The Blocking & Tackling of Building a Global Icon w/ David Pearson, Joseph Phelps

Hey listeners, everyone talks about leveraging data to improve winery sales. But does it work? Enolytics, the DTC and wholesale depletion data analytics platform, has seen their customers grow their DTC revenue double digits year over year. Parad that with higher-club growth rates and their new depletion platform, and you've got a one-stop shop for getting the insights you need to compete and grow in this fast-changing, why-market in every channel. Visit Enolytics.com to learn more. Welcome to X-Shadow, the podcast that navigates the business of wine with unique perspectives and insights. With your host, Robert Vernick and Peter Young. Welcome to this episode of X-Shadow. Today, our guest is David Pearson, president of Joseph Elbswany, which is an LVMH winery. And we're going to be talking about building global items that are available in the market. And we're going to be talking about the products that are available in the market. Winery. And we're going to be talking about building global icons and relationships. Welcome to the show, David. Thank you. Very happy to be here. Can you please give me and Peter a brief overview of your background? Yeah. I started in the wine business in 1984 when I graduated from UC Davis with a degree in Inology. And I came into the business at a technical production site as a wine maker. I had a fabulously informative year, my first year after graduation, working as a kind of intern, but in France, L'Oar Valley, Bordeaux, Burgundy, got through Germany. Came back and spent a couple years running a winery actually in Southern California, which was equally informative and a story for another time. I ended up moving into research laboratory that was actually owned by Hugh Blind, which became Diaggio today. And I'd spent about six years conducting sensory evaluation and analytical sensory evaluation. I decided that I wanted to be back at the winery in the wineries and that I wanted to manage wineries and knew that I hadn't any experience or even understanding of sales and marketing. And I felt like I had to have that if I was going to manage a winery. I got an MBA and I was very fortunate to have a ton of money. My first marketing job, I was the US representative marketing manager for the wines of Baron fleet de Rothschild, Chateau, Vuitton Rothschild, Vuitton Coday. And I did that very happily and very successfully for a certain number of years and then a head hunter found me and said that Robert Mendovi was starting a project in France and wanted to know if I was interested and I raised my hand and said that's interesting. So I moved from working with Baron fleet de Rothschild to working for Robert Mendovi. I spent about three, three and a half years in the south of France, again, another story for another time. There's a movie out there called Mondo Vino that you can reference if you choose. So I had that experience, came back, managed a small wine or in central coast called Byron, also owned by Mendovi. And then Opus I called in the end of 2003 and February 2004, I came to Opus I as the CEO. And I was CEO of Opus I for about 16 years. When I decided that I still had enough time and energy and passion in me to maybe have one more adventure, one more something to create. And left Opus in September 2020, I had a period in the wilderness, which in itself was fascinating and a fasted experience. And I started the Joseph Elps in July of 23, LVMH, what Hennessy having had purchased Joseph Elps in September of 22. It called me, we talked about it and I was very excited to get involved with this winery and the vision that what Hennessy is bringing to this winery for the future. So that's how I got here. So you have quite the story career, not only in Napa, but globally. But I'm curious because you've worked for some of the biggest names, especially at that time in Napa, Robert Navi of the swan in the Joseph Elps. How would you compare and contrast those winery experiences? Well, that's right. That's a big kind of question because the experiences were, had similarities all the way through the things that I learned, the values, the experience I gained with Robert Mendovi deeply impacted what we did at Opus I. And coming to Joseph Elps, of course, it was Robert Mendovi himself and Joe Heitz and others who helped Joe Felps start his winery in 1972. 1973 helped him define to this property and inspired him to do that. In Signis, one of the historic iconic wines of Napa Valley having first vintage B in '74. And the folks here remind me all the time that in Signis was created five years before Opus I. So that's, yes, indeed. So a lot of the principles, a lot of the values, a lot of the things that matter are consistent across all three experiences. The specifics vary, the personality, the DNA. You know, wine is not just a beverage that we sell. It's a personality. It's a character. It's an idea. It's a feeling to that end. Robert Mendovi, nothing like the energy and the excitement and the drive that was at Mendovi when I was there in the 90s. Opus I is an example of purity, of focus, of consistency. Again, though, of drive. And Joseph Felps is somehow a mix of those. We have a number of wines. There is a history that is revered. Rightly so there is a foundation of passion. And we're at the 50 year, a little bit past the 50 year mark, which Joseph Felps. We're starting a whole new chapter. That's exciting and different in its way from those two. So there are similarities and differences. So both at Opus I and now at Felps, you've been known to build the reputation of the wineries globally through in-person relationships. Can you explain how you think about doing that? It's a lot of work. It's just blocking and tackling. It is the commitment to go into a market. You know, it's at the end. It's not that different from what we do in the United States. You can phone in sales. You can ship cases to a market and let with the importer distributor, retailer, sell them. But when you go into that market and you create a personal relationship and you have the distinctiveness of what you're bringing to the market, shared and understood. When you treat it not as a business deal where you're trying to make as much money as you can, get a good deal and it's a business transaction. But you treat it as a