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University of California • Berkeley

Regional Oral History Office University of California

The Bancroft Library Berkeley, California

The Wine Spectator California Winemen Oral History Series

Agustin Huneeus
A WORLD VIEW OF THE WINE INDUSTRY

Interviews Conducted by

Carole Hicke

in 1995

Since 195A the Regional Oral History Office has been interviewing leading
participants in or well-placed witnesses to major events in the development of
Northern California, the West, and the Nation. Oral history is a method of
collecting historical information through tape-recorded interviews between a
narrator with firsthand knowledge of historically significant events and a well-
informed interviewer, with the goal of preserving substantive additions to the
historical record. The tape recording is transcribed, lightly edited for
continuity and clarity, and reviewed by the interviewee. The corrected
manuscript is indexed, bound with photographs and illustrative materials, and
placed in The Bancroft Library at the University of California, Berkeley, and in
other research collections for scholarly use. Because it is primary material,
oral history is not intended to present the final, verified, or complete
narrative of events. It is a spoken account, offered by the interviewee in
response to questioning, and as such it is reflective, partisan, deeply involved,
and irreplaceable.

************************************

All uses of this manuscript are covered by a legal agreement
between The Regents of the University of California and Agustin
Huneeus March 6, 1995. The manuscript is thereby made available for
research purposes. All literary rights in the manuscript, including
the right to publish, are reserved to The Bancroft Library of the
University of California, Berkeley. No part of the manuscript may
be quoted for publication without the written permission of the
Director of The Bancroft Library of the University of California,
Berkeley.

Requests for permission to quote for publication should be
addressed to the Regional Oral History Office, 486 Library,
University of California, Berkeley 94720, and should include
identification of the specific passages to be quoted, anticipated
use of the passages, and identification of the user. The legal
agreement with Agustin Huneeus requires that he be notified of the
request and allowed thirty days in which to respond.

It is recommended that this oral history be cited as follows:

Agustin Huneeus, "A World View of the Wine
Industry," an oral history conducted in
1995 by Carole Hicke, Regional Oral
History Office, The Bancroft Library,
University of California, Berkeley, 1996.

Copy no.

Augustin Huneeus, 1995

Cataloging Information

HUNEEUS, Agustin (b. 1933) Winery President and Owner

A World View of the Wine Industry, 1996, vii, 77 pp.

Chilean winery Concha y Toro in 1960s; Seagram worldwide wine businesses;
California wineries: Noble Vineyards, Concannon Vineyards, Souverain
Cellars, Franciscan Estates. Winery management at Franciscan: marketing,
vineyard practices, wild yeast fermentation, appellations, health aspects
of wine.

Interviewed in 1995 by Carole Hicke for the Wine Spectator California Wine
Oral History Series, Regional Oral History Office, The Bancroft Library,
University of California, Berkeley.

TABLE OF CONTENTS- -Agustin Huneeus

PREFACE i

INTERVIEW HISTORY- -by Carole Hicke vi

BIOGRAPHICAL INFORMATION vii

I BACKGROUND AND FAMILY 1

Chilean Ancestors 1

Childhood 2

Education 4

II BEGINNING CAREER POSITIONS 8

Fishing Company in Chile 8

Acquiring a Winery: Concha y Toro, 1960 9

Joining Seagram 14

III CALIFORNIA WINERIES 17

Pacific Land and Viticulture, Inc.: Noble Vineyards 17

Concannon Vineyards 20

Wine Quality 22
Small Wineries and Large Corporations: Entrepreneur vs.

Executive 26

More on Concannon 30

Souverain Cellars 32

IV FRANCISCAN ESTATE SELECTIONS, LTD. 33

Acquiring Part Ownership 33

Changing Directions 35

Estates of the Present Franciscan Winery 38

Estates in Chile 42

Quintessa - Rutherford 44

Appellations 46

Marketing to Restaurants 49

Trellising and Canopy Management 49

Trimming Vines at Quintessa 51

Jacques Boissenot 52

Valeria Huneeus 53

Tannins 54

James Laube: Maker of Wine Industry History 55

Meritage Wines 58

Other Varietals 59

Wild Yeast Fermentation 60

Travel and Marketing 61

Judgings and Auctions 63

Health Aspects of Wine 64

Price Changes 65

Future Trends 66

TAPE GUIDE 68

APPENDICES 69

A Kramer, Matt, "The Resurrection of Napa Valley,"

Wine Spectator, May 31, 1995 70

B Franciscan Estate Selection wine labels 71

C Franciscan Estate Selection Brochure 72

INDEX 76

PREFACE

The California wine industry oral history series, a project of the
Regional Oral History Office, was initiated by Ruth Teiser in 1969
through the action and with the financing of the Wine Advisory Board, a
state marketing order organization which ceased operation in 1975. In
1983 it was reinstituted as The Wine Spectator California Winemen Oral
History Series with donations from The Wine Spectator Scholarship
Foundation. The selection of those to be interviewed has been made by a
committee consisting of the director of The Bancroft Library, University
of California, Berkeley; John A. De Luca, president of the Wine
Institute, the statewide winery organization; Maynard A. Amerine,
Emeritus Professor of Viticulture and Enology, University of California,
Davis ; the current chairman of the board of directors of the Wine
Institute; Carole Hicke, series project director; and Marvin R. Shanken,
trustee of The Wine Spectator Scholarship Foundation.

Until her death in June 1994, Ruth Teiser was project originator,
initiator, director, and conductor of the greater part of the oral
histories. Her book, Winemaking in California, co-authored with
Catherine Harroun and published in 1982, was the product of more than
forty years of research, interviewing, and photographing. (Those wine
history files are now in The Bancroft Library for researcher use.) Ruth
Teiser 's expertise and knowledge of the wine industry contributed
significantly to the documenting of its history in this series.

The purpose of the series is to record and preserve information on
California grape growing and winemaking that has existed only in the
memories of wine men. In some cases their recollections go back to the
early years of this century, before Prohibition. These recollections are
of particular value because the Prohibition period saw the disruption of
not only the industry itself but also the orderly recording and
preservation of records of its activities. Little has been written about
the industry from late in the last century until Repeal. There is a real
paucity of information on the Prohibition years (1920-1933), although
some commercial winemaking did continue under supervision of the
Prohibition Department. The material in this series on that period, as
well as the discussion of the remarkable development of the wine industry
in subsequent years will be of aid to historians. Of particular value is
the fact that frequently several individuals have discussed the same
subjects and events or expressed opinions on the same ideas, each from
his or her own point of view.

Research underlying the interviews has been conducted principally in
the University libraries at Berkeley and Davis, the California State

Library, and in the library of the Wine Institute, which has made its
collection of materials readily available for the purpose.

The Regional Oral History Office was established to tape record
autobiographical interviews with persons who have contributed
significantly to recent California history. The office is headed by
Willa K. Baum and is under the administrative supervision of The Bancroft
Library.

Carole Hicke
Project Director

The Wine Spectator California Winemen
Oral History Series

August 1996

Regional Oral History Office

The Bancroft Library

University of California, Berkeley

iii

CALIFORNIA WINE INDUSTRY INTERVIEWS
Interviews Completed as of September 1996

Leon D. Adams, Revitalizing the California Wine Industry. 1974

Leon D. Adams, California Wine Industry Affairs; Recollections and Opinions,
1990

Maynard A. Amerine, The University of California and the State's Wine
Industry. 1971

Maynard A. Amerine, Wine Bibliographies and Taste Perception Studies,
1988

Richard L. Arrowood, Sonoma County Winemaking: Chateau St. Jean and Arrowood
Vineyards & Winery. 1996

Philo Biane, Wine Making in Southern California and Recollections of Fruit
Industries. Inc. , 1972

Charles A. Carpy, Viticulture and Enology at Freemark Abbey. 1994
John B. Cella, The Cella Family in the California Wine Industry. 1986

Charles Crawford, Recollections of a Career with the Gallo Winery and the
Development of the California Wine Industry. 1942-1989. 1990

Burke H. Critchfield, Carl F. Wente, and Andrew G. Frericks, The California
Wine Industry During the Depression. 1972

William V. Cruess, A Half Century of Food and Wine Technology. 1967

Jack and Jamie Peterman Davies, Rebuilding Schramsberg: The Creation of a
California Champagne House. 1990

William A. Dieppe, Almaden is My Life. 1985

Paul Draper, History and Philosophy of Winemaking at Ridge Vineyards; 1970s-
1990s. 1994

Daniel J. and Margaret S. Duckhorn, Mostly Merlot; The History of Duckhorn
Vineyards. 1996

Ficklin, David, Jean, Peter, and Steve, Making California Port Wine; Ficklin
Vineyards from 1948 to 1992. 1992

