollars per bottle or 60 or 70 at a restaurant. Because that's a lot of money to a lot of wine consumers that still are quite fancy and luxurious and would be considered fine wine and other products and services that they have, whether it be a Tesla or Gucci loafers, they still might not be spending $75 on a bottle wine. And, and thank you because that's a fascinating tie-in because one of the things that keeps me awake at night of one of the things that I spend a lot of time thinking about is fine wine is almost by nature expensive, more expensive than others. It might become more and more expensive because it will be more and more expensive to produce. But also as a reputation grow, the natural price movement means that more people want it. There's no more produced. There's more scarcity. The price goes up. At the point to a certain level, it's almost inaccessible on each of the 0.01 percent and they're going to be, you know, rarer and rarer and juau and diane, that's certainly the case for Barca Vellone and Massetto. So, but if then they become too exclusive, too rare, then as you were saying down, they don't reach enough people, so you don't have the scale of at least pallets that you've impacted if it's not will it report your wine. So how do you reconcile that? How do you reconcile the notion of scarcity, availability, exclusivity, when you're not in the, you know, in the position that diane is, you know, 35 dollars and fine, you know, juau and diane, you far from those prices were Barca Vellone and Massetto. So how do you do, juau? How do you reconcile those three notion? How do you make sure that Barca Vellone is exclusive? It's scarce by nature, but it's still available to enough people that it maintains relevance. I think there are. There are a couple of points that you have to take into consideration. One thing we refuse to do is we refuse to speculate. Right? More often than not, we have decided to. I mean, we could have followed the market. Barker Valley is a very particular case because it comes out only in particular year. So on average, it's been about 20. 20 vintage since 1952. So once every three years, more or less. And so we always look at the markets that are running in the market, you know, for the previous harvest and, you know, the scarcity that we have and all that. But then we refuse to speculate. I mean, had we speculated throughout the years, probably the price would have gone up through the roof. We also do look at the prices that are being practiced in other wines, which we only like to compare ourselves. This is not about the wine itself, but the name. The classic. We respect our philosophy as a winery, as a wine producer. We've got a number of wineries and each one of them has its own philosophy. As Dan was saying, that's why he refused certain prices. And ours is exactly that. And therefore, we cannot impose prices. As V&A was saying, we cannot fully control the point of sale, the final endpoint. But we do as much as we can to try to control the most, the more that we can. So we control distribution. And in that respect, we recommend prices, which are not obvious. We cannot do that. But we recommend prices and we fix. We establish our excellent prices in such a way that was at an extent. It is an evolution that is controlled. And in all our wineries, I have to say, we have a price pyramid. And in that respect, yes, we do recognize that a barca value, which is now trading at. If I'm not mistaken, between 900,000 euros a bottle, particularly in those countries where it is most valuable, such as Portugal and Brazil, in particular, about $600 in the US. It's not accessible for most of us. And as Dan was saying, maybe I can also say, well, there are a lot of very nice wines for less than $600 a bottle. That I would rather drink as well. It's not that I'm not fortunate enough to taste part of the venue, but say, you know, there are other things. And therefore, in that price pyramid, we make sure that we also have wines that are priced at other levels. And that can represent at each of their levels the best quality and the best reputation and the best original wine identity that can be established. And it's by doing this consistently, along as many years as you can, that provides with this feeling. Is it 100% under our control? No, it is not. If I would quote to the price at which a barca available sells in Brazil, for example, it would shock anybody. But it's not the price at which we sell it. It's the price that is valued at the end in the market. And that's, I mean, Eva was saying this as well. He was saying that, you know, selling his wine, some of his wine at 20 euros was a political statement for him because it wasn't making much money with them. That wasn't the idea. But he wanted to build that pyramid so that people could enter through different price points and discover that. And that's that the importance having a range. Yeah, that's like which is very important for us as a company. I mean, as a family on business, the philosophy of our work is to be here for a long time, to be here for generation after generation. In order to do that, this notion of fairness is extremely important. If you misbehave, you can actually, you can actually get away with misbehave for some years. I don't know how many, but for some years. But the next generation will pay a price, that's for sure. And we cannot act in a way that puts knowingly at risk that our reputation in such a way that the next generation doesn't inherit a better business than the one