sense of partnership. We want them to succeed with our wine. So we succeed. And that feeling, not the feeling when the awareness of truly caring for them is established. The thing is change. It's a different way of talking. And you mentioned when we chatted before that where you go and who you see is critical. So where do you go first and who do you see? Well, it's just it's a matter of aligning the strategy in the long-term basis that what I've said for a long time is, is you know, in the wine business, we can go practically to any city and have a wine dinner and people will be happy. You will feel good. You'll feel like it was successful. And you come home and say, wow, I had this great dinner. People were thrilled. And that's true. But the trick is indeed deciding and identifying which markets, either in the US or internationally, to focus on. Focus is the hard part. And so it depends on the amount of wine you have to sell. It depends on the priority, the timing and internationally. For the last 20 years, it's not been that hard because the markets that were emerging are active. London, Hong Kong, Japan, emerging Chinese mainland, Dubai emerged as a serious wine destination. You set that up and then you start the process. And I remember the first time that I sort of had a, not as a cold shower, but it occurred to me. And this was in the early days of Opus where we were in Singapore. You know, we're having a meeting with one of the importers. The importer said, I maybe we'll see you once every five years, maybe. He said, the furniture here every year, the fridge come all the time. And I realized he was right. And of course, you can't be everywhere all the time. But you can have a frequency and a continuity and an intention, which will build relationships. You just can't do it everywhere all at once. So you do focus. So if you focus and you just determine what market you're interested in, how do you figure out who to see first? So then also matters on the route to market. So the thing that we did at Opus that was the first to do it, at least from the American, was to go to their international market through the board of negotiants. So that's a whole strategy which creates a reality that you have to plan to market to and it affects the people you meet with. The more traditional way to go to international markets is to select one or maybe two importers in each of the countries. And then you work with that importer who has their own customers and clients. And I believe that the focus, particularly initially, is on building those links of the partners that you have going into the market. So we would go into the negotiants would indicate to us at Opus who had purchased our wine when we released it in September. We would keep track of those people and we would go meet with them and make sure that they knew what they were buying. They knew how to sell it forward that they were selling to the right people. And so we would, you know, there are 80-20 rule works as well. You've got 20% that represent 80% of the business. So you're going to focus on the 20%. Both in the US and internationally, and we're doing this the same much else. So if it helps now, you have the concept of a pyramid where There's a small number of accounts, both wine retailers and restriatures and hotels that are the most prestigious, that create the most image, that create the market. And that's where you start with the focus, particularly when you're selling a wine like insignia or like Obuswan. And so that's the start. And then there's a kind of a second tier. There's a few more of them, where maybe that's a one star, Michelin. Maybe it's a wine retail that sells the wine as well, but maybe not with the same intensity of relationship building. It is all about relationships. With the best restaurants, the best wine retailers, they create relationships the same way we want to. So that's the start point. You work on making sure that the people that are bringing your wine to the market, the distribution chain, have the same story, the same understanding, the same focus, the same distinction. You know, one of the things 40 plus years in the line business that now I just have little patience for. Everybody says the same thing, right? We're all using French, we're all using French Okan. I think we have to drill deeper and understand more deeply. What it is that is unique about the wine, the inspiration, and most importantly, where you're going, that's what you want to share. And so you get the distribution channels, the every link in the chain, knowing that we care about them, that they're successful. They understand what we're doing and why. And once that's turning, then you can spread out to touching, connecting with wine collectors, wine fish and autos, wine enthusiasts, and build down. So you just started doing this for felps. What market did you go first and who are the people you saw? It's a lot of the usual suspects. So I went to London a couple times, and I'm leaving on Sunday for London for a week, and I have met with the top retailers, the top importers, the top frustrators, I did some very nice wine collector dinners, focused on Asia, I've spent time in Korea, spent time in Japan, spent time in Hong Kong, and could be in two weeks in Asia in October. It isn't that hard to identify them. I'll tell you if I was waiting to find the moment to share this anecdote with you. In the middle of those years, at Opus, I had a conversation with a winery owner, and that the winery owner, I won't identify the winery or the individual, but I was suggesting to this owner that their wine customers, so well known wine, well respected, very good wine. Their wine customers in New York were also in Hong Kong, and that she should, having to be a woman, should at least get her feet in the door, get in the water by getting some wines in Hong Kong. And she had three objections, and I think they were really good objects that are the classic kind of objections, and they were, that they were at that point, selling all the wine that they had to sell very happily to customers in the United States market, so they didn't have extra wine to sell, and they didn't want to take wine away from their existing customers. Okay, that's possible. And had we spoken longer, I would have talked about supply and demand, and when one increases demand with the same