Jan 15
“Wine”-ing While Black: “Kings of Napa,” Let’s Look at Those Money Issues
Like Many African Americans with more than a passing fancy for wine, I was eager for the new OWN show “The Kings of Napa,” especially since it had Isiah Whitlock, Jr. who established himself forever in the hearts of Black folks with his portrayal of Senator Clay Davis in “The Wire” with his eponymous catch phrase; y’all know what I am talking about. I loved him giving the guilty the perp walk in “She Hate Me” as well as his performance in “Grand Rapids.” And while the show is a drama, as an importer and distributor of wine with my own brand as well. I am equally eager for it to investigate the guts of the industry which is something that most people don’t know, don’t care to know, and refuse to understand. It is the guts which show how the money is made. So, I was really geeked when at the reading of the will, it came out that there were some financial issues awry, i.e. Reggie King done fucked up.
And let me warn you: I am the guy who sees everything so watching certain things where there are mistakes, or logical issues, I will point out. The cowboy firing ten shots from a six-shot revolver; the grenade that went off like a stick of dynamite; the person presenting the wrong wine and calling it something else (I am talking about you “Peeples”); the action heroes that never sweat and are too clean, well, these all set me off. I could only do maybe fifteen minutes of F9 and you can forget about me watching “Sharknado.”
Back to the issue at hand, which is that the game of wine, or the entry into it, happens one of two ways and how you enter it more, or less, foretells how long you will stay in it. There is starting small and growing slowly and strategically on one hand, and the other involves just throwing a lot of money at it and treating it like any other type of business, which it is not. Now let me back up right here before I go any further and show you the difference between the old and the new, [which could just as well be analogous to the difference in old money and new money].
Wine is not the same over here as it is in the traditional Old World wine producing countries of Europe, so the culture of it is different. Over there, wine is an essential part of the culture and the economy; it is an historical component to their lives. Wineries were formed through a variety of different ways, where in some cases people had land that they purchased and in other cases people had land that they were given. Sometimes you got to expand your land holdings, and, in some cases, you simply purchase grapes from other farmers; sometimes you do both. There are even government programs which can help you start your own winery, as long as you have graduated from a program that they know has taught you not only oenology, but the business side of wine; this part right here is very important folks. While in the United States and other New World countries, it’s usually the case of people with money buying up land, and/or existing facilities, to get into the game. This is where the adage, “if you want to make a small fortune in wine, start with a big fortune,” comes from. While land was once cheap and plentiful in Napa [and other appellations now known for great wines], as people started churning out great stuff the cost of acreage skyrocketed. Success for some spelled riches for others not in the game. The exact same thing happens when a stellar restaurant starts in a place no one expected, as soon the surrounding rents increase; the sad thing is that the realtor that the restaurant leases rarely if ever gives them a break for increasing his pockets otherwise.
Having been to wineries throughout Italy, Portugal, Spain and the Azores, I have seen operations from small to large, which featured modest dwellings and production facilities, to places that make you wish you were born to the owners. I am talking abodes which make mansions look like clapboard houses; one producer I know owns an old monastery and a little over one thousand acres of land which they divide into protected woodland, land for farming, and the vineyards.
However, most people don’t start out doing that. But then over here you have the cultural peccadillos — why is it that some folks have to flaunt expensive things to prove that they have money when the truly rich don’t even engage in that behavior — which have more of an effect on your bottom line than your sales do. And the first indicator that something was wrong was looking at the string of luxury vehicles parked outside when they met up for dinner. I have only occasionally seen a luxury vehicle parked at a winery which belonged to the owner, sales executives maybe, but not the owner. How much is Christian being paid that he can afford that car? Leasing it is someone’s salary alone, and once you factor in insurance and even simple maintenance issues like changing the brakes, you need to be at least a millionaire to have that toy.