Brooks Firestone, Firestone Vineyard: A Santa Ynez Valley Pioneer. 1996
Louis J. Foppiano, A Century of Winegrowing in Sonoma County. 1896-1996. 1996
Alfred Fromm, Marketing California Wine and Brandy. 1984

Louis Gomberg, Analytical Perspectives on the California Wine Industry. 1935-
1990. 1990

Miljenko Grgich, A Croatian-American Winemaker in the Napa Valley. 1992
Joseph E. Heitz, Creating a Winery in the Napa Valley. 1986
Agustin Huneeus, A World View of the Wine Industry. 1996

Maynard A. Joslyn, A Technologist Views the California Wine Industry.
1974

Amandus N. Kasimatis, A Career in California Viticulture. 1988

Morris Katz, Paul Masson Winery Operations and Management, 1944-1988, 1990

Legh F. Knowles, Jr., Beaulieu Vineyards from Family to Corporate Ownership,
1990

Horace 0. Lanza and Harry Baccigaluppi, California Grape Products and Other
Wine Enterprises. 1971

Zelma R. Long, The Past is the Beginning of the Future: Simi Winery in its
Second Century. 1992

Richard Maher, California Winery Management and Marketing. 1992

Louis M. Martini and Louis P. Martini, Wine Making in the Napa Valley,
1973

Louis P. Martini, A Family Winery and the California Wine Industry, 1984

Eleanor McCrea, Stony Hill Vineyards: The Creation of a Napa Valley Estate
Winery. 1990

Otto E. Meyer, California Premium Wines and Brandy. 1973

Norbert C. Mirassou and Edmund A. Mirassou, The Evolution of a Santa Clara
Valley Winery. 1986

Peter Mondavi, Advances in Technology and Production at Charles Krug Winery,
1946-1988. 1990

Robert Mondavi, Creativity in the Wine Industry. 1985

Michael Moone, Management and Marketing at Beringer Vineyards and Wine World,
Inc.. 1990

Myron S. Nightingale, Making Wine in California. 1944-1987, 1988
Harold P. Olmo, Plant Genetics and New Grape Varieties. 1976

Cornelius Ough, Researches of an Enologist. University of California, Davis,
1950-1990. 1990

John A. Parducci, Six Decades of Making Wine in Mendocino County. California,
1992

Antonio Perelli-Minetti, A Life in Wine Making. 1975

Louis A. Petri, The Petri Family in the Wine Industry, 1971

Jefferson E. Peyser, The Law and the California Wine Industry. 1974

Joseph Phelps, Joseph Phelps Vineyards: Classic Wines and Rhone Varietals,
1996

Lucius Powers, The Fresno Area and the California Wine Industry. 1974
Victor Repetto and Sydney J. Block, Perspectives on California Wines. 1976
Edmund A. Rossi, Italian Swiss Colony and the Wine Industry. 1971

Edmund A. Rossi, Jr., Italian Swiss Colony. 1949-1989: Recollections of a
Third-Generation California Winemaker. 1990

Arpaxat Setrakian, A. Setrakian. a Leader of the San Joaquin Valley Grape
Industry. 1977

Elie Skofis, California Wine and Brandy Maker. 1988

David S. Stare, Fume Blanc and Meritage Wines in Sonoma County: Dry Creek
Vineyard's Pioneer Winemaking. 1996

Rodney S. Strong, Rodney Strong Vineyards: Creative Winemaking and Winery
Management in Sonoma County. 1994

Andre Tchelistchef f , Grapes. Wine, and Ecology. 1983

Brother Timothy, The Christian Brothers as Wine Makers. 1974

Louis (Bob) Trinchero, California Zinfandels. a Success Story. 1992

Charles F. Wagner and Charles J. Wagner, Caymus Vineyards; A Father-Son Team
Producing Distinctive Wines. 1994

Wente, Jean, Carolyn, Philip, and Eric, The Wente Family and the California
Wine Industry. 1992

Ernest A. Wente, Wine Making in the Livermore Valley. 1971
Warren Winiarski, Creating Classic Wines in the Napa Valley. 1994
Albert J. Winkler, Viticultural Research at UC Davis (1921-1971), 1973

John H. Wright, Domaine Chandon; The First French-owned California Sparkling
Wine Cellar, includes an interview with Edmond Maudiere, 1992

vi
INTERVIEW HISTORY- -by Carole Hicke

Agustin Huneeus, president and part owner of Franciscan Estate
Selections, was interviewed as part of the Wine Spectator's California Winemen
Oral History Series to document his career and perspectives on the wine
industry.

A native of Chile, Huneeus is one of the few vintners who has spent his
entire professional life as part of the wine industry. He began as Chief
Executive Officer of Concha y Toro winery in Chile. He later Joined Seagram
in Argentina and eventually headed its worldwide wine operations based in New
York. In addition to overseeing Seagram wine interests in Germany, France,
Spain, Italy, and New Zealand, he became president of the Paul Masson winery
in California.

Moving to California in the mid- '70s, Huneeus bought vineyards, the
Noble Winery, and later Concannon Vineyard.

In 1985 Huneeus became a partner and president of Franciscan Estate
Selections, making premium wines under several California and Chilean labels.

Huneeus was interviewed in his home on Lombard Street in San Francisco
on March 6 and May 15, 1995, and in his office at the Napa Valley winery on
August 10, 1995. The transcript was reviewed and lightly edited by
interviewer and narrator.

This series is part of the ongoing documenting of California history by
the Regional Oral History Office, which is under the direction of Willa Baum,
Division Head, and under the administrative direction of The Bancroft Library,
University of California, Berkeley.

Carole Hicke
Project Director

December 28, 1995

Regional Oral History Office

The Bancroft Library

University of California, Berkeley

vii

Regional Oral History Office
Room 486 The Bancroft Library

University of California
Berkeley, California 94720

BIOGRAPHICAL INFORMATION

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Date of birth

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Your children C.VA. ^y S -V \f^ <H -<. S> VJ 2L.

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Occupation(s) .

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I BACKGROUND AND FAMILY
[Interview 1: March 6, 1995]!*1

Chilean Ancestors

Hicke: Let's just start with when and where you were born.
Huneeus: I was born in Chile a long time ago.
Hicke: What year?

Huneeus: 1933, and I am a Leo. I was born in August in Santiago. The
family origin is Dutch. Both my mother's side and my father's
side had been in Chile for many generations. They had been
entangled, so to speak, in Chilean history and education for a
long time.

Hicke: Can you just tell me a little bit about them?

Huneeus: For example, my mother's maiden name is Cox, and as you probably
know, in Latin countries women don't lose their name when they
marry. My mother's name still is Virginia Cox. My name is
therefore a composed name of my father, who was Huneeus, and Cox,
which is my mother's name.

The first Cox to arrive in Chile happens to have been the
first doctor ever in Chile. His name was Nathaniel Cox. The
family became entrenched. Then my grandfather from my mother's
side was the politician who was minister of war during the
Chilean-Peruvian war. They lived in Europe lots of times. He
has always been in the congress and a senator and all that.

'This symbol (If) indicates that a tape or a segment of a tape has
begun or ended. A guide to the tapes follows the transcript.

Hicke:

In my father's family, my grandfather was also very much
involved in politics, an extreme right conservative, Catholic,
everything. Also senator; almost as long as I remember he was a
senator. His forebears were also very important legal people of
the Chilean history. Gorge Huneeus was the head of the
University of Chile for a very long time, and very notable in
that respect. So, what I am saying is that the family is Dutch,
which doesn't mean that they just got off the ship. Somebody
fell off a ship at some point a long time ago. They probably
walked the plank off the coast of Chile.

Would both sides of your family, then, have come originally from
the Netherlands?

Huneeus: No, Cox is English, definitely very English.

Childhood

Hicke: And you grew up in Santiago?

Huneeus: Yes. I grew up in Santiago. My father was involved in many

enterprises but mostly in the Chilean steamship business, I mean
the merchant marine business.

Hicke: Could you tell me his name, please?

Huneeus: Agustin Huneeus. It so happened that my father was the general
manager for the Chilean steamship company. They are called
steamships, but they are not steamships.

Hicke: Is that the actual name of it?

Huneeus: In this country it had a name, Chilean Lines. It was called

Chilean Lines. In Spanish it is just CSAU, which means Compania
Sud Americana de Vapores.

Hicke: Steam?

Huneeus: Vapores, yes steamship. That position required frequent travel
to America. As a matter of fact, during the Second World War,
when I was very young, my father came [to the United States] and
we lived in- -he was working out of New York. During that time he
decided to have his base of operation in New York. That was the
first time that I came to America, and I was a very young person,
grammar school, I think, something like that. I guess I was
about seven or eight when we first came.

Hicke: Did you speak English?

Huneeus: No, but at that age I picked it up in a few months. The United

States--! don't remember if it was the first or second trip—went
to war.