supply, there is a pressure that goes up on prices, so there's an upside to that, but that was her first objection. Her second one was, and this was what made me think of it, 'cause we were just talking about that. She said, "I don't know to whom to sell. I don't know how to get started." And I literally said, "I'll give you the names. I know who the good and porters are. I'll connect you." Because while we were doing all that work in a nationally, we never wanted to monopolize the market to ourselves. We wanted more napalwines to come, it makes the category stronger, and so I said, "I'll tell you who to contact." And then the third one, which is really the killer, we sort of started there, and we're gonna, I suppose, talk more about this. She said, "She didn't want to spend the time and the money to go there. Takes time and money." And I said, "Okay, well, if you're not gonna go there, don't even get started, 'cause it won't work." So to me, those are the three hurdles that a winery does have to get over, and then be committed. You can't tip toe in. You have to decide that it's a long-term strategy. There's reason that I want to be an X market, and a lot of napalwines are doing that. And I think that there have been of it now at this particular moment in time, the international market has just absurd. - Yeah, and for the luxury model, which a lot of napa is creating extra demand to create the pricing power is critical. That's like key. There's only so much great wine you can produce, although a lot now, one more nap, but still like. - I totally agree. I think the focus is indeed for a nap of Ali, and I was saying this, I've been saying this for years, at being sort of the standard bear. I mean, we have the American market, is the best wine market in the world for its education for its depth. There's been growing, and it's a great wine market. But if we napa to be truly recognized as a great wine region globally has got to be present in London, in Hong Kong, in Shanghai, in Tokyo, and it's coming, but that's where the growth opportunity is. We just need to get the napalwines to go over and establish it. And there's been movement on it, and now it's not easy time to do it. But we have to think medium and long term, or else, you know, it's not the wine business. - So with a one-way like Phelps, I'm curious, did you focus on where insignia will be placed, or do you look at the winery portfolio large when you're making these decisions of where to build relationships and where to focus? Like I get, you're gonna target the 20% that gives you the 80% in terms of your strategy, but is it for a flagship, or is it for the portfolio at large? - The focus is on insignia, almost 100%. We produce a second wine to insignia, which is the Joseph Elbs Cabernet Sauvignon, and that wine has some distribution, and they have a different price point, and a different placement. But it's really not Joseph Elbs wine's going international. And this gets back to again, it would learn the experience that Obus focuses everything. So you don't sort of throw everything at the market and see what sticks. And our empire focuses really establishing insignia. And I would say reestablishing, because I remember through the Obusier seeing insignia in Japan, and insignia is known in Korea. It's selling very well in Korea right now, South Korea. So we're really are sharing, and our productive focus, our quality, and focus, and our flagship is the thing, and that's what we're taking out. - So I'm curious when you're thinking about what wines to show in those markets when you're doing this travel, because a lot of these ones are big, right? And they take some time to show their real true potential. Are you showing current vintage, a library release, or are you showing, how are you thinking about that mix? Because do you want people to buy and drink it right away in the restaurant, or do you want people to buy and hold on? Like I think I've used some of the logic that I would be thinking about. - The answer is market dependent, and I'll start with London, which I love going there. But for the last 20 years, they didn't want to try anything if it wasn't from 1995 or older. I just didn't know. They just didn't care about the current one. And the lovely evolution that's coming, and I've experienced this the last couple of times over, is this insistence that drinking a young wine is not, as some people in France have called, it's not infanticide, it's not a moral sin, it's actually okay to drink a wine. And the holy grail of wine making these days, whether you're boredot or Italy or Napa, is to make a wine, which is very pleasant, very drinkable when it's young. The tangos are present, but they're soft and silky. And what now, as I think generally accepted, is wines like that can also age brilliantly. It used to be this idea that if the tangs weren't a little aggressive and really present, and you had to wait 20 years, it wouldn't be a great wine, this sort of an old world thinking. And now the best in Bordeaux, the best in Napa are coming out with beautifully velvety's, tangos, great structure and great integration. And we know we've seen that we've done this long enough that those wines after 20 years are gorgeous. So when I go to the UK, now I'm able to pour the current wine and they're recognizing that that's a wine that can be purchased. And then as much as possible, we'll bring out some wines from 19 to something to get their recognition that the wines have the agent capacity. And so depending on the audience and the market, we'll do our best to show that range, but we're in an export market selling, presenting our current vintage. Got it. And if you were to compare that with one other market, like Hong Kong or Tokyo, is it the thought sent very different than London? - Let's see. So I mean, Hong Kong, Hong Kong's not the same as it was pre-COVID. It's coming back and God bless the politics and all of that with pre-COVID. Hong Kong felt like New York to me, energetic, very smart. The prices were sharp and tight, whereas mainland China had all sorts of pricey variation. The market was not as sophisticated and you could do both of those. So I think New York felt like, Hong Kong felt like New York, where it's most interesting to present why NAPA wines is you can Europe, where they have old world sensitivities, old world knowledge and