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Professor Benjamin C. Esty and Research Associate Gregory Saldutte prepared this case. It was reviewed and approved before publication by a company designate. Some data in the case has been disguised to protect confidentiality. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2018 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

B E N J A M I N C . E S T Y

G R E G O R Y S A L D U T T E

Sandlands Vineyards

“It’s the dream of many entrepreneurs: Get rich, buy a vineyard, kick back on the porch and relax with a glass of wine. Keep dreaming. Wine is a tough, competitive, and expensive business that’s likely harder than your current day job.” (Forbes Magazine)1

As he wandered through the 100-year-old vines at the Kirschenmann Vineyard in Lodi, California, Tegan Passalacqua reflected on the challenges of starting and running a small winery. “I am constantly thinking about the business—what to produce, how much to produce, how to build the brand, and most of all how to make really good wines.” Passalacqua and his wife Olivia owned both the Kirschenmann Vineyard and a small winery called Sandlands Vineyards which produced “old-vine” wines. Although he had a full-time job as the head winemaker at Turley Wine Cellars, he managed the Kirschenmann Vineyard and made the Sandlands wines in his spare time using Turley’s facilities.

In early December 2017, however, the Passalacqua’s faced an important decision: should they buy a building down the road from the Kirschenmann Vineyard and develop it into a winery and possibly a tasting room for the Sandlands wines at a cost of up to $500,000? This building, known as Eastside Meats, had been a meat processing facility with a history going back to the German and Russian immigrants who settled in Lodi in the 19th century. Although it was not listed for sale, Passalacqua had been in negotiations with the owner who seemed willing to sell. On the other hand, he and his wife could save their limited resources with the goal of buying another vineyard. Unfortunately, old vine vineyards did not come up for sale very often and when they did, they were generating more and more interest from winemakers and selling at higher and higher prices. Knowing they could afford to make only one major investment over the next five years, they had to decide whether to bid for the building or save their resources for another vineyard.

The U.S. Wine Market People have made wines for thousands of years by pressing grapes and fermenting the juice to

produce an alcoholic beverage. The resulting wines came in three primary colors (red, white, and rose) and three main types: still (table wine), sparkling (with bubbles), and dessert (often sweeter and with higher alcohol levels). Although there were thousands of kinds of grapes and more than 150 kinds that were regularly used to make wine, 10 varieties accounted for 80% of the tons crushed in California.2

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The most common types of red wine grapes were Cabernet Sauvignon, Merlot, and Pinot Noir; the most common types of white wine grapes were Chardonnay, Sauvignon Blanc, and Pinot Gris/Grigio.

People drank wine by itself or paired with food to enhance the taste. Red wines were traditionally paired with high-fat foods such as beef and cheese while white wines were paired with leaner foods such as chicken, seafood, and vegetables. Wine taste derived from a complex combination of the grape, climate, weather, soil, and winemaking process. Winemakers described the taste using six characteristics: acidity, tannin, alcohol, sweetness, fruit, and body (fullness). A balanced wine was one in which all of these characteristics blended together harmoniously rather than having one of them stand out above the others. Taste was a very subjective factor that could vary considerably from person to person. As a result, it was an “experience good”, a product you had to try before you could decide if you liked it or not. As one analyst quipped, finding a good wine was like finding a good barber.3

To help consumers make an initial purchase decision, professional wine critics such as Robert Parker, Jr., Jancis Robinson, and Antonio Galloni reviewed and rated wines particularly more expensive ones.a While some people argued that critics provided objective assessments of wine quality, an assertion the strong positive correlation between ratings and bottle prices seemed to corroborate, others argued they had strong and almost predictable preferences that drove winemakers to produce wines with specific taste characteristics.4

The standard unit of measurement in the wine industry was a (9-liter) “case” which was comprised of twelve 750 milliliter bottles (~ 2.4 U.S. gallons). Total sales in the U.S. wine industry in 2016 were 399 million cases with a retail value of $60 billion.5 Approximately 70% of the wine consumed in the U.S. was produced domestically and 90% of that was produced in California. The most famous wine- producing regions in California were Napa and Sonoma Valleys where millions of tourists flocked each year to see the vineyards and taste the wines. Though not as well known, San Joaquin Valley also had numerous vineyards and wineries. Lodi, in fact, had 85 of wineries.6 The remaining 30% of consumption was imported from Italy, France, Australia, and numerous other countries. Over time, U.S. wine consumption per capita had grown from approximately one gallon per year in 1965, to two gallons by 2000, and was up to almost three gallons by 2016.7