I saw one tweet where someone referenced the show and wrote “Black Luxury is the standard.” Well, this is that point where a fool and his money are soon parted. Like I said, there is a cultural difference between here and the Old World wine producing countries. Over there, they not only have government-backed healthcare, but restaurant employees are paid salaries and have great benefits regarding paid vacation time and what not. Wine is less expensive and so is the food. There are even places and times where they put out free things to nosh on while you’re enjoying libations. Oh yeah, no tipping either; y’all should look up the racist roots of tipping as well. Anyway, we have a whole subculture of folks that believe you need to purchase wines at a certain price point or with a certain name behind it to enjoy yourself, i.e., to experience a certain vibe. Whatever. But one main point is that if you factored salaries/hourly pay over here and what we pay for food and wine and compared it to the same over there, you’d understand that you’re getting screwed.
I have been trying to come up with scenarios for the “House of Kings” winery since that first episode, trying to factor in how long they have been in business, how much land they have and how much wine that they put out.
Let me start with the fact that he took a loan for ten million from his sister-in-law two years ago. With that and looking back at when the wildfires started affecting grapes, I can only go back three years in time. So, let’s say that he was already in the hole for one year, and his lifeline came two years ago, which was right before Covid hit. This just doesn’t compute. This means that in the least, they are running bills of at least one third of that loan per year. What the hell are they spending it on? As far as August going to a bunch of restaurants, I can tell you that folks who sell wine rarely eat out that much, and when they do go to places which carry their products, they are not spending as much as the profit made from those sales.
And with this, I wanna know how “Harvard and Wharton” educated Dana King never saw that things were in a financial disarray. Like I replied to his tweet the other day, Wharton is right down the street from my house and their graduates never really impressed me as much as their business school is lauded. You should look up Smith Business Institute at Florida A&M which got better marks in one national review; they actually have their students intern in various industries to actually understand the business, not just the numbers. This why yo’ ass wasn’t put in charge, Dana!
What I instantly saw with their manor was a somewhat opulent place which would have been more reasonable for a larger operation or a business that was making a lot more from their range of wines to justify the expenditure. I am also going to assume that they purchased the winery and lands from someone else, because to do it from scratch [including levels for wine storage, aging, fermentation, and bottling] takes some time to construct. Buying someone else’s winery is always something to be mindful of because there is a reason that they are selling, which is usually because they weren’t turning a capable/sustainable profit. Well, buying it at an affordable price that is.
But let’s argue the other point and say that he decided to go with August’s idea and they did this from scratch. This means that a lot of money needed to be brought to it, and they calculated that within eight years, they would start to make a profit. I am saying eight because it’s going to take a good five years for newly planted vines to consistently produce fruit which you can use for wine. At the earliest, you might be looking at three years, but for consistent yields, go with five. The other three years are there because of things like aging.
And this brings us to the next thing, which is the product. They indicated that they only have four different varietals. Well, only having four means that you need to produce a lot of each and/or produce some great offerings as well. This means that your fruit needs to be good, and you are going to need to be doing some aging, which means that your reds are not going to be released for at least twelve months after the completion of fermentation. You’re going to need a mix of products, both those which can be quickly released not to long after harvest, and those which you can fetch a higher price for. A prime example of this happens in Montalcino where the Rosso is released not long after the harvest but the Brunello is aged for at least five years before it is released. Of all of the Sangiovese grapes grown in Montalcino, about eighty-five percent of the production is used in Brunello, with that for Rosso giving producers a quicker amount of immediate annual revenues.
Even if I roll it back to two point five million dollars in expenses a year, I still can’t wrap my head around it. That means that you should be [comfortably] having gross revenues exceeding four million dollars a year, and even then, there still isn’t much of a profit after monthly payments of mortgage, construction loans, salaries, insurance (health, liability, etc.) and let’s not forget the lawyers. Assuming that the average retail cost of their wines are fifteen dollars means that the within their on-site wine shop, they are netting around a little more than seven dollars a bottle, average (I have not factored in the costs for running the shop). A distributor in turn, is going to pay some $7.69 for a bottle, which means that they are going to be netting maybe three dollars per bottle. Again, assuming that the volume of wine sold at the winery is some five percent of overall volume, I am going to do some fuzzy industry calculations and estimate that they are making around 40,000 cases of wine a year, or 520,000 bottles. Assuming three bottles of wine per vine, and twelve hundred vines per acre, this means that they need one hundred forty-five acres of vineyard. Napa has some forty-three thousand acres of land, and open plantable land runs at least forty-five thousand dollars per acre, making their estate’s land cost at least six point five million dollars; you do know that the vines also cost money as well as the labor to cultivate it? And you know the odds of getting that much contiguous land in Napa just ain’t happening without paying a lot more for it (this is my accuracy trait coming out again).