belief structure. And it's a little bit harder in some instances to get them to look at NAPA as they in the same way. Let's just say that. - And how do you think about who goes on these trips? Is this, I mean, New York, one man band, it's just you, or you have a group of people underneath you that are kind of like your ambassadors that you're bringing out and they're into different markets with you? - If you're lucky enough to have people that have the desire and the ability to do this, then that's a great asset. So I had Opus I had one of the great wine makers who loved to go out and travel. It was great at it still is. And when you have that, and not all wine makers, if we're really honest, not all wine makers, because you're really good at it. God give you a little shutdown. And it's not easy work either. It's, you travel long hours, you've got shed lag, you work all day long, you do lunches, dinner, slouches, dinner, so it's not a walk in the park. But when, and you can't have your wine maker all year long, he or she is busy in the fall. But integrating a wine maker in is a great plus because that's such an authentic connection from the vineyard to the consumer to the trade. Integrating our marketing team, which has again their particular focus into the experience, is good for the market, but it informs the marketing team. You know, when I was marketing in the 90s, I was out of the market all the time because you can't really know the market at your desk. And it's not numbers. It's meeting people, listening, sharing ideas, feeling it. So long answer, just a little quicker. We have a team that goes out. And depending on the person going out, we'll structure his or her meetings and presentations to audiences that would be appropriate. But a winery needs to be incarnated. It's not a flat label. In Robberman-Dabby, we know the wine personalities. And so one of the things that we did with Hopus was, give it personality myself, Michael, and the team. It's critical that it not be anonymous, that it be something, buddy. - So obviously, Hopus and insignia, at least, of Phelps are the high end and small production, relatively small production in Napa. How do you think of different size or figure, or even smaller or non-Napa winery that this process might be different? - In general, the process of selling larger volume wines through channels is a different kind of commercial relationship to begin with. I think coming into a market with large volume expectations in the export market in Asia and elsewhere is possible, but it'll take the same elements. I mean, you still have to be present. You have to know your partners and getting into the market. But getting high volume achievement immediately is harder. I think that starting at the top where the volumes are smaller, where the placements with the restaurants and the retailers are more resonant will build increasingly a recognition of the category. You go to retailers shops in Asia, there is not a Napa wall. I mean, sometimes you see Napa walls. Sometimes you see Napa place with it. So I think it's a building process, but it's the same blocking and tackling. You've got to come in and get an importer, they can spread it, they can distribute it properly, and then you have to be consistent and persistent. - And you mentioned one of the things that this other winery owner found challenging was the expense and wanting to spend that money. What kind of percent of your marketing budget do you allocate towards building these relationships? - Well, it's exactly right. It's shared, I actually don't have an exact number for you, but the reason that it can make or sense from a financial point of view for the high end winds is the margins that exist in those products. We'll spend 20 to 30% of marketing expenses, which is not necessarily that much more. One of the challenges for the mid-tier wise is as they go to international markets, they'll have trouble keeping the same price point that they get here, and that'll squeeze their margins and that makes it a little harder for them to get in the water for sure. - And so how often do you have to go back and see people to establish a real relationship? You mentioned that they said, "I'll only see you five years and whatnot." So unfortunately, how often I've been seeing my family and seeing a poor family. Every five years, so they probably forget who I am or who my kids are, but do you have to go every year or even more than once a year? - So we, again, I have 20 years of experience with open summer referencing those years with Phelps, we're just getting started this year, the second year, but expected to be a similar rhythm and it is responsive to the market. We would be in the first 10 years in Opus, we would go to Asia every year. But it'd be once trip and we could buy and touch folks. We would then make a trip into Canada, we'd make a trip into Europe, and as our business grew, we reached a point where we knew we needed someone permanently in those markets. So we put someone in Tokyo, we put someone in Hong Kong, and that allowed that relationship to change. But we had of course had to prime the pump first to have enough business to justify it and to meet it. And so I would still through those years go to Japan almost every year, and again, you don't see everybody every time. We would do small things like I would every holiday season hand-write about 400 to 500 holiday cards to the individuals, my hand would do this. And it's a small thing, but when they get a handwritten card, and I say thank you, and it's not just happy holidays, it's nice to see you in April. You read it and you know that they're thinking of you, not just stamp your name on there. A lot of small things like that keep the relationship going, which seems silly, but I think having it have an impact. And then opportunities would come up, something would occur, and we race over to Japan, those kind of things. Japan was Opus' largest export market. As we do this now, as I said, I've got a week in London next week and a two-week Seneja will keep knocking on the doors and building the relationships. - And how do you think about measuring the quality of the relationships? Is it just a feeling or how do you figure that out? - Initially, initially it's a sense of feeling, a kind of sense of connection. But within short term, you want to see why it's