Wine Customer Segments

The beverage market was divided into non-alcoholic (soft drinks, fruit juices, coffee, water, etc.) and alcoholic beverages. The smaller market for alcoholic beverages included beer (50% of total dollar sales); distilled spirits including rum, vodka, and gin (35%); and wine (15%).8 Among adults of legal drinking age (i.e., those over 21 in the United States), 36% abstained from drinking alcohol, 24% drank alcohol but not wine, and 40% drank wine.9 Approximately two thirds of the wine drinkers drank wine occasionally (less than once per week) and one third drank wine more frequently. The high-frequency drinkers accounted for over 80% of wine consumption and purchases.10

According to one industry survey, there were six key customer types ranging from “overwhelmed” customers who bought cheaper wines and felt bewildered by the range of choices to “enthusiastic” customers who bought more expensive wines, and loved learning about and shopping for them (see Exhibit 1). When surveyed, frequent wine drinkers listed price and brand as by far the most important purchasing criteria (see Exhibit 2). Most consumers viewed price as a signal of quality, which was particularly important given the enormous range of options available—a typical wine shop might carry 400 to 800 kinds of wine. Interestingly, however, there was no correlation between price and taste

a Robert Parker, Jr., created the 100-point rating scale in the 1970s. Wines rated above 85, 90, and 95 points were considered good, outstanding, and extraordinary, respectively. Ratings were based on color, appearance, smell, and taste.

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preference for most drinkers in blind taste tests. There was, however, a positive relationship between price and taste for “expert” or knowledgeable wine drinkers.11

Wine Product Segments

Consistent with bottle price being a major purchasing criterion, most analysts segmented the wine industry by price: the value segment for wine costing less than $10 per bottle and the premium segment for wine costing more than $10. The value segment represented approximately 80% of the industry volume and 60% of its revenues.12 Marketing analysts further divided the premium segment into “luxury” wines costing more than $50 per bottle. In fact, at the high end, wine could cost several hundred if not several thousand dollars per bottle. Exhibit 3 shows sales by price point in the off- premise channel (i.e., grocery stores and wine shops), a segment where good data existed for low- to mid-priced wines. More expensive wines were difficult to track because customers bought them directly from wineries rather than through retail outlets, and that sales data was difficult to obtain.

Marketers classified premium wines as “non-essential luxury goods”, meaning that consumers could defer purchases indefinitely (“non-essential”) and tended to buy proportionally more of them as their income rose (“luxury good”). Exhibit 4 shows the fraction of adults who had purchased expensive wines and the reasons why. Over 40% of adults had purchased a wine costing more than $50 per bottle, and the most common reason was to celebrate a special occasion. The second and third most common reasons were to drink or to give as a gift. When purchased to drink, premium wines competed against other kinds of wine; when purchased for a special occasion or as a gift, they competed again other kinds of wine such as champagne, food such as chocolates, and gifts such as flowers. One wine blogger described the way he chose his wines this way:

There are what I call “Everyday Wines.” These are the kind of wines that we’ll pop open with dinner on an average Tuesday night...The second category is what I call “Saturday Night Wines”…for times when you want an outstanding wine—a wine that may be a focal point…of the evening...And then there are “Special Occasion Wines.” These are wines that really are special—that when you open, you’re excited...

And I broadly break them into three categories. The first are what we might call the Rolls- Royce wines…These babies are expensive!...[T]he next category might be the Porsches (or the wines of the experts). They’re often expensive…[and] hard to find...The third category is unique...We might call it “What the Cool Kids are Drinking.” For example, one night a month in New York, a group of 15 or so of the top somms [sommeliers] in the city meet after work and bring exciting new finds to share. Perhaps a Chenin Blanc from Sandlands...If you open a bottle of one of these for your friends, even the wine lovers may say “What the hell is this?” After they taste it, the novices may still be unconvinced—these are not mainstream wines—but the serious wine lovers will likely say “Ummm... this is really interesting!”13

The Structure of the U.S. Wine Industry Producing wine consisted of three main activities: growing grapes (sourcing), making wine

(production), and distributing wine (distribution). Exhibit 5 provides a schematic overview of these three activities. The two key wine segments—the value or commodity segment at the low end and the premium segment at the high end—differed in how they conducted each of the activities. The former relied more on “science” and automation to mass produce consistent and affordable (low-cost) wines; the latter relied on a complex combination of art, science, and nature to produce more unique, higher- quality wines. In both segments, however, the production, distribution, and sale of wine was regulated extensively and taxed heavily at both the federal and state levels.