Hicke: That was 1941, so you would have been about eight, seven or
eight.

Huneeus: It went to war so, strangely enough for somebody who is not a
native American, I went through the war, I went through air
raids, I went through rationing, I went through collecting tin
cans and the whole works, very typical American boyhood at that
age. I became, sort of, immersed in American quote, unquote
culture .

Hicke: You saved tin foil balls?

Huneeus: Yes, of course, of the chocolate bars. I used to listen to- -at
that time it was the radio program, very American. I went to
school in--

Hicke: You lived in New York City?

Huneeus: New Rochelle, New York; this was in Westchester County. I went
to lona Grammar School. Then we went back to Chile after about
three years here. We went back to Chile, and I went back into
the Chilean growing up thing. When I was about twelve I guess,
we came back here again for a few years. I am educated in both
places.

Hicke: I was just going to ask you, when you switched back and forth

between these educational systems, what was the effect? I would
suspect they had better schools in Chile, or at least different.
Did you have to get put back and forward?

Huneeus: Yes. There are two problems related to that: one is that the

programs aren't parallel. I would come here, for example, and I
would have a very strong mathematical background and of course no
history or anything like that. So I would have a hard time in
that. Then I would go back there and have no Chilean history—it
just didn't work. Another thing is that we have the counter
season. We are now approaching spring, Chile is approaching
autumn. So when I would finish school here, I couldn't just go
back and take the course, because they were in the middle of
school over there. So, that was complicated.

It creates a different personality, because you live here,
you live there. You are not identical to the kids in either of

the countries. You start learning that you are yourself, you are
different, and that no culture is valid in front of the other.
You know how kids are very dependent on what everybody does, and
you don't want to be different? Well, there is no way you are
not going to be different. I was different in Chile because I
was a gringo. I was different here because I was a Chilean.

Hicke: You always felt kind of on the outside of things?

Huneeus: Always on the outside, but that was never quite a big problem for
me. I sort of adapted to it like your size or your color or the
way you look. It was just me. I was just different, but that is
accepted.

Hicke: Do you think it stimulated or challenged you in some way?

Huneeus: I think it certainly marked me, because the last time we went

back with my parents, I must have been thirteen or fourteen years
old. I finished school in Chile. I got my bachelors [degree] in
Chile; in Chile we follow the French program, which is, you get a
bachelors degree upon finishing your sixth year of high school,
which I did.

Education

Huneeus : Then I became absolutely determined that I was going to come to

the university in the United States. That must have come from my
pride at being here. By then I was bilingual completely. I was
able to get myself a scholarship, because my parents didn't want
me to come here, so they wouldn't contribute. I got a
scholarship, and I came and did my studies here.

Hicke: To which university?

Huneeus: I went to Fordham University in New York.

Hicke: Can I ask about your scholarship? How did you happen to apply,
and how did you pick that university?

Huneeus: Fordham University was a Jesuit university, and I was at a Jesuit
school in Chile and became close to a lot of the priests there.
I was very involved in intellectual pursuits. There was one
particular Jesuit, who was a very important international
theologian, who would go to Chile and would come here. I would
relate to him when he was in Chile, a lot. I finally asked him,
"You have to help me get out of here. I want to go to the United

States." He made it look like it was some kind of a competition
that I was entering. Whether it was or not I don't know, never
will. Thing is that I got a scholarship which paid my tuition.

To pay my board I applied and got, from Chile, a subsidy of
sixty dollars a month. It wasn't much. But at that time it was
half of what I needed, at least. That was given to me by the
Chilean Ministry of Economics, I think it was. They liked people
to go outside, so I got this little bit of money. So I had my
tuition plus this money.

Then, I worked of course. In New York I worked in lots of
things. I first worked in the American Kennel Club. By the way,
I know a lot about dogs and what they eat and how they behave.
Then I started working at the school library, where I really
liked it. I would work nights and weekends, and read. I think
that I have never done more reading in my life than there. I had
a grand time. They used to pay me seventy-five cents an hour.

Hicke: Oh yes, and all the books you could read, [laughter]

Huneeus: And all the books I could read. And, by the way, all the study
time I needed. I had a night job, so I was just sitting there
reading, basically. During the summers I would make
significantly more. That would stabilize my economic position.

Hicke: I need to back up a little bit. When you were going through

these American and Chilean schools, both grammar school and high
school, what subjects were your favorites?

Huneeus: I think that I sort of liked the subjects where I had good

teachers. I have analyzed that a lot, by the way, because in
interviewing people, which I have to do a lot for hiring, I
always ask them the question, "What are your favorite subjects?"
It occurred to me that one's favorites subjects are always the
ones that were well taught. I had great teachers in some areas.
I was always very good at things which did not require memory. I
could not find the interest in learning lots of things by heart.
I was very poor, for example, in Chilean history where basically
the questions were: what year was such and such a battle? Or who
was the general of such and such a thing? I didn't like that at
all.

Hicke: That has turned a lot of people off history, that kind of
teaching.

Huneeus: Inorganic chemistry- -the value of this or the value of this atom
forming a molecule—these things. I just could not get myself to

be interested in learning things by heart. But in things that
were conceptual, like Spanish literature, I had a wonderful time.
One teacher put me into this area. I never knew I had any
interest in the golden years of Spanish Literature, Cervantes--
and just brought literature into our lives. He turned out, later
on, to be very highly reputed.

Hicke: You mean he went on to write and publish?

Huneeus: Yes. In the Chilean program we studied philosophy and logic, so
mathematics was very interesting. Physics was okay. Chemistry
was terrible. History was—when I had an interesting teacher
that was interested in the ideas more than in the names and the
dates, I would do well. And literature I liked.

Hicke: Were there Spanish books in the Fordham library?

Huneeus: No. Throughout life I have learned that it is much easier to

read English. Spanish for me it is quite easy, but English is a
more precise language. It has more verbs. Any quote in an
important book that is written in English is going to be shorter
than one from a book that is written in Spanish. It is more
precise.

Hicke: So, back to the time at Fordham University, what did you study?

Huneeus: I studied business. I guess the priority in my life at that time
was to get on with life. We are talking about 1961. Business
administration was something fairly new in America and totally
new in South America. So I thought I would study that. I
thought I would end up in public life, like others in my family,
so I emphasized public administration and economics. And
parallel to that I was taking some graduate courses at Columbia
University. I never did get the degree from Columbia.

Hicke: Where did you live in New York?

Huneeus: The first year I lived in the Bronx, and then after that I
decided that I wanted to work in New York City, since I was
coming to New York City to study, because that permitted me to
work in the afternoons. So I lived in different apartments or
boarding houses, whatever I could afford.

Hicke: Do you remember anything about your professors at Fordham?

Huneeus: I think that Fordham had a good, overall program. I think that I
was a little disappointed in the education there. I expected a
lot more when I first came, and the whole effort of being here
was --it was too pragmatic and too limited, I thought. That's why

I went and got myself into industrial engineering classes at
Columbia, because I wanted more.

Hicke: What did you have in mind to do with the industrial engineering
courses?

Huneeus: Well, I thought that I was going to get my bachelor's at Fordham
and then get my degree in industrial engineering at Columbia.
But I never did get all the credits. What happened was that I
married while I was finishing at Fordham, then right after that I
went back to Chile and started working, so I never finished the
engineering degree.

II BEGINNING CAREER POSITIONS

Fishing Company in Chile

Hicke: What year did you get married?

Huneeus: I got married in 1955, I think.

Hicke: Could you tell me your wife's name, please?

Huneeus: She was my first wife, Christiane Cassel.

Hicke: Okay, so you then went back to Chile?

Huneeus: I went back to Chile and started working there in of all things,
fishing. My father was still in the steamship business but with
him we developed a fairly new concept, which later on became very
important for Chile and Peru, which was fish meal. Basically, it
is a component of most meal for chicken and hogs—animal feed--
and it's just mashed up fish.

Hicke: What kind of fish?

Huneeus: Well, we were fishing hake, which is a very abundant fish right
off the coast of central Chile, near Santiago, and later on we
also fished sardines and things like that, but it's ordinary
fish. It turns into a sort of powder, very high in protein. We
sold the fish meal mostly to Europe and America. I was doing this
and this company was working, and typically in the fishing
business there are periods of bonanza, when you are fishing a lot
of fish and the company is doing fantastic. Then there are
periods when you fish very little, either because of the weather,
or because the fish have decided not to be fished.

Hicke: Sounds like good preparation for being in agriculture, [laughter]

Huneeus: It was! My father left for Europe again on the same company
business, to live there, and I was in charge of the fishing
company, and we had big amounts of money sometimes, and then very
little sometimes, so I had a lot of dealing with investing money
in the stock market, or whatever I could get it into. In an
economy like Chile's, unstable, with inflationary forces at work,
you don't keep money; you invest it right away.