going into the market. This isn't three years of relationship building, hoping that the fourth year, some cases would go in. You're contacting people in the trade who have the ability to sell the wine you're presenting, who have the skill set. And you know that there's a match very quickly. And if the match isn't there, then you stop. So you need to see forward momentum. And beyond how fast it should be, we have our planned projections, volume projections, based on everything we know that's going on. And then you see what happens. And you adjust to that last year in November. I did a great trip through our friends with our friends up in Canada. And to Montreal, it's Toronto, what do Cal grew into Vancouver. I had great meetings. We talked about this new excitement of what we're doing here, Joseph Phelps, and how we reinvigorate again. We want to get up into the market. Toronto and Montreal, we're going to send down their high end wine customers. And that's the end, of course, now it's done. The stand still for the moment. I sent an email to those folks up there and said, I said on behalf of what I hope are most Americans, I apologize. And I hope we can have a rain check and we'll get to it. And they came back to, of course, we will. But that's just something moment. So what actually happens is a fluctuation of things that sometimes we don't expect. But over the long term, a mix of international wine, present international markets for Napa, I think is just essential. I mean, as president of Joseph Phelps, how often are you planning on travel? I'm assuming you have a lot more responsibilities than just building relationships. But it does sound like you enjoy that part as well. I love what I do. And I love managing in the position that I manage is could I get to dabble in everything? And it's not really dabbling. But I used to say it. I still say the same thing. As CEO or president, your job is to do nothing. Your job is to help the wine maker help the market, or help the team do all of that. And of course, it is more than that. And the job is the process of balancing the amount of time that you spend doing any number of things, working with the production team, working with the marketing group, working with the being in the field. So because we release our wine in September, the fall is always a busy time to travel it. And the rest of the year, I'll have more time to spend here or with production. We did the calculation at once, at one point, I've retained the figure. I used to travel at Opus about 65% of the time. And now I've only been here for two years. So it's too early to get a good average. But I think about half the time is about right, which is a lot. I would go to-- I love this example. I went to Asia during those years. And a retailer-- Canberra is a retailer and an importer. It was in Japan. But he said to me, he said, we sell all of the cases that you give us. He said, why do you spend the money at the time to come here? And I said to him, sincerely, as I felt it, I said to say thank you. Because you don't want to take anything for granted. You have to earn it. And they have to know that you respect it and appreciate it. And the minute you start saying, no, I'm going to buy it. I'm going to go click off. That's the wrong direction. So I had to go out, shake their hands, say thank you. And then hope and see that they were telling the story the right way that they were presenting the wine, the right way the right customers. And that's how you keep the pedal turning. I mean, it's also a huge value ad for their top customers getting exposure. Because you also do lots of things. When I lived in Asia, I got the opportunity to join lots of wine lunches and wine dinners with foreign visitors. And it was always something cool. You get to hear directly from the wine maker or the owner and their anecdotal stories. And it just burns in your memory. This is it. I mean, right? Just say you think that's why it's sort of like blocking and tackling. And there's nothing new. There's no secret that I'm not going to share a secret. Why in a story telling our story? to the trade, our stories to customers, and customer stories about when they bought the wine, when they had the wine. And if we turn wine into a series of numbers, prices, cases, margins, we're selling just any other consumer good product. And I think that we have to be very careful in an away, in many cases, we've drifted towards being too self-important, too complicated. You need to know all these things. And we need to tell you these things. If you don't know these things, then you won't know how to buy the wine. It's a human joy and a pleasure that we've, I think, again, we need to find, like, when I go out and say, "Look," and I just in the US as well, and I say, "Since COVID, we all feel sort of disconnected." And everybody always nods, like, "Yeah." And I go, "I personally don't know anything better to connect with people than sitting in a table with a really good piece of bread and a glass of wine." And they, and it's like we need to slow down and sell not the wine, but sell the social joy, the social value, the connectivity that comes at whatever level, whether it's an opulent wine, a high wine or an everyday one. And more and more people are coming to that. That's getting into a different kind of discussion. But that to me, I learned that from Robert Padavi. I was going to say you need that olive oil, too, right, for the holy Trinity. Well, the thing is, is that I mentioned earlier, remembering the neo-prohibition is from the 1980s, and the way the wine industry had to step up and say, "Wait a second, wine is unique." If you Google today, Mandavi defense, just those two words, first thing that comes up is a two paragraph statement that Robert Mandavi and his family and the wine recreated at that time to argue why wine matters, the joy of it, the pleasure of it. And when I reread those paragraphs, I say, "I think we have to go back to those basics." I think we have to remember that wine's been with us for 8,000 years. It's not going to go away. People are having to go to a gummy bearer or so I'm told. So you've got that going on, but gummy bears don't pair well with meat. And maybe they do. I don't know. Different discussion. But I think we need to sell. I don't even like to word sell. We need to share the simple passion of wine