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Growing Grapes

Winemakers often said that “wine was made in the vineyard.” When growing grapes, farmers made a series of critical decisions such as what to grow (which type of grape); how to farm (plant, prune, and harvest the grapes); whether to irrigate or “dry farm”; and whether to use pesticides or grow organically. In the value segment, the objective was maximum yield with decent quality and low cost. In the premium segment, by contrast, there was considerably more variation in farming techniques and a desire to grow high-quality grapes. Premium winemakers sought a match between the type of grape, the climate, and the “terroir” (the French word for soil or earth)—all three of which affected the ultimate wine’s taste. From year-to-year, weather—temperature and rainfall—also affected the taste.

The most critical decision in any given year was when to pick the grapes, a decision that was based in part on science (acid and sugar levels) and in part on the winemaker’s judgment regarding the desired wine. Control of the harvest also mattered—did you pick all of the grapes or just the best clusters; did you pick in the early morning or later in the day; did you pick certain elevations, etc.— which is why winemakers liked to be involved with the harvesting process to the extent possible. There was no substitute for experience in making good picking decisions, which is why aspiring winemakers sought to work as many harvests as possible.

Wineries sourced grapes in three ways (see Exhibit 5). One option was to own or lease the vineyards (an “estate” or integrated winery) which gave winemakers full control over growing practices and harvesting decisions. A second option was to buy grapes on the spot market or with longer-term contracts. The final option, used by négociants (French for merchant) or “virtual’ winemakers, was to buy wine made by others and resell it under a proprietary brand name. The largest wine makers used a combination of all three structures; the smaller, premium winemakers tended to buy grapes.

One of the greatest challenges for growers was dealing with diseases and pests. Although farmers could control these problems with fungicides and pesticides, others preferred to farm organically. One of the most destructive pests was known as phylloxera, an insect that attacked the roots of grape vines and eventually killed them. An outbreak in the mid-1800s destroyed a majority of the vineyards in California and Europe. More recently, a second outbreak during the 1980s forced Californian growers to replant their vineyards. By grafting different kinds of grape vines onto naturally immune rootstocks, growers could avoid phylloxera damage even though the process came with unavoidable cost: it changed the taste of the resulting wine according to some people. Others argued the change was so minor compared to the winemaking process that it was undetectable. Interestingly, phylloxera had less impact on vines grown in sandy soils which were inhospitable to the insect. As a result, vineyards with sandy soils tended to have a higher fraction of “own-rooted” rather than grafted vines.

As of 2016, there were 5,900 wine grape growers in California who farmed just over 600,000 acres.14 The largest grower, Bronco Wine Company, had 40,000 acres and revenues of $182 million.15 In contrast, 90% of the growers had fewer than 100 acres and 50% had fewer than 5 acres.16 These smaller vineyards provided grapes used to make premium wines. Vines became productive three years after planting, remained productive for 20 to 40 years, and then were replaced as output fell. An acre of land produced from 2 to 10 tons of grapes, with high-quality wines at the lower end and low-quality wines at the upper end. Each ton of grapes produced roughly 65 cases of wine. The challenge for all growers was the high and rising cost of land: vineyards ranged from $20,000 to $40,000 per acre in San Joaquin Valley and from $50,000 to $370,000 per acre in Napa Valley.17 Restrictive zoning and strict environmental regulations meant new land was difficult and costly to acquire. Rising land prices, however, helped offset the low operating margins most growers earned on their grapes—averaging 9% despite considerable variation over time and across growers. Growers with the most prized

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vineyards, which produced the most expensive wines, could earn higher operating margins, perhaps 20 to 40% or more, but they were relatively rare and few growers disclosed their profitability.18

In addition to grapes, the other major inputs needed to make wine were equipment (processing, pressing, and bottling machines); labor particularly the services of a skilled winemaker; barrels to store and age the wine; packaging which consisted of bottles, labels, closures (corks or screw caps), boxes for shipping; and buildings to house the equipment and store the wine. With the exception of skilled winemakers, all of these inputs were readily available from multiple suppliers at competitive prices.

