Toasting Success: Responding to Critical Issues in the Wine Industry
UC Davis Wine Executive Program Celebrates 12th Year

Robert Smiley is a professor emeritus of management and served as dean of the Graduate School of Management from 1989 to 2003. He is co-director with David Block of Viticulture & Enology Program (V&E) of the UC Davis Wne Executive Program to be held March 26 -29.

Responding to Industry Challenges

The wine industry is experiencing major change in response to both market conditions and consumer demand. Recently, the industry has become more professional, in the sense that senior managers are better trained–they realize what they don’t know. Companies bring in people from other industries to run different parts of the firm. It’s a dynamic, booming industry, but it faces specific challenges. We recently had a bad crop year; going forward we’ll see shortages of grapes simply because we’re not planting as much as we should. We’ll go from a surplus situation in the last five years to a shortage situation in the next five years.

The question is: will consumers stay with California wines if they can’t find them at a certain price or on discount, or will they turn to European or out of state wines?

I recently attended a meeting of 25 senior leaders in the industry, where each shared what they considered to be the most critical issues. First, of course, is the shortage of crop. The second is trying to understand the consumer and learn new ways to build brand loyalty in an industry that doesn’t have any.

Another tricky issue is that there is a rather large glut of grapes in Europe. Italy, France and Spain are big producers, but their consumption has been dropping dramatically. People of drinking age have turned to other beverages, which means there are too many grapes. You can be sure that bulk wine will be coming in from Europe because they have a surplus and we have a shortage. Will the consumer notice or care that the grapes come from Spain or Italy, rather than Central California? We don’t know. It’s just one of the major questions that we’ll be discussing during the program this year.

The Wine Executive Program, Born Out of Demand

I started the Wine Executive Program at UC Davis a dozen years ago, having been in frequent contact with senior executives in the wine industry. They approached me and asked if we could create an educational program that would combine wine making, grape growing and management. They were interested in something on the same level of executive education as they might find at Stanford or Harvard. I met with the head of the Viticulture & Enology Program (V&E) and we designed the program together.

A Unique Program, Tailored to the Wine Industry

The program provides a quick and high-quality way to bring executives up to speed. For example, a few years ago the newly appointed CFO from the world’s largest wine company attended. He had moved from the hotel to the wine industry so he knew a lot about finance, but not very much about wine making. He told us he learned an enormous amount at our program in just four days–it was a “crash course” for him. Equally important is that he learned where to look for answers to other questions he might have in the future.

We also educate a wide range of professionals who serve the industry: accountants, bankers, attorneys, cork and glass and other suppliers. Related companies ofter rotate people through their firm, so they may need to train inform someone like a banker how loaning in the wine industry is different from housing or consumer products.

The program draws equally from the expertise of  the Graduate School of Management (GSM) and Viticulture & Enology. The GSM teaches business and management topics such as economics, finance, accounting, marketing, organizational behavior and innovation. V&E teaches grape growing and wine making. Within each of those areas we cover various topics: What is current practice and how do you do it (for those people who are just coming into the industry)? What is the most recent research and what are the questions concerning the industry at the moment? Where is the industry is going with regard to grape growing and wine making?  

One of the reasons the Wine Executive Program has had long-term success is because we modify the program each year to address industry-specific issues. Our goal is to always give executives actionable information they need, from the most basic topics to a full understanding of the industry landscape, complete with cutting-edge research and analysis of market trends. I invite you to join us at this year’s Wine Executive Program, hosted at UC Davis on March 26-29.



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