is. Now I'll just start to go off on it. But when I go to markets, and I spend a lot of time in the international markets, that resonates deeply. So not to try to put numbers on things, but we are a business podcast after all. Yeah, ready. And Joseph Alps is a business. How do you try to measure these results? Is this about, hey, we've invested X much in this specific market and we saw this uptick in the export volume to that location or is it about increasing the live X values? How do you think about return off investment? Yeah, I know. We track live X a lot. We have for years. And the thing about a wine aspiring to be perceived in the company of the finest wines of the world, the real measure of that is that the value appreciates over a period of time. Not that it skyrockets and not that becomes an investment vehicle and not what happened to Bordeaux in 2009 and 2010. But if in the world of wine, their wine is in the company of those wines, then the secondary market over a period of time in most instances with some variation will appreciate. And indeed, as we even over the last two years have looked at insignia on live X, I've seen a little uptick. There's a little uptick. The 2021 that were released last fall has been gaining value. As I say this, I'll probably look on live X and see that it's dipped a bit. But over a period of time recently, after we released it, it dropped a bit. But it's been growing. I was happy to see that the 2010 insignia had a nice uptick in value. This means that people who do value appreciate purchase and resell wines are in that company. So that is to me the reflection of the success varies specifically, of course, for measuring penetration into the market. So we're about about 12, 13% export in our sales right now. I'd love to be humbly 30 to 40% in 10 years. And I would consider that a big success. I mean, Opus had bigger numbers, but I'm not comparing with them, but that's not relevant. But if you get 30 to 40% of your sales being export, you've got a good foothold in those markets. That means people are buying and selling and enjoying your wines. So you mentioned Laplace earlier, the network of Bordeaux negotiations that sell wines internationally, that in use it for Opus, are you using it now for Phelps as well? No. In fact, the Phelps family had taken insignia and the Joseph Elves Cabernet to the plus in 2016. I think the plus handled it saying different vintage 1670 to 18 and 19th. When what Hennessy acquired the winery, the business, what Hennessy having an extensive global network, it makes much more sense to use our own network to distribute the wine, then have the supplementary network of the negotiations. It's a very long discussion and important discussion about what the difference is and what the negotiations actually do. There has been over the last more than five years, six or seven years, an influx of American wines, California wines, and beyond Bordeaux wines into the negotiations, which I think now is giving them a little bit of indigestion. I think that their ability to distribute those wines is being tested right now. So we'll see how that works out. But it's a long discussion about my own opinion of what the negotiations do very well is respond to existing market demand. So when the market demand comes and they come asking for the wine, they are expert at getting the right buyers with the right wines and the way that the system works is it creates at the point of release a kind of perfect commodity because every negotiate is selling whichever wind or type of the same price where they should be. And the distribution is very effective, very efficient and they manage that on going base. When it comes to building brands, creating brands, placing wines in specific places and markets, that's not their DNA, that's not their forte. I've feared that they have ventured a little too far into that kind of business and it's what's confusing the market with their offerings right now. It's a loaded topic. And how is that different now with the LVMH network of countries? Well, with LVMH because we have people in the market, we're coming in in a brand building approach, being very specific with the accounts that we're selling to. We can go straight to the account and sell them, which is what the board of negotiants, a wine would be offered on the plus would sell to importers and the importers would resell. And in the open free market of the expo world, you lose track of where your wine is going. In the days, it's a little slower now than it used to be, but you know, all of the British importers of our vendors, very much, they would buy Chippitagia and then you lost track of where the wine went. So you had to live with the open market and with the wine that like the grunker class A and like opus that has existing demand, it works brilliantly. But when you're trying to establish build a brand, it's very frustrating because you don't know where your wine's gone. So the beauty of the moment for us is that with what Tennessee Global Network, we can go into a market go straight down to the account to deliver the wine to the account. We know where it's going and that's the phase that we're in. And from a corporate perspective, are those separate entities so you still sell your wine to the Moe NSE network, whatever it's called and then they sell it to their people or is it somehow different? We will sell true, sell two and through the Moe team that's in place. Next week, I'll be meeting with the fine wine folks in London that work for Moe in the UK. And we have a list, an agenda of accounts and restaurants. I'm going to go visit with. I'll be sitting with Jansis Robinson, that kind of thing. And we'll talk about what we're doing and build the recognition that, you know, again, what I think is important is that wine sales can't just be a sale. There has to be some reason behind it. There has to be something that's compelling. And now, because the market is so competitive, you need a lot of things to be compelling. The quality has to be right. The price point has to be right. And again, there's a lot of wines that do that. You need still something else to hold on to, to pull your attention, to retain attention. I think that when you go to markets, you've got the history, which is your DNA, your authenticity. That's what gives you credibility. It's a good, you've