Hell, more and more, the numbers are somewhat starting to be understood, aren’t they?
The answer is yes, and no, as there should have been a good business plan to figure out stuff and it would have stipulated when first repayments would be due. The odds of them getting that much acreage in Napa is also something that we must look at as an act of fiction.
But back to the whole financial mess, I have a sneaky suspicion that some of the money came from the “organization.” You’d be surprised by how many times businessfolks have had to rely on other methods of financing to get a dream off the ground. We can look back at The Godfather, with the story of the singer Johnny Fontane who needed some help to get released out of his one contract and also to be put in a movie. And as we are talking about organizations, I wonder if he also needed to pay a group to distribute his wines, as kickbacks to distributors and retailers are rife throughout the business; just go look at how many times Southern Wine and Spirits — now Southern Glazer — wound up getting fined millions for their shenanigans (I actually know someone who had to step down and he ran one state). I can tell you that I wish my friend “Cha Cha” was still here, as we’d be dissecting this six ways to Sunday, especially from that angle. Cha Cha played Albie Cianflone, the consigliere for the Leotardo crew in The Sopranos. At a memorial dinner for him, when a Chinese friend of his found out about me in wine, he looked at me from across the table and told me point-blank to not accept anything from the Tongs if they approached me, which was interesting. For those that don’t know, New York’s Chinatown and the old Little Italy of Mulberry Street are right next door. I got to be at the front of the procession for the Feast of San Gennaro with Cha Cha in 2014, which was an honor and an experience.
So, I am wondering what will be revealed. I already see some issues with the will since it has now been revealed that the “cousin” is his oldest daughter, which gives her a birthright claim to a portion of the estate; you do not want to see how these situations play out in Italy, even when all the children are from one couple! At the end of the day, this show is a drama in the vein of other works like Falcon Crest and Dallas, but wine money takes a while to make, which means that anything those folks are stunting with needs to come out of their own pockets. Of all the producers I know, unless they are trying to impress folks, they keep everything light, and on occasion might pull out a library wine. There are no fancy cars, fancy clothes, or big talk. There is thankfulness and humility, as years in this life has taught them that your fates can change overnight based on some bad weather.
Drama is drama, and it is written for a reason. The Sicilian who encouraged me to get into the business, well we joke that my romantic life could easily be a telenovela… and I do have stories that I want to turn into shorts and what not. And the wine business has its share of “interesting” tales. I remember meeting one Champagne producer years ago during a small, exclusive trade event, at which I joked with during lunch that he must be swimming in women. He replied that sometimes he drowns in them, and then proceeded to tell me that since I was his last meeting of the day, we had to drink everything left so he didn’t have to lug anything home. The last time I saw him was the day after “forty-five” was elected. I reminded him of our previous conversation and he admitted that he got caught “drowning” by his wife and he was now divorced, but that he would ultimately marry again.
I’m going to keep watching this show, for one reason or another. Yes, I am a man and the women are stunning — you should see my wine bottles — but because I also am hoping that those of us who swear that they know wine start realizing that there is more to this thing, and that they start to understand where the money is made and start pursuits in that space. Maybe we can start to not only have nice things, but to also keep them as well.
This was a short TEDTalk from me.
Zachary Marcus Cesare Harris is the President & CEO of Ikavina Wine and Spirits, LLC. His specialty is Italian wines, followed by Portuguese and Spanish wines but he has become versed in wines from almost all the Old World wine producing countries. He is an ambassador of a group assisting some forty plus wineries in Portugal, mainly in the Douro. He is involved in several endeavors to highlight wines from several regions and certain varietals. He also loves Grappa and Aguardente! He also hates taking pictures.