Making Wine

Most wineries had a head winemaker who ran the process of transforming grapes into wine, a process that involved four key steps: 1) pressing the grapes, 2) fermenting the juice, 3) aging the wine, and 4) bottling the wine for distribution. Each step in the process could be done in multiple ways and required the winemaker’s judgement to achieve a desired taste. For example, in the pressing stage, you could destem the grapes or press full clusters; in the fermenting stage, you could do one or two fermentations; and in the aging stage, you could store the wine in oak barrels which affected the taste or stainless steel containers which did not. For wines in the value segment, the challenge was to blend grapes from multiple vineyards to produce a consistent taste year after year. One of the most important decisions was how much to intervene in the process. The choice was between letting the wine become what it was destined to become—fermentation was after all a natural process that would occur on its own—or manipulating the wine by adding sugar, acid, enzymes, or water. While making wine depended in part on the science of chemistry and growing depended in part on the luck of nature, winemaking ultimately depended on the winemaker’s skill, knowledge, and accumulated experience.

As of 2017, there were more than 9,000 wineries in the U.S., and more than 4,000 in California alone. Exhibit 6a shows the distribution of wineries based on size. Most wineries were very small: 80% of the wineries produced fewer than 5,000 cases per year. At the top end, the three largest firms (E&J Gallo, The Wine Group, and Constellation Brands) controlled 60% of total wine production.19 Gallo, in particular, produced 75 million cases across 90 brands and generated sales of $4.7 billion.20 Consolidation at the top end had occurred steadily over the past 20 years and was likely to continue in the coming years. The largest firms produced wine in the value segment, yet some of them also produced a few premium wines. For example, Constellation Brands produced Opus One, a “Bordeaux style” cabernet sauvignon that sold for up to $400 per bottle and had recently acquired the Prisoner brand which sold wines for ranging from $30 to $50 per bottle.21 When broken down by average bottle price, a small fraction of the wineries produced value wines. In contrast, most of the entry and growth was occurring in the premium segment in a trend known as “premiumization” (see Exhibits 3 and 6b).

Each winery produced one or more brands (e.g., Sandlands), and each brand had one or more “labels” (Sandlands Mataro vs. Sandlands Chenin Blanc).b Across multiple vintages (Sandlands 2014 versus 2015 Chenin Blancs), there could be hundreds of thousands of types of wine. Gomberg, Fredrikson & Associates, the leading market research firm in the wine industry, tracked prices of 15,000 wine labels commonly available in the market, yet government taxing authorities tracked over 100,000 different labels per year including imports.22

Although larger wineries had profit as a primary objective, the owners of smaller, premium wineries were interested in some combination of profit, prestige, and fun. In fact, many celebrities and

b As an example of the industry’s extensive regulation, every label had to be pre-approved by the Alcohol and Tobacco Tax and Trade Bureau (TTB, part of the U.S. Treasury Department) as part of the taxation process, and every label had to contain at least nine items including brand name, wine name, bottler name and address, alcohol content, and health warnings.

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business executives owned wineries as part-time endeavors. For example, Francis Ford Coppola (director), Dave Matthews (musician), Joe Montana (football player), Nancy Pelosi (politician), and TJ Rogers (CEO of Cypress Semiconductor) all owned wineries. According to a survey of California winemakers, 40% said they would be willing to lose money to make better wine and almost 80% said they would be unlikely to sell their winery to get a higher return in the stock market.23 Consistent with this survey evidence, Don Ross, founder of Cardinal Shower Enclosures and owner of Shimumi Knoll Vineyards, a small producer of premium wines, said: “[In the]…wine business, we don’t make any money. I do it for love. I sell shower doors for money.”24

Starting a winery was daunting endeavor because of the large capital commitment. Exhibit 7 shows the theoretical economics of a small-scale (2,000 cases per year) winery producing premium wines. The analysis shows that the $600,000 investment generated relatively low operating margins.