got your story. Then you've got the wine you're bringing to market. That's what generates sales. You've got to have a good wine, the right price, sold on my person. But the last element of, I think a lot of Irish maybe don't spend as much time out or to sort of art complete with, which is, where are you going? What are you doing? And when that's strong, the people go, "Oh, I want to hear about that. I want to see how that comes out." And when those three things, the story, the wine you're bringing to market and where you're going are aligned, then you get reverberation. Oftentimes, they're disconnected. The story's over here, but I'm selling this. I'm going there. It could be that way, but it's a harder thing to align with because it's focused in alignment. How do you, that work if you're, where you're going, sort of maybe changes the style of your wine and what you're settling today or what your current release is, what you've made before a few years ago? I think that the great question, I mean, wine in the old world, which I love, the goal is, is topicity. And even that sort of fluctuating a little bit like how, what's your topicity? Are you, authentic to the region and within that what's your relative quality. The New World, we have a broader range of possibilities because we don't have a heart of anchor around tipicity. And I think that Napa Valley is a New World in the sense that we've only been divinured, started back in the 1850s, 60s, 70s, but the Renaissance started in the 1960s, 1960s. And we've only got 60s some years of it doing this. We're still really young. So again, a winery could have a compelling vision to go to a different style. And that would just have to be aligned with you still need something that would abide today. And you could say I'm going to go off to the left or go off to the right. And if that's aligned with the founding, being some of the often changed styles, it could still resonate when we think about insignia. Our aspiration is to be recognized as producing the wine that's considered to recognize as being amongst the finest wines coming from Napa Valley. And we can have a long discussion about the evolution styles we've seen through the decades in Napa from strong high alcohol, heavily extracted wines to where I think the pendulum is going towards wines of great character personality, but more restraint and balance. And we're not quite such high alcohol. That's the profile we're imagining. Then we have to layer in climate change, which is a whole other conversation. Warmry temperatures, of course, we had a couple of cool advantages recently. So I don't know. I don't think it's a black or white answer. The question really becomes is what is the authentic intent of the wine maker and how aligned is that with the wine you're bringing to market? So besides the blocking and tackling of traveling and building relationships, what other marketing efforts do you think are critical, especially in this day and age, to support building a global icon? I think doing as many podcasts as possible is critical. I would spend as much time on next show as possible. I'd say with the smirk and the smile, but again, I think what's interesting is understanding that the 90s and early 2000s, you know, a parkour score would send you through the roof and you put a score down and you sort of went home and you were good. I think it's very positive that people are now talking about wine through different channels. It's sort of a diffusion of the conversation. The social media came in. It was recognized that relationships are being formed differently. I talk about relationships of being in person, not very old school about this stuff. And I still believe that there's nothing better than sitting in a table and shaking hands and having that relationship and but relationships are also happening through social media. And so it's a conversation versus a selling. And I think the trick is being in the conversation and being part of the discussion that then we look at the idea that, you know, everyone is worried or talking about the fact that young people aren't coming to wine. The young people are drinking differently. They're not drinking at all. But that's a whole conversation. I do think that the young people, if you go to them today and say, "Hey, this is a great wine. It'll age for 20 years. You're going to love it when it's 25 years old. It's not going to connect to them at all." They're much more about the experience now, the pleasure now, they're much more of the moment. And so that gets back to what we said earlier, which is what we really need to do is make wine that are very satisfied, very pleasing, very easy to drink, very good now and still can age. So the way we talk to folks, the way we present the wine, I think is evolved recently, that is different from last 20, 30 years when we had a lot of boomers doing the buying. I'm curious on how what similarities to see with digital marketing and those building relationships of the blocking and tackling of in-person with your network. Because you mentioned a lot in the building relationships about telling the story, not about selling. How do you think that translates to digital marketing in terms of your ability to tell the story to the direct consumer potentially? I think that what we are experiencing is that it's interesting, again, a direct outreach through text or calling people is giving us the best results still. I don't think you can recreate it on a website. I think you can put up enough information to open the door and then people will come up outside. But it's still, you know, we're not trying to translate this into a digital experience. We're present, but I'd much rather have a conversation, that much rather speak to somebody and touch them and that seems to have a bigger impact than digital advertising. So what do you think about pricing and allocations between markets? How does that play a role in building a brand? It's everything. Over-supplying a market anywhere is bad, which seems obvious to say, pushing a supply and demand or a pushing or pulling. When we create relationships, when we go into the market, our intent is to create pull. When you have pull, you want your supply to be slightly behind that. So there's a little tension to getting the wine. Even entry-level wines, people buy them, table wines, everyday