Social entrepreneurship

The Wente family of California winemakers, now in their fifth generation, have kept ahead of the competition not only by developing new ventures for their business, but also by finding new ways to promote their region.

By Deanne Stone

The 124-year-old Wente Vineyards—a continuously operated family-owned winery said to be the oldest of its kind in the U.S.—has endured Prohibition, periodic droughts, urban development, changing tastes and, for the past two decades, stiff competition. As each challenge has arisen, the Wente family has responded with bold entrepreneurship, developing a multiplicity of ventures aimed at promoting its core businesses: growing grapes and making fine wines.

Located 47 miles east of San Francisco in Livermore Valley, the Wente Estate is a California historical landmark. Wente, one of the top 30 U.S. wineries in winemaking capacity, is also the largest global exporter, on a percentage basis, of any American family-owned winery. Today, its 3,000 acres of estate vineyards are managed by the fourth and fifth generations of winegrowers.

The original family winemaker was C.H. Wente, a German immigrant who learned winemaking from Charles Krug in Napa Valley. In 1883, C.H.—who was known by his initials—ventured off on his own, buying 48 acres in Livermore Valley. The region’s warm days, cool nights and gravelly soil, he realized, were ideal for growing grapes. His seven children owned shares of the winery but only sons Ernest and Herman worked in the business. Ernest managed the vineyards, and Herman was the winemaker. The brothers saw themselves as stewards of the land and passed on a respect for the land to future generations.

“Part of being a family business is keeping a long perspective,” says Karl Wente, the fifth-generation winemaker. “If we hadn’t been using sustainable farming practices all these years, we wouldn’t still be here.”

The Wentes are proud of the vineyard’s long history, and fourth-generation winegrower Carolyn Wente, the former company president, has a reservoir of stories about the family business. “When my grandfather Ernest was a student at UC Davis,” says Carolyn, 51, “he had a professor from France who wondered why California wineries didn’t grow Chardonnay plants. The professor’s brother owned a nursery in France, and he offered to bring Ernest some cuttings. Ernest planted the first of those cuttings in 1916 and continued to farm them during Prohibition.” Today, Chardonnay is the most planted grape in California.

Determined to hold onto its vineyards during 13 years of Prohibition, the family supported itself by ranching cattle, raising hogs, and doing hay and grain farming. Prohibition put many vineyards out of business but, thanks to the Catholic Church, Wente continued producing white wine for the sacrament, according to Carolyn. When Prohibition was repealed in 1933, Wente was one of the few wineries and vineyards still in operation.

To distinguish Wente wines from the more common blended wines, Ernest and Herman developed varietal labels that identified wines by the grape variety from which they came. According to the family, the brothers were the first American winemakers to label Sauvignon Blanc and Chardonnay. Wente’s Sauvignon Blanc won the Grand Prix at the Paris Exhibition in 1939.

In 1949, Ernest’s only son, Karl, joined the business. By 1960, he was named president; his father and uncle served as advisers. A year later Herman, who was childless, died, leaving his shares in the business to Karl.

By the 1950s, development had taken off in Livermore Valley. Agricultural land was taxed for its real estate value, threatening farmers’ survival. In 1963, Wente bought 250 acres in Monterey, becoming the first to farm grapes in that area. The family once considered moving its entire operation to Salinas Valley but, after successfully lobbying the state legislature in 1964 to reform the tax code to permit agricultural land to be taxed on crop value, it kept its major operation in Livermore.

Meanwhile, Karl continued to modernize the Wente operation, bringing in overhead sprinkler irrigation, mechanical harvesting of grapes and a centrifuge to remove solids from wine. “My father was always on the cutting edge of technology,” says Carolyn.

After Karl died at age 49 in 1977, his three children— Eric, Philip and Carolyn, then in their 20s—took charge. Eric, groomed as a winemaker by Herman, headed production and exporting; Philip, who had learned farming alongside his father and grandfather, oversaw the vineyards; and Carolyn, who had been working as a bank financial analyst, stepped into sales and marketing.

Immersed in running the business, the fourth generation was caught off-guard by the changing California wine industry. Napa and Sonoma counties had exploded as major tourist stops, leaving Livermore Valley lagging behind. “We went back to basics, “says Carolyn. “We eliminated the low-end wines and refocused on the varietals, Sauvignon Blanc and Chardonnay, we were originally known for.”

The strategy worked, but they didn’t stop there. To counter competition from Napa and Sonoma, the family encouraged new grape growers to establish themselves in Livermore Valley. To attract visitors, in 1986 Carolyn launched the first of Wente’s “lifestyle ventures:” The Restaurant at Wente Vineyards and a summer concert series featuring jazz, country and rock music.

“Many family businesses become insular over time,” says Ann Dugan, assistant dean at the University of Pittsburgh’s Katz Graduate School of Business, “but the Wentes looked beyond their particular interests and saw the bigger picture. They could help themselves by developing Livermore as a premier grape-growing area. Today we call that kind of community development ‘social entrepreneurship.’”

