Grapevine: An Anecdotal Discussion of Capitalism and the Wine Industry
Much has been written about the one-percenters in America as the polarization of wealth in our nation continues to get wider. However, this division of wealth is not a recent phenomenon. The one-percenters have dominated America’s social, financial and economic landscape ever since the days of the Founding Fathers.
As the United States evolved from an agrarian economy to an industrial nation, this polarization continued. As the Robber Barons wielded their clout from the late 19th century through the early 20th century, distinct demographic classes arose, creating opportunities for many at the lower end of the spectrum to become entrepreneurs – all under the thumb of big business.
After World War II, a clearly defined middle class arose and the American Dream was born, affording millions of Americans the opportunity to create their own wealth through business ownership. The entrepreneurs of the late 20th century succeeded as no generation before them.
Today, it seems a new billionaire is created every month, as social media and the internet-of-things create unique opportunities.
This history of wealth creation has permeated many industries as our country emerged as a world economic and political power. From coal mining, to the building of massive production plants, to the pervasiveness of financial instruments, to the never imagined applications of sophisticated technology, the United States remains the dominant economic force in the world.
One industry where this evolution has had fits and starts, rather than meteoric rises, is the wine industry. Most likely because there is a lack of structural mass as well as an historically influential temperance subculture, individual wineries and their owners have not garnered the interest of the wealthy, nor enjoyed the successes of other products.
Certainly there are many wealthy patrons of winemaking, but these interests are typically avocational rather than vocational.
Unlike the behemoths created by the entrepreneurial likes of John D. Rockefeller, J.P. Morgan, Steve Jobs, Bill Gates, Mark Zuckerberg and Larry Page, wine companies in the 21st century are monolithic corporate machines, sans warm flesh. Many popular wineries lack the capital and/or scale to compete with the corporate aggregators that control the wine industry.
So it was with interest that I noted the finances of two winemaking operations in recent weeks. Although I have been focusing on the consolidation within the United States wine industry that has taken place over the last ten years, the polarization within the industry seems to be growing at an accelerated pace.
Joe Wagner built a fledgling wine operation into a major force in just a few short years. Last month he sold his Meiomi brand to Constellations Brands, further solidifying their position in the top three wine companies in the United States. Ironically, the astounding $315 million his brand fetched was just that – a brand name. Meiomi owns no prized vineyards, purchasing their grapes instead. Does this sound like a stereotypical 21st century asset-challenged company? Or just another case of a promising entrepreneur selling out to the rising tide of centralized capitalism?
Sandro Boscaini is the head of Masi Agricola, a famous Italian producer of an eponymous Amarone wine. Seeing an opportunity in today’s heady equity markets, last week he seized the opportunity for an initial public offering of his company’s stock. As the sixth generation progenitor of his family’s business, he decided to monetize a portion of the family’s wealth, presumably to continue to grow the tradition and quality of Masi wines. The valuation? Over $160 million. The ownership percentage retained by the Masi family? 80%. The funds raised for the benefit of the family’s shareholders? Over $32 million. Here is an example of the optimization of a brand name, and the retention of the entrepreneurial spirit and control of the founding family.
Corporate behemoths and wealthy entrepreneurs. They exist in all industries. A few hearty wine souls are pursuing divergent paths to attain their financial dream; capitalism continues to thrive through it all.
Nick Antonaccio is a 40-year Pleasantville resident. For over 20 years he has conducted numerous wine tastings and lectures. He also offers personalized wine tastings and wine travel services. Nick’s credo: continuous experimenting results in instinctive behavior. You can reach him at nantonaccio@theexaminernews.com or on Twitter @sharingwine
