Planning Leadership Succession for Your Wine Business

Armand Gilinsky, Jr.

Armand Gilinsky, Jr. is the F J Korbel & Bros. Professor of Wine Business at Sonoma State University in Rohnert Park, CA. He can be reached at gilinsky@sonoma.edu. Researchers for this study include: Kristen Rinck, Ph.D. candidate, University of Houston, Houston, TX, KristenRinck@gmail.com; Adele Santana, professor of business, Sonoma State University, santaade@ sonoma.edu; Caroline Bailey, founder and CEO of Premier Growth: The Business of Family, Sausalito, CA, caroline@premiergrowth.com; Tim Wallace, MBA, instructor, wine business, Sonoma State University, Rohnert Park, CA, USA, wallacti@sonoma.edu; and Jean-François Coget, dean, School of Business, Sonoma State University, cogetj@sonoma.edu

Winery owners, managers, and winemakers that came of age in the 1970s are likely to retire in the third decade of the 21st century and how to craft a sustainable leadership succession in a turbulent environment is more relevant than ever before. While most recent studies that investigate sustainability focus on the “triplebottom-line,” that is, people, planet, and profits, none directly consider company succession planning as a sustainability driver. Is leadership part and parcel of any sustainability strategy, or in other words, is leadership succession potentially the “fourth bottom line”? If so, what skills will leaders of successive generations need upon the retirement of the Baby Boom generation (born from 1945 to 1964)?

Focus Groups on Leadership

To find the answers to these questions, researchers at Sonoma State University’s Wine Business Institute conducted three focus groups from August to November 2021. Each group consisted of eight leaders for a total sample size of 24. Participants were selected for invitation based on their leadership positions in a wine business, prominence in the industry, and familiarity with the Wine Business Institute. Participants were contacted via email and LinkedIn messaging and were required to provide informed consent in writing regarding the voluntary nature of the focus group. All participants were guaranteed anonymity of names and affiliations. Sessions were conducted virtually via Zoom and led by a professional moderator, who is also a member of our research team. Composition of the three focus groups is listed in ( TABLE 1) .

as the COVID-19 pandemic, the necessity of having a diverse workplace to bring different opinions and skills has become more prevalent. Several leadership traits were prominently identified by the focus group participants. These traits included:

1. Support the next generation. What stood out in the focus group discussions was the importance of being a mentor or champion for one’s employees. Effective leaders should be planting the seeds for successors or younger staff members by providing them an opportunities to have a voice in the company. Mentoring fosters teamwork and accountability. Furthermore, leaders need to assign credit to the next generation when they come up with actionable, innovative ideas.

2. Display emotional intelligence. Another point that was brought up was how crucial it is to recognize different personality types and their varied needs/wants in the workplace. Leaders then need to be prepared to lead these varied personality types. Having this skillset of emotional intelligence would better allow an organization to support the needs of their employees, resulting in higher worker performance. One participant proposed the idea of implementing mental health checks as a way to ensure that all employees felt supported in the workplace. Even if these practices may move industry leaders outside of their comfort zones, they should still be able to do so to lead effectively.

Note: Numbers may not add up to 100 percent since one participant reported working in two of the above categories.

Leadership Can Be Taught

The wine industry is rooted in history and tradition; thus there can be resistance when adapting to a new reality. One focus group participant commented, “Life does not follow a textbook”, which aptly summarizes the importance of pivoting alongside the evolving industry. With the onset of recent events, such

3. Know your industry. Leaders must have knowledge of their industry, the competition, and their customer base. For instance, it is crucial to understand that the wine industry today faces substantial issues, such as competition from other beverages, consumer confusion, accessibility, and supply chain constraints. Only after leaders possess that knowledge can they work towards demystifying wine, allowing more people to explore wine under their own terms.

4. Be a superior communicator. Leaders need to practice active listening to make complex and ambiguous information translatable into action. Along the same lines, leaders need to help their teams understand why particular business decisions need to be made, then back that decision up with numbers, by communicating and interpreting complex data. A good leader does not need all of the answers but should at least be able to analyze market data to raise the right questions. Furthermore, a leader should communicate with leaders in other disciplines or industries who may have unbiased perspectives on the challenges the wine industry faces.

At the end of each focus group session, the moderator asked, “Can leadership can be taught or are there specific personality types that are better suited for leaders?” The consensus was that leadership “can be taught,” even though each person may have a distinct leadership style and there is no one specific way to be a successful leader. Anecdotal information from the transcripts from the sessions revealed ten common themes regarding how a wine business leader should act, as shown in TABLE 2 , “Ten Common Wine Industry Leadership Traits.”

TABLE 2: TEN COMMON WINE INDUSTRY LEADERSHIP TRAITS

A wine business leader should….

• “Be able to take complex and ambiguous information and distill it down into doable actions.”

• “Be resourceful.”

• “Create a shared vision for the business.”

• “Develop soft skills.”

• “Do research and not bring bias into business decisions.”

• “Have emotional intelligence.”

• “Have financial aptitude.”

• “Have knowledge of your industry, competition, and customers.”

• “Know what, how, and when to speak.”

• “Place value on diversity, inclusion, and equity.”

Dropping or Passing the Torch?

How leadership is imparted to the successor generation of wine business owners is not necessarily consistent across all businesses in the wine industry. Two case vignettes, “Succession Planning for Rich Family Winery” and “Succession Planning for Block Family Winery” were contributed by two of our co-authors. These cases were drawn from experiences in consulting to wine businesses.

Succession Planning For Rich Family Winery1

A wine entrepreneur hoped that his son and daughter would inherit the winery he had founded. The winery’s founder considered himself to be a “hands-off” manager of this business. What had started as a luxury-tiered wine passion project of the father and his winemaking daughter eventually morphed into a family project that included the son, who had experience in sales and was said to be marketing-oriented.

A period of slowing sales and declining profits threatened the viability of the business. With his father’s encouragement, the son developed a revised plan to drive profitability. However, 18 months into the pivot, the father and daughter had become increasingly dissatisfied with the brand repositioning. Although brand repositioning had improved the winery’s price-competitiveness and profitability, the result was inconsistent with the owner and winemaker’s original intent for a luxury brand.

Their rejection of the results confused the son, causing him to feel so diminished that he resigned, to the dismay of all family members. His son’s departure was an “aha!” moment for the founder when he realized that what was missing from the start of the winery’s transition to his children were documented, consensus-driven statements of mission, vision, and values as well as a strategic plan that defined success. Had this structure and alignment existed, he observed,