Acquiring a Winery; Concha y Toro. 1960

Huneeus: In this investing I became very close to the person who would
eventually be very close in the wine business, who was a
stockbroker. His name is Eduardo Guilisasti. He once came to me
and said, "Why don't we invest money in this company?" which was
Concha y Toro. Concha y Toro was a sort of sleepy company. It
was not by any means the most important wine company in Chile—it
was number three or four—and it was sort of going down. It used
to be, before we got involved, a family company, but apparently
the family wasn't getting along, so we were able to buy the
stock. His idea was to buy the stock, because there was more
bulk wine inventory in the company than the whole value of the
stock. So his idea— which I wasn't enthusiastic about— was to
buy a lot of stock, sell the bulk wine inventory, give ourselves
dividends to pay back the stock, and then sell the stock, which
would have been pure profit.

I'm telling you now the way I got into the wine business.
Hicke: Right! That's what I wanted to know.

Huneeus: I told him I don't have money, this fishing company sometimes has
money, sometimes not. He said, don't worry about it— his was a
big stockbrokers' company- -we '11 give you margins if you need it
and whatever. So we did that, and we bought together- -Eduardo
and I— we bought about 15 percent of this company. And then we
said, let's liquidate the inventory now and pay ourselves. But
in order to do that, we realized that one of us had to jump in as
the manager. And because they were so separate, all the family,
we were able to get on the board, and very soon we were sort of
controlling and running the company. I took the general
manager's job. Now we're talking about 1960.

Hicke : Okay .

Huneeus: And I was twenty-six years old, so I was pretty young to be

general manager. Very shortly after I was in there, I would say

three months after I was into it, I told Eduardo, you know, this
is a wonderful business; instead of selling out, let's stay with
it. So that is what got both of us into the wine business.

Hicke: So you started out from the business end of it?

Huneeus: Yes. I had, through the family, a small ranch which had a small
vineyard.

Hicke: You were just starting to tell me about your vineyard.

Huneeus: I had a small ranch with a vineyard, which was maybe twenty

acres, or something like that. I would sell wine--I made wine in
this place. In Chile, typically at that time, nobody sold
grapes. Every farm that had a vineyard would turn those grapes
into wine and sell it to companies like Concha y Toro. I had
sold to Concha y Toro, so I knew them from a business point of
view. I had sold grapes to them, or wine really. I knew they
were quite disorganized, but nice people. Basically an old
company that didn't really have any destiny.

Hicke: They never had their own vineyards?

Huneeus: Oh, they had a lot of vineyards too. What I really liked about

the company was that they had huge, wonderful vineyards, which we
were going to get free. After we sold the bulk wine we were
going to get these vineyards for free. They were everything--
Cabernet Sauvignon and Sauvignon Blanc. This was a large
company. It was not Chile's most important, by any means, but it
had good vineyards, excellent vineyards. So, that was how we got
into the wine business.

I started running this company, and Eduardo stayed in the
stock market. I ran it as general manager, which is the
equivalent of president. Here they call them presidents; over
there they call them- -managing director was my title for
approximately ten or eleven years. The company turned itself, or
we turned it into Chile's most important company by far, in the
wine business, and one of the more important ones in Latin
America, certainly. It did very well.

Hicke: You got some dividends anyway?

Huneeus: Well, I got a lot of gratification, no dividend. We put all the
money back in. What happened later — this company then turned
into a large company. I developed exports for the first time.

Hicke:

Huneeus :

Hicke:
Huneeus :

Hicke:
Huneeus :
Hicke:
Huneeus :
Hicke :
Huneeus :

I bought other companies . This was ten years of running a
business. My learning curve was very high at that point. I was
just learning. I didn't know how to run a company. I didn't
know the first thing about wines .

Let

f^u not go by this too quickly. Where did you start when you
got into the managing director's position?

I started, really, by deciding--! was very young, very
enthusiastic and thought 1 knew it all, obviously. The first
thing I did was get rid of all the old guard of managers and put
my own, new people in. 1 hired a person who was, perhaps still
is Chile's most knowledgeable vineyard manager. So, he got
involved. We were the first to send people- -this particular
person—to [University of California at] Davis to learn.

What is his name?

Ricardo Vial. He came to Davis and met with Maynard Amerine,
whom I see you have there, with [A. J.] Winkler, with Jim Cook.
We established the first connection between Davis and Chile,
which later thrived and became much closer. We were pioneering
in the vineyards in Chile. In winemaking I hired also a very
good man from Germany. He was in Chile, but [he had the] German
knowledge and is still the head winemaker of Concha y Tore.

And his name?

This one you won't get, Goetz von Gersdorf .

I was not too far away. It has something to do with a village.

Right, Gersdorf, you are absolutely right.

And he is still your winemaker?

Not mine, because Concha y Toro is not mine anymore. He is still
with the Concha y Toro winery. That grew and we did very well.
Anything I can tell you is not enough. It was a success story of
the--we were pioneers in almost every area in Chile at that time.

Hicke: Give me some more examples.

Huneeus: We were pioneers in packages, for example. We brought into Chile
the first liter bottle, which is the vehicle for selling quote,
unquote jug wines. Before that, it used to be jugs--five liter,
fifteen liter jugs--which were reusable. We turned the thing
into liter bottles, and we were able to deliver the liter bottle

at the same price. That was the end of the jug. That was
marketing; we had a very good guy there. Let's see, what else?
We bought a couple of other companies, and we grew that way.

Hicke: Can you recall their names?

Huneeus: Yes, we bought Vina Tocornal, which used to be pretty important
at that time.

Hicke: And it was a winery?

Huneeus: Yes, very similar to Concha y Toro, and brand and that. Perhaps
the most important move that I made was the export . I really
started the export business of Concha y Toro, and most Chilean
wines came in after us.

Hicke: How did you go about doing that?

Huneeus: 1 packed a little suitcase and 1 started moving.

Hicke: You traveled?

Huneeus: Yes, I traveled a lot. That led to a contact which later turned
out to be very important. I was in Venezuela. Our wine was being
distributed by a company which used to belong to Seagram. When I
came to America to try to export, it was through the contact in
Venezuela that I connected with Seagram. I was trying to get
Seagram to market my wine in the United States . Seagram
answered, "We are definitely interested; we would like to invest
in your company." So we were negotiating. I didn't want to sell
a part of my company, but they wanted to buy a part of the
company. We were playing at this negotiations thing when all of
a sudden Chile elects Salvador Allende president, which was an
unexpected thing for Seagram and for me. So, that knocked the
Seagram negotiation right out of the table.

Hicke: They didn't want to invest in the company after that?

Huneeus: Oh yes, you don't invest in Communist countries. There is no way
you can. What happened then was that Seagram said, We can't have
anything to do with this, but if ever you want to leave Chile,
which they thought I would have to, please call; we would love to
work with you in some other facet. What happened was that,
indeed, I found it necessary to leave Chile very soon after that.

Hicke: Tell me what happened to your business after you left?

Huneeus: What happened to the business was that the Allende regime acted
in a sort of legal format, abusing the law, intervening in my

company. First, they would put a government interventor there
who would run the company. He hired a lot of political Communist
activists and put them on the payroll of the company. Prices
were congealed at that time. You couldn't raise prices.
Inflation was very high. With the amount of extra people that we
had on our payroll, our company started losing money, which was
no problem, because then there was a state bank that just
funneled whatever the company needed. So, little by little the
company became pretty worthless in terms of equity. Without any
illegality, the company had de facto passed into the hands of the
government, which was their way of doing it. It also happened
that my second in command was a closer person to Allende than I
was ; so we decided that I would leave and he would run the
company and we would see what happened. We really had very
little hope.

Hicke: What about the rest of your family? Did they have to leave?

Huneeus: No. We didn't have to leave. We left because I thought Chile
was going to be a Communist country and I didn't feel very
comfortable. If you are a skier you go where there skiing is.
What is the sense of being in the desert if you are a skier? I
was a business person and I had done this for many years. I
didn't even think that it was such a bad idea at that time to be
a Communist country. Certainly the right hadn't been able to do
any good for Chile. The Christian Democrats had not been able to
do any good for Chile. So, maybe the Communists could, for all I
knew, do some good. I was not going to fight it and I was not
going to be part of it.

Hicke: That is a good explanation.