Consistent with the theoretical analysis, Exhibit 8 shows that small wineries lost money on average according to a survey of actual financial results. The survey of approximately 130 wineries showed that larger wineries sold lower-priced (value) wines, used distributors, and generated higher margins. What the exhibit did not show, however, was the wide variability in profit margins that existed at each size level. According to an unrelated study, the gross margins for large wineries (>100K cases) around the world ranged from 27% to 66% with an average of 44%.25 Assuming the wineries in Exhibit 8 were representative, the results implied that approximately 80% of wineries broke even or lost money on an accounting (net profit) basis and 90% or more lost money on an economic basis (i.e., after a charge for the implied cost of equity).c Larger wineries—those with for-profit motives and sufficient scale—were generally more profitable. This finding was consistent with the long-term performance of Willamette Valley Vineyards, one of the few publicly traded wineries in the U.S. (see Exhibit 9).

Distributing Wine

Following the repeal of Prohibitiond in 1933, states set up a variety of regulations to control the distribution and sale of alcohol. Some states permitted only government-owned entities to sell alcohol while others imposed a “3-tier distribution system.” Producers had to sell to (and could not own) distributors who, in turn, had to sell to (and could not own) retailers. Only retailers could sell directly to customers. A Supreme Court decision in 2005 changed this system and gave wine producers the ability to sell to retailers and consumers directly. As a result, producers distributed wine in one of three ways: via distributors (90% of total sales), direct-to-retailers (3%), and direct-to-consumers (7%).26 Because wine bottles were large and heavy—a case weighed approximately 40 pounds—and needed to be stored in temperature controlled settings, at least the more expensive wines, it was costly to ship long distances.

Selling to a distributor (a wholesaler) simplified the process and reduced selling expenses, but resulted in lower prices. On the other hand, selling direct-to-consumers through tasting rooms, wine clubs, or wine lists (customers who requested annual allocations of wine) generated higher margins, but required incremental marketing, sales, and overhead expenditures. Table A (below) shows prices

c Assumes 90% of the wineries under 5K cases of output (79% of the industry according to Exhibit 6a) and 50% of the wineries under 50K cases (17% of the industry): 80% = (90%*79% + (50%*17%). While this fact could be explained by owners drawing excessive compensation, it was probably not a major factor here because there was not a clear tax advantage to doing so (most wineries were structured as pass through entities) nor did most of the owners need the income.

d The 18th Amendment to the U.S. Constitution was ratified in 1919 and forbade the production and sale of alcoholic beverages. It was repealed by the 21st Amendment in 1933. During this period, many farmers removed their grape vines and winemakers exited the industry. The result was fewer wines and many fewer people with skills and knowledge to produce great wines.

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and typical mark-ups for premium wines sold across the three distribution channels; the mark-ups for value wines were much smaller, perhaps half of those shown for premium wines.

Table A Bottle Prices and Mark-ups for Premium Wines by Distribution Channel (dollars per bottle)

Source: Casewriter estimates based on data in American Wine Economics, by J. Thornton, University of California Press

(2013, pp. 124-125).

Note: Shaded box shows realized price for the winery (producer) assuming a $26 retail price.

There were approximately 600 distributors in the U.S. down from 3,000 or so in 1995.27 As the

numbers dwindled, concentration increased: the five largest distributors controlled 50% of the market; the top 20 controlled over 75%, and the top 100 controlled well over 95%.28 The largest distributor, Southern Glazer’s Wine & Spirits, sold 75 million cases of wine from 1,200 producers and generated wine sales of $6.6 billion.29 Whereas largest distributors dealt with the largest wineries and pushed volume, the smaller distributors dealt with smaller wineries and pushed selection. Although increasing scale helped improve operating margins for the largest firms over time, distribution remained a difficult business with low operating margins: 2 to 6% for the largest distributors and somewhat higher, say 15 to 18%, for the smaller distributors that sold higher-priced premium and luxury wines30.

Smaller wineries found it difficult to get marketing support from the larger distributors. In a recent survey, one winemaker said, “So much of our route to market is handled by a single company now; it is rather frightening. The clout they have over us is remarkable.” Another said, “[W]e are not seeing a surge in smaller or boutique type distributors. There are a few...[and we] do see larger distributors adding boutique operations.” And a third complained, “You will see smaller distributors opening up but…they will still get clobbered by the big guys.”31 Like the big distributors, even the smaller ones selling premium wines depended on volume to make money, which meant small accounts from unknown wineries had limited appeal.