that we've started with. So I think it's maybe it sounds too much philosophical. It's the way it works to be very honest. And we always go back to one of the difference with fine wine is fine wine's relationship with time. Is that it's that consistency through time. And you never do something for short term and you've expressed it very well, also, via view. But Viana, I wanted to ask you the same question that I asked Joao. How do you manage that delicate equation between scarcity, exclusivity, but still accessibility? For example, you know, Macedina was on Schruff few years ago. Was that also part of the reason was to make it more accessible to more people? Or how do you deal with the fact that so many people want to taste your wine? But there's so little available. You cannot go against the laws of physics. There's only so much to go around. We do not produce bottles like in the cartoons where you put a drop of water on a cake and a second cake appears right next to it doesn't work that way. That's probably good. So we cannot ensure that everyone has access that's impossible and it's also the definition of a very rare wine. But we are talking about the laws of physics. You can think of two things. I always say that these bottles have a GPS and there are subject to gravity. Bottles of a wine like Macedo will find their way to people who want to enjoy it and when they taste it for the first time, if they want to taste it again, they will find another way to get there and to get these bottles. So these bottles have a form of GPS and when I say gravity, there is only so much to go around. It trickles down and hopefully we try to work, we try to organize our distribution so that it reaches the kind of customers who understand and are interested in that wine. So you can't satisfy every demand. But I always say that even Romantic-on-T participates in events. God knows they could stay in the world of money and do nothing and still even them they do events. So it's extremely important to maintain the face. And at least you occupy the space even if it's not with wines on every glasses. But to keep your foot on the ground as you were saying. I'll tell you about Macedina but I'll also tell you an example. Of course, you can think that mostly wines of Macedo, Ard-Ranke, let's say New York, London, Frankfurt, Paris, Rome, Hong Kong and Tokyo. But it's in fact way broader than that. And a couple of years ago I went to Columbia for two messengers events. People said, "Why are you going to go to Columbia?" Columbia in South America, not Columbia, University in the US. Columbia. And this has nothing to do with what I said about the drug lord. So we went to Columbia and considering the allocation that Columbia gets, probably my plane ticket, sorry, what we made on the bottles was less the cost of the plane ticket. But through a extremely highly qualitative distributor, the level of wine lovers were able to meet the level, the places where we did the two events, the level of access we had. And in fact, what these wine lovers showed to me, the pictures that they showed me of their own private service, which not getting into the technicalities of Columbia wine distribution, but most likely in bottles bought in Miami, Houston, wherever. Was impressive. And it definitely justified. So I'm not saying that wines like Macedo should do events in Columbia every year. But there is a long tailed, you know, there is more to the fine wine world, the New York Hong Kong, Tokyo, London, Paris, Frankfurt, Rome, Zurich and Milan. So do not forget these people and these customers and going, they're going to talk to them, go and show them love. And I learned so much about Macedo by talking to Colombian fans of Macedo. Never forget these overlooked kind of places. And you mentioned Macedino. In fact, Macedino was born that four hectares were added to the original seven hectares of Macedo, because it was discovered that the famous blue vein, blue play vein. In fact, was continuing beyond a certain hedge trees, row of trees. But we wait 25 years for the juice produced by these grapes. to reach mastato level and when we thought, when we felt that they have reached mastato level, all of a sudden the pallet from which we could choose from to make mastato was a bit broader. So we were able to make an even stricter selection for mastato to make a wine with an easier, a younger drinking window perspective that we call mastatoe, and this wine is clearly, and of course everything being related, and we're talking about the second wine of 1000 plus retail, or first wine. But it's certainly in a few key markets has allowed us to broaden the the cervical and the appeal of mastatoe markets where mastatoe had not difficulty, but you know, was not necessarily doing as well as we thought it could be doing. Definitely with mastatoe, you know, we are bringing more people to, well, the aromatic profile, the story of the estate. Amazing. There was no third wine in the plans. That's what you want sort of. Of course, that's always what I wanted to know. Dan, so, Vienna was mentioning that you have to go where there's real love and there's so many places in the world. So far you've been only in the US, do you have a plan to scale up outside of the US and how different would you, and visit scaling up outside? Like, what kind of other elements will you have to take into consideration? Should you want to go outside of your national market? If my question makes sense? Yeah, for sure. I grew up in Napa Valley with this concept that