Huneeus: I decided to leave the country immediately. We all of a sudden
had to leave- -but that was a temporary thing. It so happened
that there were arms in one of my cellars in Concha y Toro. This
was a few months after Allende had been elected. They issued a
warrant of arrest for me. I was just working in my office in a
day and then I got a call from Valeria, my wife, who told me that
her cousin, who was the minister of the interior of Allende —
that's how Chile is, by the way — called and said, "There is a
warrant of arrest." Valeria said, "That's crazy, there are no
arms." He said, "There may well be no arms." What there was
really was an old antique collection of World War I arms. They
didn't belong to us. They were in a house that belonged to an
old relative of ours, but it wasn't our house. He said, "That's
fine and it is true but it is going to take Agustin some time to
clear himself. In the meantime he is going to be in jail." I
said to hell with that, and I took the first airplane going out,

which happened to be going to Buenos Aires,
the first leaving.

That is, sort of,

Joining Seagram

Hunneus: I called Seagram at that time and they asked me to run their

Argentina operations. That is basically how I started with them.

Hicke: Was this your second marriage?

Huneeus: Yes. I married Valeria in 1964.

Hicke: In Buenos Aires you had made contact with Seagram?

Huneeus: Yes. I had been in contact with Seagram. They offered me the
job of running the Seagram operations in Argentina, which were
important. They were four companies: a large distilling company,
a large wine company, and a distribution wholesaler. We did
quite well there. I turned the thing around. At that time I was
very naive about working for corporations. I thought it was just
like working for yourself. I did everything that had to be done,
never checked with anybody and did excellently well.

Hicke: Let's get the year, maybe I have it; 1973, is that right?
Huneeus: No, that is when 1 left Argentina. We are talking 1971 here.

Hicke: Let's go back to when you started out with Seagram. What did you
start out to do?

Huneeus: President of Seagram Argentina, it was called, which was these
four companies. They did very well. After two years of living
in Buenos Aires, I received the offer of coming to New York and
running Seagram's international business. I didn't want to leave
Argentina really, because I felt close to Chile, and some day we
were going to go back and etc. But, at that time in Argentina
there was this war—what they called the Dirty War—going on.
People in my position were being kidnapped and killed very often.
As a matter of fact, my colleague of Hiram Walker, I was Seagram,
he was Hiram Walker- -we were close- -he got himself kidnapped and
they never found him again. It was a very nervous situation. I
would go to the office in a caravan of cars and nobody knew which
car I was in, and machine guns in the cars. Whenever I went on a
bicycle or anything like that, there would be a couple of cars.
It was a terribly unnerving kind of a situation. The children
were nervous, Valeria was very nervous. So, we said, let's get

let's get out of here. We did in 1973.
in New York and we came up to New York.

I accepted the position

Hicke: When you started in New York what was your job?

Huneeus: My job when I started in New York was vice president,

international operations. I had a large group, about thirty
companies, I guess it was, Seagram companies around the world
that 1 would supervise, including my old company in Argentina, of
course, but also in every country in Latin America as well as
Europe and lots of places where they had companies. I was fully
responsible for all of them. This was the first time Seagram
named an international person. Up to now it was all run by the
same president out of New York, everybody reported to the same
guy. Edgar Bronfman decided that he wanted someone to run the
international company, and that was what 1 was there to do.

Hicke: They reported to you and you reported to him?

Huneeus: Yes. It was a very hectic job in the sense that 1 was always in
Europe or somewhere. Every other week I was out. There were
never two weeks in a row that I was at home. It was just
terrible. After about a year or two of that position, they
reorganized Seagram, making spirits one section and wine another
section. I asked to be put in charge of wines. I was the person
in Seagram that was in charge of all of the wine businesses.

Hicke: Including both national and international? So they split it
another way?

Huneeus: In another way. In that capacity, then, I became president of
Paul Masson [winery] .

Hicke: How did that work?

Huneeus: Paul Masson was a Seagram company.

Hicke: You became president of all the companies that were held by
Seagram or just one?

Huneeus: This one I named myself president. I named the presidents of all
of the others. Because of this one being the largest and the one
that was going to be my center of operations, I named myself
president. So, I was president of Paul Masson, and I had thirty-
six other wine companies, including two in Germany, two in Italy;
Barton-Guestier in Bordeaux, and a company in Spain, Palacios; in
Argentina, and Brazil. I had a company in New Zealand, Montana.
Paul Masson, of course, which was pretty important, and Chateau
and Estates [Seagram Chateau & Estate Wines Co.], which is large,

reported to me at that time. Chateau and Estates is a marketing
company here.

Hicke: Did you stay in New York? When you came home was it to New York?

Huneeus: We lived in Bronxville, which is in Westchester County, very

close to where I had been—five minutes from where I had been in
high school.

Hicke: You obviously brought to bear the imaginative techniques that you
had been developing all along, to this Seagram position. What
were your first responsibilities?

Huneeus: The only condition that I put to Seagram about coming to America
was that they would put me through the Harvard Advanced
Management Program. That was a very valuable experience to me.

Hicke: How long were you going to this?

Huneeus: This is a three-month or four-month course.

Hicke: Totally dedicated to--

Huneeus: Totally dedicated, 100 percent. It is called the AMP--it's like
an MBA. That is a top level management course which is, perhaps,
the world's best. It used to be at that time. What I learned
there was a lot of things which permitted me to prepare for the
Seagram job, mostly.

Hicke: Can you give me some examples?

Huneeus: What I learned there was the possibilities that there are in this
country to secure funding for businesses if you are a well-
respected professional. And human relations skills which was--
Seagram's was a highly political company, and I had difficulties
with that, because my upbringing had been through my own
business. I had only run that other company.

III CALIFORNIA WINERIES!!

Pacific Land and Viticulture. Inc; Noble Vineyards

Hicke: You were talking about what you learned at the Harvard Management
Program.

Huneeus: I soon learned after a few years in New York, I mean after one

year in New York, that I was not going to make the corporate life
my life. I wanted to move on quickly. I think that in this
Harvard environment I quickly learned how strong the
entrepreneurial thing is in this country and how easy it is. I
made up my mind then and there that as soon as I got my legal
residency, I would seek my own thing, which I did. As soon as we
got our quote greencard, I resigned from Seagram and started my
own thing by buying a large vineyard in the [California] Central
Valley between Madera and Fresno. We bought the Noble Vineyards.
This was about three thousand acres of vineyards. It had a small
winery, small by Central Valley terms. Actually, it was a three-
million-gallon winery, which is big by my terms today.

Hicke: Tell me about looking for it. How did you find it?

Huneeus: I found it because this was offered to me while I was at Seagram
and I tried to buy it, but Seagram didn't want to buy it. I
tried to buy it for Paul Masson — it was a sort of a distressed
sale, so it was very low priced.

Hicke: Who had owned it before?

Huneeus: I think it was a Mr. Noble--it was called the Noble Vineyards--
and he had died, so the family wanted to sell it for estate
purposes, or something.

Hicke: What kind of vines were planted?

Huneeus: They were the typical Central Valley thing. It was French

Columbard, and Barbara, Carnelian, and that kind of thing. We
developed an interesting niche. We discovered that at that time
all of the fine wine houses of the North Coast wanted to have a
generic wine program. Basically, it was a time that Mondavi and
Beaulieu and everybody had chablis and burgundy. We became sort
of a supplier of high quality, Central Valley generic wine. We
did very well economically.. I had partners, and the partnership
ended after six years. By then 1 had also been thinking about
getting into the fine wine business. I had also bought Concannon
Vineyards, which is an old, interesting winery and vineyard.

Hicke: Let's elaborate on both of these a little bit. Noble was a bulk
wine producer, is that what you are saying? You sold the wine in
barrels--

Huneeus: It was a bulk wine producer starting from grapes, yes. We sold
only bulk wines, no bottles.

Hicke: What kind of equipment did 'you have?

Huneeus: We had a very good winery for bulk business. In other words, it
was all stainless steel tanks. We had the most sophisticated
equipment we could find to make the best wines we could out of
those grapes, and it was pretty good wine, actually ended up
drinking it. I liked it so much I started drinking it. Wouldn't
touch it anymore but--

Hicke: Did you have a winemaker or did you--

Huneeus: Oh, yes. I had a wonderful winemaker with whom I am very good

friends still, Richard de los Reyes. You may have heard of him.
He works with Joe Ciatti now.

Hicke: Did you have vineyard managers too?

Huneeus: Yes, Jim Wineman. He passed away, unfortunately, a few years
ago; he was our vineyard manager. Then he left and Jim Curtis
took his job.

Hicke: What kinds of challenges did you have?

Huneeus : It was very difficult to find a niche where you would have

business every year. In that particular business, it is always
speculative. You can either sell before or after. If you sell
before [the crush], sometimes there is no price, you just have to
go and sell at a loss, or else you take the risk and don't sell
and hope that the crop is not going to be very good and the price
is going to go up. It is a very speculative, challenging thing.

It was fun. I really enjoyed that business. It was certainly
easier than the business I am in now. It was much easier, you
only had five clients or something. We became important
suppliers of --well, Paul Mas son for sure, and also then later on
for Coca-Cola. Remember when Coke came into the business?