According to the Wine Institute (an industry trade group), 550,000 retailers sold wine, but consolidation was happening in the retail end of the market, as well. Costco had become the largest wine retailer in the U.S. with $1.7 billion of wine sales in 2016, and was selling an increasing number of low- to mid-priced premium wines.32 At the same time, Amazon and the large supermarket chains like Kroger and Safeway were selling larger volumes of predominantly value wines.

Seller's Seller's Seller's Seller's Seller Price Mark-up Price Mark-up Price Mark-up Price Mark-up

On-Premise $52 300% Retailer $26 50% $26 50% Distributor $17 33% $17 33% Winery $13 $13 $17 $26

3-Tier Distribution (Using a Distributor) Off-Premise Retail On-Premise Direct-to-Retailer Direct-to-Consumer

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The Sandlands Vineyard

Tegan Passalacqua

Passalacqua grew up in Napa Valley and graduated from Sacramento State University in 2001 with a degree in public health. e His coursework in chemistry helped him get his first job in a wine laboratory at one of Napa Valley’s leading custom crush facilities where he was “bitten by the wine bug.” After taking night courses in viticulture (growing grapes) and enology (wine making) and working in New Zealand, he landed a job at Turley Wine Cellars in 2003. According to industry estimates, Turley produced 35,000 to 60,000 cases of premium and luxury wines, mostly Zinfandels, each year (Turley did not release actual production figures).33 Critics said Turley made some of if not the best Zinfandels in California.34 Over time, Larry Turley (the founder) gave Passalacqua more and more responsibility, allowed him to take part-time jobs in France and South Africa to learn more about winemaking, and eventually made him the Director of Winemaking in 2013. Passalacqua replaced his friend and mentor, Ehren Jordan, who left Turley to run his own winery that he had started 15 years earlier. At Turley, Passalacqua was responsible for making 34 different wines from 50 different vineyards spread across central and northern California. Most of Turley’s grapes came from organic, “old vine” vineyards.

Old Vine Vineyards and Wines

There was no official definition of what constituted an “old vine” vineyard, but California’s Historical Vineyard Society (HSV, started by Passalacqua and several close friends) defined it as being more than 50 years old. There was something special both culturally and agriculturally about old vines. Their survival illustrated a form of natural selection and implied a productive match between the grape variety, the climate, and the terroir. Compared to newer vines, old vines had deeper roots—up to 40 feet deep compared to 3 to 8 feet—that extended into new and unique soil elements. It also meant the vines could be grown without irrigation and the grapes were less susceptible to the damage caused by too much rainfall.

These gnarled, old vines (see Exhibit 10) produced wines with more unique and more balanced flavors. Passalacqua argued: “My personal belief is they make better wines, but I understand that not everyone agrees with that opinion or can appreciate the taste. As an empirical matter, they produce better wines most of but not all the time because their output is more limited and the flavors are more concentrated.” Chuck Wagoner of Caymus Vineyards (a prominent Napa winemaker) disagreed. He said, “I’ve never been a believer that old vines make the best wines.”35

This disagreement over taste exemplified a much larger battle taking place in the Californian wine industry at the time. As characterized by Jon Bonné, the wine critic for the San Francisco Chronicle, the ascendancy and popularity of California wines, especially the premium wines, was due to their “big flavor.” He argued winemakers were picking over-ripe grapes and manipulating them to produce wines favored by the critics. As Bonné put it, modern California winemaking illustrated “…not so much the artistry of the winemaker as the ministrations of a technocrat.”36 Yet a new generation of winemakers—Passalacqua and his friends Mike Officer from Carlisle Vineyards and Morgan Twain- Peterson of Bedrock Vineyards—were making old vine wines that reflected the place (the terroir) more than the process (intervention by the winemaker). In essence, the argument came down to whether winemaking was an art or a science. Passalacqua said:

e Although Sacramento State University did not have a wine program, several other California schools such as U.C. Davis and Sonoma State had programs in viticulture and enology. U.C. Davis had a large research facility that provided disease free rootstock and laboratory services for the entire wine industry, and used DNA analysis to identify old grape vines.

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“Grapes aren’t widgets. If you view them that way, then winemaking becomes a form of mass production, which results in a race to the bottom on cost. Or you can view the terroir— the place—as something special, and see winemaking as a craft. As a winemaker, you want your fingerprint to be on the wine, not your footprint. Over time, the wines should be recognizable, but they should not the same. In that way, they tell a story of time. That’s what keeps people interested in them.”