the word "no" is the easiest word to sell wine. When you tell someone, "No, you cannot have it," or, "I am sold out," or, "we are sold out." These are concepts and philosophies of, you know, the supply and demand growth strategy. But I learned early on with Mussocon when I was here in New York City with someone who was a distributor and mentor of mine told me he goes, "Being sold out two years in a row is cool. Being sold out three years in a row is not cool. You cannot take wine off of wine lists. Once you do that, you're going to lose your customers over time. You want to be consistent." So, what that implied to me as a business strategy was, "Don't throw paint on the wall. You need to focus on markets." Mussocon has actually contracted under Gallow. And the reason for that is because we don't have enough wine to be distributed to all the states that we'd like to be in. So, we're going to start slow. We're going to feed the machine, which is like of New York City or California, and make sure that we are hitting a saturation point. Right before we hit the saturation point, we have more production. We will then expand. So, you might be on the cards in 2024, 2025 for Mussocon. But when we're only in 10 markets domestically and we have 30 or 40 more to go, I'm not interested in being in London for the sake of being in London, although I would love to be traveling and hanging out with you, Pauline. But I'd much rather decide to support where the love is and where the support of Mussocon is and whether it be Missouri or California or hopefully in Florida in the next couple of years. Yeah, thank you for saying this. Thank you for saying also, it's not all to be sold out always. Because we had that conversation now. A later spot cast was with Vaskele in the boutier that you know, Dan. And she was saying how difficult it is and the impact for somebody or for a creative or a wine list that, you know, when those wines that you've start building suddenly have attained such a reputation that they disappear and they're not accessible anymore. And you constantly have to find replacement for the wine list. And that's something also that I think is important to keep in mind when you build a brand and when you want to scale up is how do you deal with your, you know, your current fan and the people that have a company new building that reputation and making sure that you do not create, you know, that you also show them the love that they've shown you along the way and helped you along the way. So I think that was a thank you so much for that, for that comment. Yeah, and Nicole is saying, yeah, she's also experienced the frustration when your distributor doesn't follow through to revenue, she sold out wines and then it disappeared and it disappeared from the shop. I think, Yannay, that must be also something that keeps you awake at night to make sure that, you know, there's sufficient wines in different places, I'm sure. Well, I was, I'll be totally transparent. I was afraid that we wouldn't have enough questions to keep us going for an hour, but as usual, your guys have been fantastic. I've learned so much and it's already, it's already 5 p.m. my time. We had some questions in the Q&A. I'm sorry, I could you know, address them because one was a such a deep question that we would have needed another hour to bond her, but thank you so much for asking it because that gives us idea for another inside series on that topic. So thank you all very much for tuning into this reneglobal inside series. A couple of things that I should not forget, we have a round table dedicated to that question of growth and financial sustainability. So round tables are a little bit different because this is a panel we only have, we panelist talking and chatting, but round table is a group of 8 to 10 people and we work together on those key questions. So if you want to bring your thoughts around the table, if you want to learn from your peers, if you want to ask questions, if you want to, you know, Sarah will give you all the details into how to register for this. It's at the end of February, and we've also launched our new report today. We do that every quarter. We have a new report to study the fine wine consumer, the one that we've launched today is about the Singapore fine wine market. As you can go to our website and against our respect in you everything on the chat to discover that new report. If you're not to remember yet for a reneglobal please become a member and support our work and you will be able to unlock all the analysis, all the reports, join the round tables and everything. So until next time, thank you very much, cheers, it's time for a glass of wine for me now, Dan maybe another coffee for you. And thanks again and see you very soon. Bye everyone. Thank you so much for tuning in to this special episode of the O'Reilly podcast. If you are wondering what the levers of success are and will be in fine wine production and distribution, head over to our website www.arene.global and become a member. This is not only a great way to support us, but the best way to unlock all our analysis, reports and articles on the topic. Because whether you are producing or selling fine wine you need reliable specific data to make informed decisions. And we have just that in store for you. Until next time, cheers. Thank you for joining us for the Arene Global podcast. If you liked what you heard today, please give us a positive review and share this episode widely. 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