Hicke: Yes.1

Huneeus: Oh, we were very important suppliers to them in wines and grapes.
We had more grapes than we could turn into wine so we always sold
some grapes that other people would crush.

Hicke: Did you live in the Valley?

Huneeus: No, I lived in San Francisco. I fly, so I would sort of,
commute.

Hicke: Do you fly your own plane?

Huneeus : Yes .

Hicke: When did you learn to do that?

Huneeus: When I was about twenty- five-years old I learned.

Hicke: We missed that.

Huneeus: I have been flying ever since. Still fly, as a matter of fact,
this morning I just got back.

Hicke: So, you manage to travel by your own plane some of these times?

Huneeus: What happened was that in Chile when I was running Concha y Toro,
I found myself traveling a lot on Chilean roads , and they are
dangerous. I figured out that if I didn't learn to fly, I would
end up being run over by a truck in Chile someday. The safety
conditions of driving in Chile at that time—even today—are
dangerous. At that time particularly, they were very dangerous.
I learned how to fly for self-defense, not for anything else. It
has become a fun thing to do.

But even when I had the Fresno property, I would fly to
Fresno. Then, we had an airfield in the vineyard. That was a
lot of fun- -fly every week and spend a couple of days here, but

'In 1977 Coca-Cola bought Sterling Vineyards; in 1983 Sterling was
purchased by Seagram.

my office was still in San Francisco. Now even when I have the
Monterey vineyards, I always fly there.

Hicke: Where do you park your plane?

Huneeus: I fly from Gnoss [Field], which is Novato.

Hicke: San Carlos has a small airport too.

Huneeus : 1 used to keep it in San Carlos . That ' s where we used to have it
when I used to fly to Fresno all the time. It was great because
we had a home in San Carlos .

Hicke: Does your wife fly also?

Huneeus: Co-pilot, but she's not a pilot. She flies around a lot. We did
a lot of flying in South America when we lived there.

Hicke: For vacation?
Huneeus : Yes .

Hicke: I think that is a novel reason for taking up flying; at least I
haven't heard of it before, [laughter]

Huneeus: That was definitely what it was—self-defense.

Concannon Vineyards

Hicke: You were still at Noble vineyards and you had bought Concannon.
How did you get into that?

Huneeus : I decided that it was important to start getting into the fine
wine business. 1 thought it was important. We did that as a
partnership first. I guess this was in--I don't even remember.
We did it as a partnership first; and when we sold Noble, which
we did, then Noble and I kept Concannon. Now we were
independent .

Hicke: Yes, but meanwhile what did you do with Concannon when you had
it? What kind of grapes and—

Huneeus: Concannon was a company that was very sleepy when I bought it.

We developed a lot of new vitality in it. It was based on Petite
Sirah, and we turned it more into Cabernet, Chardonnay, like most
of the premium business. Concannon had a beautiful Sauvignon

Blanc, and we emphasized that. What my problem with Concannon
was that it had a very old winery, and it had grown to the point
where we could not maintain it without getting a new winery, and
I didn't have the resources. I found myself looking for a
partner, and the partner turned out to be a very major
corporation that ended up buying me out.

Hicke: And that was?

Huneeus: IDV, International Distillery and Vineyards. It's actually a
distillery.

Hicke: Who owned Concannon when you bought the property?

Huneeus: The Concannon family.

Hicke: They didn't want to be involved anymore?

Huneeus: I guess they didn't have the resources. I don't know. Jim
Concannon was-- Jim's brother had been the one running the
company, and when he died, I think they had to sell for estate
purposes. Jim remained in Concannon with me for a long time. I
think he is still there.

Hicke: Anything particular or memorable about Concannon when you were
there?

Huneeus: No, I regret not knowing then what I know today. I think

Concannon should have been turned- -rather than try to compete in
the Cabernet /Chardonnay business, we should have turned it into a
Rhone style or Italian style, because it is a different climate
and different soil. It doesn't compete, really, with the
Cabernet /Chardonnay, but for the other Rhone varietals, I think
it is better than anything we can get; wonderful property for
that.

Hicke: Well, hindsight of course. Also, now is not then.

Huneeus: Right, and now there is a market for those things. There wasn't
then. We had a varietal there called Ricasseteli, which is a
Russian white varietal. We thought we would turn that into
something, but there was no way of selling. We just couldn't
sell a bottle of that.

Hicke: Did you try?

Huneeus: Yes. It wasn't a great wine. It was a very high yield. I don't
know why the Concannons had brought that from Russia, something
novel. I also think that the Petite Sirah of Concannon was very

good. It could have been an interesting wine. Nothing has
happened with the Petite Sirah now.

Hicke: I think there is more interest probably now than there was at
that time.

Huneeus : Yes, definitely, absolutely true. Cabernet /Chardonnay wasn't
what it is today, then.

Wine Quality

Hicke: Let me just switch gears here for just a minute and ask you how
you developed your palate. How do you decide about your wines?

Huneeus: I don't think 1 have any systematic education of my palate, but
from the very early days of Concha y Toro, I made it a point,
which was very novel at that time, to have weekly tastings--it
didn't turn out weekly, but at least bi-weekly it happened—with
the winemakers, and my head of marketing, and sales, and me.
That was normal at that time. I would always have other
winemakers there. As a matter of fact, I took Maynard Amerine to
Chile to teach us how to taste and all that. I have tasted once
or twice a week all my life. The palate may not be better than
it used to be, but certainly I know how to look for things
better. I know how things would develop in the bottle, or how a
new wine is going to turn into a aged wine, or how you expect it
will evolve. I have gotten a lot of history in tasting. But it
is still a mystery to me--how we taste, and how we demand things
of our palate which it cannot possibly do, such as serial tasting
like they do at these rating events. It is just physiologically
impossible for the palate to do what they pretend to be doing.

Hicke: Do you have a certain style of wine that you prefer or that you
aim for?

Huneeus: Yes, well I mean I have my tastes. I am very mono-wine faithful.
For me, it is red wine, and Cabernet red. If you can grow a
great Cabernet you are wasting time and a natural resource if you
don't, and it is safer to grow than anything else. I am not
prejudiced. But, definitely I have an orientation towards
Cabernet- -to the Bordeaux varietals in red and in white, as a
matter of fact. I can't understand America's fixation with
Chardonnay. I find Chardonnays to be a great white wine but very
boring after a while because of the French oak all of the time;
that makes it pretty uniform.

Hicke: How do you think this madness developed in California, and now
throughout the rest of the United States?

Huneeus : This American market is a very unique market . It is a market

that is new. The Americans are used to following trends. Trends
can cause everything here. I think that because there is a
certain lack of tradition, we can go anywhere, like we went from
a Mateus Rose to Sangria to Cold Duck. The things we do in this
country are amazing--to Lambrusco to White Zinfandel--and we are
now into Chardonnay, and from Chardonnay we are going to go to
Merlot--it's going to be the coming thing. They become generic
names after awhile. Chardonnay today, to the consumer I think,
means white wine, fancy white wine. I don't think there is any
concept that it should have a specific flavor, style, or anything
of that, just white wine—it's generic. Merlot will be the same
thing someday, I suspect.

Hicke: If it is not already here that big. Do you think that these

trends have any upward progress — shall we say, people's palates
are getting more sophisticated?

Huneeus: Yes, this is not random. This is definitely a quest for quality.
It is obvious to me that Mateus Rose should never have been the
sophisticated wine of America, as it was. Sangria, my goodness,
and Cold Duck. We have come a long way from Cold Duck and White
Zinfandel; we are close to being classic now. Now it is
Chardonnay, and little by little Chardonnay is going to take the
place of White Zinfandel, I suspect. And when it does, we are
more into good, serious wine.

Hicke: As you have gone through having these different wineries, have
you had a specific goal for each one? And do you have a
philosophy about the wines?

Huneeus: I have a very strong idea that quality wines have to be the

representation of a vineyard. I don't like the concept of buying
grapes and making a good wine and making it better. I don't know
what better is, except as a reflection of a particular terroir.
I am always looking for what that vineyard wants to do, and then
doing it and hopefully making it good. I don't like the concept
that there is a "good" out there and that all wines in the world
have to tend towards that good. I think that is a crazy thing we
have done to the consumer — making him believe that. This whole
system of rating wines in America is that. It is telling the
consumer there is a hierarchy on which all wines of the world can
be placed. There are two prophets who know exactly how close
each wine is to that god and they are called [snaps fingers].

Hicke: The judges.

Huneeus: Yes, two raters. We didn't even appoint these prophets. They

are self-appointed prophets. I mean, they are good, that is why
they are there, but they are not true in the sense that they
don't reflect my palate or yours, they reflect their own palate.
We are pretending there is some kind of objectivity there which
is false.

