New top manager of Chappellet plans for family winery's next 50 years

With over a half-century of producing fine wines from one of the most prized areas of Napa Valley, the Chappellet family's namesake winery has quite the story to tell.

But telling that story to new generations of consumers and readying the next generations of the family to take the winery's legacy forward is tricky business that, if not managed carefully, can derail succession plans.

That's where David Francke comes in.

After four decades in the wine business with several years of guiding the Chappellet family on best business practices, first as a consultant then as a member of the board of directors, Francke in May was named managing director.

He had started his own management consulting company two and a half years ago. Vectis Group in Napa, focused on small- and midsized wineries. He later rolled that practice into business advisory for United Kingdom-based The Shirlaws Group, helping to start a wine practice out of the San Francisco regional office.

'There's this amazing foundation,' Francke said of what the family has created since Donn and Molly Chappellet purchased the Pritchard Hill property in 1967. 'One of the frustrations of working on the fringe of a business is not seeing things through to fruition.'

THRILL OF THE HILL

Longtime wine writer Steve Heimoff described Pritchard Hill in Wine Enthusiast as the 'best grape-growing region in Napa Valley you've probably never heard of.' It's still in the Napa Valley appellation, located on the slopes of the Vaca mountains that form the eastern border, but it's between the outer boundaries of several notable subappellations: Oakville, Howell Mountain, Stags Leap District, Rutherford and Chiles Valley.

The hill got its name from Charles Pritchard, who was growing zinfandel and riesling there in the late 1800s.

But the Chappellets put the hill on the wine map with cabernet sauvignon and other Bordeaux wine grape varieties, trademarking the Pritchard Hill name in 1971, according to Heimoff.

Today, Chappellet has 102 of their 640-acre property planted with vineyards, and they were certified organic in 2012. Of the vine acres, 65 are planted to cab, with the rest growing merlot, malbec, cabernet franc, petit verdot and chenin blanc.

CHAPPELLET STRATEGY

Francke's goals for Chappellet include better communication of the brand's legacy to today's wine consumers together with closer integration of sales strategies for wines sold directly to consumers and those sold at restaurants or wine shops.

One key point is not to shy away from the brand's reputation as a luxury item, with wines starting around $35 a bottle.

'It's part of the appeal to the next generation,' Francke said. 'Somebody who's 20-something or 30-something can't afford a Ferrari, but Ferrari is not trying to change who they are. Someday when those consumers earn more, they'll be able to afford it.'

PREPARING FOR TRANSITION

The second generation of Chappellet stepped up to leadership in 2013, when Donn Chappellet named his oldest of six children, Cyril, chairman. Donn Chappellet died in May 2016.

One of the conversations Francke as an adviser and board member has been having with Cyril, his siblings and his mother, Molly, is how the legacy they built will be continued.

'Their children, grandchildren and great-grandchild won't make the same decisions that this group would make, because they'll have their own different influences,' Francke said.

And there's another conversation for the up-and-coming generations.

'I'm trying to give a group of family members who are right now in their teens and early 20s a glimpse of what this business can be,' he said. 'And they may choose not to be involved. But if they're not, they're still going to be shareholders, and they have the opportunity to choose a management team to execute what they want 30, 40, 50 years from now.'

But he wants to get across that the business could look quite different, depending on their choices.

'But it's really important to this group to hand something off to those future generations, but they don't want them, for lack of a better term, to take their eyes off the business here and end up letting it slide into disarray or lack of energy, so that future generations have to rebuild,' Francke said.

STARTUP VERSUS MATURE

Older and younger generations of the Chappellet family are involved with the key aspects of the business: Meeting with staff and consumers and conducting dinner tastings. But Francke has seen waning energy levels among founders challenge the future of businesses in wine and other industries.

'At a certain point, they just get tired,' Francke said. 'The business can be really healthy, but it can wear you out. And so, unless you've brought someone else along, who's behind you on that energy curve, and wants to really go out and have the passion and the desire to be in front of those customers, there's not someone to do it.'

That phenomenon is what business succession planners often call 'founder fatigue.'

And without a next generation of a level of nonfamily management to step up, it's among the key reasons why family businesses sell. Succession planning has been getting a lot more attention in Wine Country in the past several years, as the ages of a number of vintner-founders climbs.

But a common mistake Francke has seen small- and midsized companies make in the wine business and elsewhere is to not match the energy level of a startup winery to the experience of new top managers.

'Oftentimes, the people who are really great at keeping a well tuned machine humming aren't the people to build it,' Francke said. 'And the mindset, the willingness for trial-and-error experimentation, knowing that you're going to have some failure when you're building something new or walking in with no standard operating procedures but you have to put them in place.'

So, care must be taken when hiring away a manager of a startup brand to run an established brand, and vice versa, he said.

And similarly, another common management mistake is to emulate the practices or strategy of a neighbor winery or an admired vintner. He draws such insights from a career that included over 25 years in marketing and management positions with Robert Mondavi Corp., Young's Market, Folio Fine Wine Partners and Purple Wine + Spirits. He recalled observing the approach to brand growth in the 1990s for Opus One, a high-end joint venture between Mondavi and a French family launched in 1979.

'The people that are at grinding to build distribution and convince the world that they should buy a 2 ounce pour of Opus One for, at that point, four or five times what the standard by-the-glass (restaurant price) was are different than the people who are running that operation today, and they need to be,' Francke said.

Jeff Quackenbush covers wine, construction and real estate. Contact him at jquackenbush@busjrnl.com or 707-521-4256.