Issue link: http://winesandvines.uberflip.com/i/543749
30 WINES&VINES August 2015 Winemaking L et's start with two definitions. Core competencies are the unique abilities a company develops that cannot be easily imitated. Non-core competen- cies are headaches you should proba- bly outsource. Owning or running a winery is supposedly the No. 1 "second career" choice of middle-aged executives, especially those who wear uncom- fortable clothes to work in the steel and glass cages commonly known as traditional offices. Like well-dressed prisoners on furlough, office workers visit wineries on the weekends and imagine how magical it would be to top off barrels all day. Those of us in the business know the real story is a little different. Most small wineries are run by passionate people obsessed with quality, yet they are lim- ited by what limits all small businesses: capital, time and human resources. Dirt-to-bottle inte- gration sounds great (own and control your vineyards, make wine in your own fully equipped, crush-to-bottle production facility, sell direct to consumer from the tasting room). But while having all of these tasks done well is critical to your success, you have choices as to who does them. After more than 25 years in the wine industry, most of them as a supplier of new technologies, my observation is that successful small operations are quite ruthless in prioritizing what they do themselves and what they allow others to do. Some things to outsource are obvious: You'd rather have someone pick up your trash and take it to a landfill than build and operate your own landfill. It's eas- ier to buy an iPhone than it is to make one. But outsourcing decisions closer to your core business is trickier. I like the saying, "Know who you are and stick with it." An Australian wine com- pany got itself in trouble sev- eral years ago pursuing a private-label strategy t o t h e l a r g e s t U.K. retailers. The problem was this company was structured as a high value-added, brand-oriented company with lay- ers of marketing, sales and support staff (includ- ing a job title called "master data analyst, Northwest"—what is that?). Their U.K. private- label business exploded in sales and unit volume (if the sales managers get their annual bonuses, all must be good, right?) but incurred heavy losses as they devolved into a low-margin pri- vate-label supplier combined with high brand- driven overhead. They failed to stick with who they were and should have either a) forgone the private label strategy, or b) reduced their staffing to be profitable with private label. Navarro Vineyards: local knowledge Navarro Vineyards is a 43,000-case facility in Philo, Calif. Jim Klein, Navarro's hands-on wine- maker, explains that the winery's core compe- tencies (the areas in which they excel) are being a leading producer of aromatic white wines and Pinot Noirs from the Anderson Valley. Quality, local knowledge and sustainability are highly valued. Navarro also excels in execution of its direct-to-consumer (DtC) strategy, selling 85% of its wines DtC. For many years, Navarro's tasting room has been one of the busiest and best loved in Mendocino County. The marketing of its many wines as compelling stories is im- pressive as well. Navarro tends to perform more jobs in-house n ANDY STARR Successful Small Wineries Know Their Core Competencies TOP: NAVARRO VINEYARDS LLC Bottling in-house provides Navarro Vineyards with flexible scheduling.