Hicke: Do you think that the consumers understand this?

Huneeus: No, I think the consumer believes that a wine that gets a ninety-
five rating is better than one that gets a ninety rating. I
think he does. I think we exploit that a lot, I mean we in the
business, the traders. Wine gets a ninety, it's swept off the
shelf immediately, regardless of whether it suits that palate of
that particular buyer or not, nobody cares. These raters are
very sophisticated raters, and they like wines that are big and
tannic and unfiltered and whatever, which is not necessarily what
the consumer that just wants a nice wine for dinner tonight would
like. Unfortunately, if that consumer doesn't like the wine that
the consumer has bought because of its rating, she is going to
think--or he is going to think—well, I don't know enough about
wine. This is a great wine, but it is terrible to me, but I have
to learn to like it.

Hicke: From the marketing standpoint, do you have anything that
approaches a solution to that?

Huneeus: Yes, I think that we, the vintners, have to learn that wine

cannot be marketed as brands, as branded goods, as they typically
are, because there are too many. The decision-making process of
buying a wine is completely different from the decision-making
process of buying toothpaste or beer. When you buy toothpaste or
a beer, you typically—your mind goes immediately from the need
to the brand. If I think beer, I probably think Heineken,
because I like drinking it. If I think toothpaste, I think
Colgate. Now, if I think wine, I have to go through an elaborate
process before I get to the brand.

I have to go, first do I want a white wine, or red wine, an
American wine, or a Chilean wine, a Pinot Noir, or a Cabernet, a
fifty-dollar wine, or a ten-dollar wine? If I say a ten-dollar
wine, I am now in a category. Supposing I say I want a
California Cabernet, ten-dollar wine, hopefully from Napa. Now I
have come to a set where my brand can compete with others. But
until then I can't pretend that the guy is going to think, I want
a Beringer wine. Nobody wants a Beringer wine or a Franciscan
wine, they want a wine. It is a different marketing concept. I
call it class marketing, by which I mean we have to market
classes of wine, like Merlot is a class of wine, or fighting

Hicke :

varietal--price--is a class. That is what we get people to want.
We get them to want a good-quality Cabernet at ten dollars. It
is different marketing.

As an example, Carneros is a class of wine, Cameros
Chardonnay. There was a time that Carneros--ten years ago--
nobody cared about Carneros . Later because these people in
Carneros did things right, no matter how poor you were at
marketing, if you had a Carneros Chardonnay it was going to sell,
or a Carneros Pinot Noir, because a class had been marketed.

Did they do that by neighborhood association or something like
that?

Huneeus: Yes.

Hicke: That is interesting. So when you approach your marketing, do you
consider that the consumer is going to return to this --assuming
that he/she has picked out this category—is going to return to
the same brand, once he/she finds one in that category that is
acceptable?

Huneeus: I think that the wineries are always presented in a limited set,
never alone but never with five thousand either. When you go to
a restaurant you pick your class of wine, and say you want a
white wine and you want a Chardonnay and you want it from
California. Now you have ten wines to pick from. Then my
marketing is to be one of the ten that are being offered and for
you to know enough, or have heard enough, or somehow be persuaded
to ask for mine rather than somebody else ' s . I have to get you
first with the Chardonnay of California. Then I have to get
myself on the list.

Hicke: You have two jobs. You have to sell your class and then you have
to sell your brand.

Huneeus: Then, I have to be present when you have made your choice. It is
the same in the store. You don't pick from an infinite amount of
wines in a store. They are already limited to twenty maybe, or
thirty. I am in a set amount, and I have to be in that set. You
are never going to be loyal enough to me to say, "I am getting
out of this restaurant because they don't have an Estancia or
Franciscan wine." That doesn't happen.

Hicke: Does the opposite happen when somebody says, "I had this fabulous
Franciscan wine but I would like to try something different for
fun."

Huneeus : Absolutely, people—yesterday I was fooling around in my computer
in the CompuServe or--

Hicke: On the Net.

Huneeus: 1 am on the Net, and somebody in the wine questions said, "Can
somebody tell me what other wine I can drink? I am hooked on
Estancia and have never found anything I like better." Something
like that. I answered it. "If you are hooked on Estancia, drink
Estancia, friend. Why change?" [laughter]

Hicke: I think maybe we should stop for now and put off the rest for
another day.

Huneeus : Sure .

[Interview 2: May 15, 1995 ]ti

Hicke: I wanted to ask you about working with Sam Bronfman; have you
worked very closely with him when you were with Seagram?

Huneeus: No, I worked with Edgar Bronfman. I reported to Edgar senior.
Sam was not in the company at that time.

Hicke: Okay. What about other people in the company that you
particularly worked with?

Huneeus: I was very close to people such as Ab Simon, who was the head of
Chateau and Estates, and Harold Fieldsteel, who was the executive
vice-president at that time. I was hired by Jack Yogman, who was
the president when I was hired, and we were together for quite a
few years, and then all of a sudden he was taken out of his job.
I ended up reporting to Edgar, and that was it. I had reported
first to Jack Yogman and then to Edgar Bronfman, nobody else.

Small Wineries and Large Corporations; Entrepreneur vs. Executive

Hicke: You have seen the wine business both from the aspect of an

individual owner and as part of a large organization. Can you
compare and contrast those two perspectives?

Huneeus: Yes. I have given a lot of thought to what the role of a

corporation can be in the wine business. In all honesty, except
for providing the financial resources, I find that wine is a
difficult product of a difficult industry for corporations to be
in. There is a tremendous amount of personal involvement at the

level of product and at the level of marketing. At the level of
product, it is very subjective. Corporations like to have big,
quality control departments. They take quality assurance as a
risk factor and then they cover it by having very strict, rigid
rules. Of course that is not possible in the wine business at
all.

When I first took over the Seagram wine business, Paul
Mas son, for example, had to submit their blends to the New York
lab for bottling. Now, that is a completely difficult thing for
a wine company to do.

Hicke: What would the lab do with them?

Huneeus: They were used to the whiskey blending system, indeed all of

these distilleries would send their blends in. There would be a
panel of tasters that would make sure that the product tasted
identical to the standard and authorize it. In wine, of course,
you can't do that. In the first place, the whiskey tasters know
nothing about wine. All they did was relate it to another sample
which was a year old anyway, so it was very different.

Hicke: That certainly seems unusual.

Huneeus: Yes, there were no real wine tasters. That is just an example of
how absolutely absurd this all is. The other thing that
corporations are very poor at is understanding the tremendous
fluctuations of the price of grapes and the price of, therefore,
the blend and the product. We had difficulty trying to have the
financial people of Seagram understand why our blends would
change, and why the cost of the blend would change. There would
be blend restrictions oriented at costing out the raw materials.
It just didn't work. Fortunately Edgar understood wine very
well, and he gave me total independence. We cut Paul Mas son and
the rest of the wine companies from the corporate quality control
syndrome and from the cost and all of that. He let us fly on our
own.

Going back to the corporate thing, one of the most important
business considerations in the wine business is inventorying very
high quality assets. These assets have an appreciation which is
the core of the interest the wine individual will be involved in
in the wine business.

Hicke: Are you talking about the grapes?

Huneeus: No. I am talking about land, and winery, and wine inventory.
These things do not show on a balance sheet, so these large
corporations don't see it. The fact that their vineyards have

Hicke:
Huneeus :
Hicke :
Huneeus i

Hicke:
Huneeus ;

increased in value and that their inventory is all of a sudden
worth 20 percent more than it used to be and all that—that
doesn't show on the balance sheet, so they don't care. They say,
"I am interested in return on investment, and my return on
investment"--these corporations are usually public, of course—
"has to be twenty times, or whatever, 20 percent." That doesn't
work in the business unless you factor in the valuation increases
of these assets.

There is a very big difference, which is even more
difference than the corporate versus an individual owner, and
that is the difference between an executive and an entrepreneur.
Corporations don't have entrepreneurs, they have executives.
Individual owners are either individual owners—and nuts, really
--or entrepreneurs of some sort. The difference between those
two people- -the executive is dedicated to a career, to a
profession. The entrepreneur is dedicated to a product. Usually
an entrepreneur cares much more about product and quality, and he
is passionate about the results of his company rather than his
own career. Obviously they want to do well and all of that, but
that is taken as a side effect of doing things well. The
entrepreneur will take risks which the executive cannot. The
entrepreneur will be much longer-term-oriented. The executive
has to perform in a very short window of time. He is evaluated
every year, or maybe even a shorter time. He has to deliver so
many cases, so many bags. He has to conform. It is not a
business for an executive. It is a business for an entrepreneur.

You have really been both.

I have been both, that is why I say that, [laughter]

You have a good perspective.

Yes. I found that to be a very important aspect of it. Somehow
or other the executive frame of mind is inadequate for a business
like the wine business.