Capitalizing on the restaurant’s location on estate grounds, Carolyn—an accomplished cook, gardener and coauthor of two cookbooks—relied primarily on food grown on the estate. Today, the chefs still pick the vegetables and herbs daily. The restaurant has repeatedly won the Distinguished Restaurant of North America award for excellence and has been cited by Wine Spectator magazine for its wine list.

The veranda of the restaurant faces out to a large lawn surrounded by gardens, vineyards and rows of sycamore and oak trees, the setting for the concerts Wente has hosted for the past 21 years. Some 25,000 music lovers come every summer to hear top talent and to dine at the restaurant. The restaurant and lawn serve as settings for weddings, banquets and corporate events catered by the restaurant. Also on the property are two tasting rooms where guests sample Wente wines and food products, including its estate-grown olive oil sold only in the Wente tasting rooms or online. This year Wente has expanded its catering services to homes in the Livermore area.

In 1996, Wente opened The Course at Wente Vineyards, designed by golfing champion Greg Norman. The 18-hole course runs through the vineyards and rolling hills of Livermore Valley. Wente hosts the Wine Country Championship stop of the PGA’s Nationwide Tour, televised for four days on the Golf Channel.

“The great meal, the outdoor concert, the golf course—all those things tie into our core business of growing grapes and making wines,” says Carolyn. “We learned early on not to rely on one income stream, and that’s given us flexibility to respond to changes in the market and long-term stability.”

Eric’s daughter Christine, 32, had worked in sales and marketing at Gallo Winery for three years before being named Wente’s marketing director in 2000. Two years later, Eric’s son Karl joined the business as a winemaker. Forgoing his dream of becoming a professional basketball player (he’s 6’ 7”), Karl studied chemical engineering at Stanford and earned master’s degrees in horticulture and food sciences at UC Davis. Before joining the family business, he worked at wineries in Sonoma County and in Australia.

Together with his uncle Philip, Karl, now 30, started Wente’s Small Lot winery, a winery within a winery. “This is a competitive business,” says Karl, “and consumers have lots of choices. We asked ourselves, how can we stand out? We decided to experiment by pushing the limits to the Nth degree in growing grapes and making wines.” They set aside 3% of the best vineyard blocks to farm the best wine. The name “Nth Degree” stuck; now Karl’s task is to ensure production meets the growing demand for wines produced under that label.

“It’s unusual for a family to continue to be entrepreneurial into the fifth generation,” says Pittsburgh researcher Ann Dugan. “Typically the second generation implements the vision of the founder and there are some sparks in the third generation, and that’s it. The Wentes seem to have built entrepreneurship into the family brain.”

The Wente family, Dugan comments, has “continued to innovate by thinking creatively about how to maximize their business. That plus instilling values of a strong education, self-development and hard work have served [the business] well.”

By 2003, the fourth generation was ready to hand over more authority to the fifth generation. Carolyn resigned as president, and Wente’s CFO, Peter Chouinaid, was named the first non-family COO. To avoid any awkwardness among family members, the fourth generation preferred that a non-family member evaluate the younger generation. Christine, who had taken a two-year leave to get an MBA at Stanford, returned the following year.

All the family members except Christine, a new mom, live on the property. Living and working closely together on a daily basis, the family has avoided stepping on one another’s toes by carving out distinct areas of responsibilities. Eric, 56, is still a winemaker; his brother, Philip, 54, oversees the vineyards. Carolyn has fewer day-to-day responsibilities now that Christine has taken over as vice president of marketing. “Winemaking is a collaborative effort,” says Karl. “We can’t make great wines without a mutual understanding of our objectives. We all have plenty to do, so no one’s jockeying for more responsibilities. If anything, we’d gladly give up some.”

The family recently redesigned their business cards to give top billing to their generational status. “We identify ourselves first as fourth- or fifth-generation winegrowers and second by our business titles,” says Christine. “We’re all involved in and passionately interested in all aspects of the business, so we decided that honoring the core business was more important than our titles.”

A prime target market is Americans in their 20s and 30s, the fastest-growing demographic group in dollars spent, Christine says. “Wente is perfectly positioned to meet the demand for wines in the $10 to $25 range.”

As a medium-sized winery—larger than most family-owned wineries in California—Wente has the resources and management experience to compete globally. In 2006 Wente sold 350,000 cases under its own label in the U.S. and exported approximately 30% of its production to 50 countries. (By comparison, Rodney Strong Vineyards, which sells 550,000 cases annually, exports only 4% of its production.) Of its four main divisions, grape growing is the most profitable, followed by custom bottling and wine making for other producers; retail sales; and the “lifestyle businesses.”

The family’s efforts to showcase Livermore Valley have paid off. The region now has 38 wineries and, in contrast to Napa and Sonoma, many more acres that can be planted. Moreover, Wente’s lifestyle ventures have made Livermore Valley a popular tourist destination.

“The great thing about our family,” says Carolyn, “is that we’ve always done things together. As kids we helped out with the farm work and entertaining. Our parents didn’t pressure us to join the business, and we aren’t pressuring our kids. The way we’re raised, we know that if we join in the business, we’re expected to grow the business so that it can afford us. We choose to work here because we love it. You have to have that passion in a family business because it’s 24/7, and your family depends on you.”

Deanne Stone is a business writer based in Berkeley, Calif.