wines, buyers still have this idea that they're getting a special, but when it's stacked up, it's a little less rare. It's a little less special. And again, a fine wine at high prices are a different kind of relationship than mid-tier or an entry-level one, because when you go into the grocery stores, you see the wines still able stacked up the endiles, and people buy them there. But managing, I find the right answer for you, managing the balance of supply to the demand and having a price that resonates as valid as correct for what they're buying is the goal. My opinion is that if you use price as a lever, when the vintage is good, you check the price up. When the business is bad, you pull the price down. What you're really doing is meaning the price isn't intrinsically related to the value of the wine. It's just how much you want to sell in the condition of the market. What is a great place to be is where the consumer trade and consumer connect without too much debate, the price with the quality of the wine. And it's not a artificial construct. It's not how much money we can make. It's the actual true value of that wine. And when you arrive there, you're in a very good place. And what you don't want to do is then abuse that or upend. And this is where the Japanese market is. Once the Japanese decide that this product, this luxury product has this value, they will stay faithful to you as long as you don't mess it up. What do you think has changed in the past 20 years in building a global icon? I know you talked about scores as one. And what do you think will change over the next 20? I don't know the next 20. I wish I did. I'd be a billionaire, I suppose. But looking back to the past 20, it's what we've been talking about. I mean, the wine world has shifted to me amazingly as the global market opened. In 2004, Asia was just opening. Hong Kong reduced its import taxes. The wine flowed into Hong Kong. When the first time I was in China in 2004, they were still put at ice in the wine and Coca-Cola, all these kind of things. And everywhere, people have been drinking wine. And what matters to me is that it's not just a trophy purchased. Like, look how much money I have. So I'm going to buy some peters and some of this. But they were learning and bracing the culture, the pleasure, the joy, all these good things. So that has changed the global market, I think enormously in the 20 years. And then at the same time, the quality of wine has gotten so much better. I mean, from, I remember, more than 20 years ago, 30 years ago, there was a lot of wine sold in plastic jugs. It was a lot of wine. It just wasn't that good. And I think that the quality of our wine making from New Zealand to South Africa to Oregon and California and Europe and France is better and better, which is a great thing. I think people are more consumers, are more aware, more selective and therefore more competitive. At the same time, we've seen globally the various market by market consumption has been dropping, particularly in Europe. And we need to be, we need to take nothing for granted. I think I said this early, we need to earn it again. We need to explain to people not why we are selling this to make money to make our living. But why wine is a fundamental historical, social, cultural, pleasurable part of life. Where are we going in the next 20 years? I mean, climate variation, climate change is a real thing. How we farm, and we don't have time on this podcast to do this, but I would love to tell you about, indeed, where we're envisioning taking Joseph Phelps in our vineyard work. And it has to do with bringing back biodiversity to our farming. And it has to do with applying with the French call agro-ecology or agro-forestry. It's a very long discussion, but I think it's not just a different way to farm for the sake of it. But it's a fundamental response to changing global conditions. And I think we're going to, as an industry, we have more viruses, we have more temperature pressures, we have more issues. As an industry, I think the next 20 years, hopefully we'll see us evolve towards a different way of farming. And in doing so, remain relevant, produce products that people like to drink, and we'll have a glorious 20 years. David, we want to wrap up this podcast on a more personal note. And we are curious, what is the most cherished wine you have in your personal cellar? And when do you plan on drinking it? The most special bottle today in my cellar is the 2001 Chateau-Mouton-Roth-Chile, signed by Baroness Philippine de Roth-Chile. And it was the vintage that came out when I started at Opus 1. And as I said this, I suddenly thought I have a bottle of rubber bandabi, Cabernet Sauvignon Reserve signed by rubber bandabi. It's the personal connections that matter so much. And I think of both of those wines as being cherished bottles. I have to be careful to not wait too long. I think the other thing, you have to open these wines and open these bottles. And I don't have an answer to when I'm going to do it. But many times, I mean, those wines will age forever. It's not a question of aging. But the issue is oftentimes we just never have a dinner that's special enough. We take no, I need more fancy friends or more fancy dinner guests. So I don't know when I'll do it. But I have been seated in the fortune in my career to be have being mentored and have been in the presence of fabulous, see impressive and visionary and people in the wine business, whether it's rubber bandabi or Baroness Philippine de Rothschild. And it's the personal aspect of the business that I love so much. So the wines, the bottles I have that are signed by them. Are clearly the most cherished. I love that your answer ties back to everything we just talked about in this entire episode. We want to thank you for your time and sharing so much information about how over your career you've built relationships to enable the growth of global iconic wines. And so we appreciate your time. And thank you so much. I appreciate the conversation. Thank you for the opportunity to talk about it and hope to talk to you again soon. 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. Thanks for joining us. If you loved this episode of Xchatto, we'd love for you to subscribe. Rate and give a review on iTunes or wherever you get your podcast. Until next time. Cheers. [BLANK_AUDIO]