Turning this around, let's look at some of these factors from the
entrepreneur's point of view. How did you deal with costs and
changes in values of assets?

The entrepreneur—that has more to do with the ownership. A
private owner may not do terribly well on a balance sheet. His
operational results may look rather unattractive, sometimes even
negative, but he knows that he has an inventory which has just
doubled in price, because the crop was short or whatever.
Therefore the price of the bulk wine or the grapes of next year's
harvest has gone up 30, 50, or 100 percent. It happens. This an

entrepreneur will factor in. He will show a negative balance
sheet and be the happiest guy in the world, because he knows he
just made a ton of money because the inventory or the value of
the vineyards went up. The company, the corporation can't do

that.

Another thing which is very typical is this: you have an
inventory, let's say today you have an inventory of Merlot. You
know Merlot is very short. You can either sell it all at ten
dollars a bottle today, or you can sell half of it at ten
dollars, or you can sell half of it, but at fifteen dollars a
bottle. Then you save the other half for next year and you sell,
probably at fifteen or twenty dollars a bottle.

An executive has to perform because he is committed to a
cash load commitment, and he is committed to a plan, and that is
what he is going to be evaluated on. The entrepreneur will say,
"To hell with my cash flow. To hell with my plan. I am going
save this inventory and sell it for a higher price, because I can
get it long term." It is a permanent position. The risk between
buying more barrels or less, French barrels or American, top
quality fruit or normal standard fruit — the difference in prices
for that little extra edge of quality is huge. It is a very big
risk. Executives have a hard time making that decision- -making
that extra expenditure. It is a passion that leads you to do it.
You finally say, "To hell with it. I will make less money, I
will take a risk." You do it. Sometimes it works, sometimes it
doesn't. If it doesn't you back off.

Hicke: It is a very interesting question. I was going to ask you this
later on, but since we are here now: I was looking at your
brochure and noticing that some of your wines are made with 80
percent French oak. Some are 100 percent American oak. Some are
other combinations of things. Some are half new. How do you go
about making those kinds of decisions?

Huneeus: That is a very pragmatic thing. We fall into these products by
experimentation and tasting. Mostly, I guess, it is testing.
Within the company, we have some winemakers who just love French
oak and others who are very fond of American oak. I am
personally biased in favor of American oak for red wines, because
I was brought up in Chile, of course, where American oak was the
standard of quality. Then we were exposed to very fine wines
from Rioja, which were also in American oak. Of course whiskey
is always in American oak. That flavor of American oak for me is
very important, apart from the fact that it is one-third the
price, which is very nice even for an entrepreneur, mind you. In
red wines I really like American oak.

For the Chardonnay, we are going more and more into French
oak, and most of our Chardonnays are in French oak, some 100
percent, some less. It is more that way. Of course our raters,
the people that rate wines—there are two or three that are very
important --and those like French oak; so we have to cater to
them, because we depend on their ratings a lot. They are very
biased toward French oak.

Hicke: There is a certain amount of prestige value in French oak, I
think, isn't there, aside from everything else?

Huneeus: I think so, mostly because of them. I don't think the consumer
really knows the difference or cares too much.

Hicke: You probably are of the avant-garde though; I think more and more
winemakers are going to American oak.

Huneeus: I think that we are all learning. It used to be that American
oak was basically whiskey barrels. Now they are making barrels
to our specifications which are very well made and which release
the flavor very much like French oak does.

Hicke: Do you have a special cooperage firm that you work with?

Huneeus: We work with about five really, French and American. The ones

that are doing a very good job with American oak are Independent
Stave and Dan Thomason. This business is not patented, so
whatever anybody does that works, they all do right away.

More on Concannon

Hicke: I wanted to get in the record—you formed this land company to
buy Noble and Concannon, that was Pacific Land and Viticulture,
Inc.?

Huneeus: Yes, quite a mouthful isn't it?
Hicke: Very descriptive.

Huneeus: My god, we were going to buy everything in sight then. That was
the company we founded.

Hicke: When you say we, who do you mean?

Huneeus: There were some Swiss investors. I didn't have the money at that
time.

Hicke: We talked about Concannon and then I think about the last thing
you said was the partnership split off, or Noble was sold to the
other partner and you kept—

Huneeus: That's right. After the term expired we decided to--I kept

Concannon as my--I had to compensate with money and things—and
they kept Noble.

Hicke: Why was that?

Huneeus: They were mostly interested in lands more than the operations of
a winery.

Hicke: They didn't want to make wine?

Huneeus: These foreign investors are more interested in asset base

vineyards, which is just vineyards. That is, assets and land.
The Concannon was much more of a risky operation, because it was
dependent much more on management --as any winery does—than land.
That is why they didn't want to be in that, and that was fine
with me.

Hicke: How much longer did you continue to operate?

Huneeus : I operated Concannon not very much longer because I was in the
process— Concannon did not have a winery. It was an old, old
winery and we were growing and doing quite well. So I set out
immediately to seek a financial partner that would contribute
money. IDV, which was the International Distillers and Vintners
of London, appeared as a possible partner. We started
negotiating and seeing how we could form a partnership. After a
while we came to the conclusion that there was really no way in
which a large corporation like them could partner with somebody
who had no extra capital like me, so they bought me out. I sold
to them. That was in 1983.

Hicke: Was it then you went to Souverain Cellars?

Huneeus: It was during that time; I had a vineyard and I was sort of
relaxing. I was having a wonderful time.

Hicke: Flying around?

Huneeus: Flying around, I was going back to school, I was back to music.
It was wonderful, one of the best periods of time. I had a
vineyard though. I had Mistral Vineyards, which was a nice
vineyard south of San Jose.

Hicke:

Mistral, as in the wind?

Huneeus: Yes, also as in the poet-laureate of Chile who is Gabriella

Mistral of Chile, a Nobel [Prize] winner. That vineyard--! spent
three mornings or four mornings running it and had a good time.

Souverain Cellars

Hunneus :

Hicke :

Then some friends asked me if I would look at Souverain, which
was in trouble. 1 did.

As I was looking at Souverain and giving them my report --
because I was doing some consulting here and there just between- -
the bank which had a big loan out to Souverain said, "While this
guy is looking at it and running it, we will keep the loan in,
but if not, we pull the loan." There was a tremendous pressure
that I stay there running the thing, which I did for about six
months . I put a package together and we were really going to
turn the thing around, but it was very difficult to deal with
those growers. There were cross motivations among themselves.
There was a group there that wanted to keep the winery. There
was another group that was very serious and just wanted a place
to put the grapes in. They couldn't get their act together, no
matter what. Then there were some not too terribly clear
dealings amongst them, which 1 didn't like. So all of a sudden I

said, "I am getting out of here."
over and that was it .

And I did and the bank took it

You said you had been going back to school,
anything to do with wine?

Did that have

Huneeus: No.

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IV FRANCISCAN ESTATE SELECTIONS, LTD.

Acquiring Part Ownership

Hicke: Then what did you do?

Huneeus : It was almost like a few days later that Peter Sichel called me
one day--we are very good friends with Peter--and said, "I have
some friends that have a problem." I guess it was sort of known
that I was around. "Would you please help them out?" I said,
"Of course not. I will have nothing to do with Franciscan." I
did have dinner with them [Peter Eckes and Peter Sichel] and they
asked me if I could look at it and help them put a package
together, which we did. After a few months I had explained to
them exactly why I thought that they had been very unsuccessful.
We did put a package together, but it was —

Hicke: Can I interrupt you and ask what exactly you mean by a package;
is this to the bank?

Huneeus: No, it was for sale. By package I mean you make your

presentation and you decide what you will sell and what you won't
and what the price is. There was a buyer for Franciscan. There
was an offer and the offer was really accepted by [Peter] Eckes.
Eckes was the German partner, but it had to be ratified by their
board. When the time came--that was about a week later—at the
board meeting, instead of saying, yes we will sell at this price
which is what we want, that was what they always wanted, they
called me and said, "You have identified the reasons why we have
lost money. Why don't you become our partner and we'll turn this
thing around?" So, voila, that is what happened.

Hicke: Let me go back and ask you, what were the problems at the winery?

Huneeus: Historically I attribute it to people problems. It had been very
misguided, the winery. They went for volume and for low price.

They went for up front spending. They had big organization, big
sales people, big everything, very poor management. The people
they had picked were just not the right people. There was no
direction to the company, no structure, no organization. It was
dramatic when I went in there. There was no process for decision
making of any important decisions.

Hicke: Was their goal just to make as much wine as possible?

Huneeus: I don't think there was any goal, just keep the thing going and
earn your salary, I suppose. These poor investors were in
Germany and they had been really- -the company was losing
something like two million the year I got in. It was really bad.
On the other hand, the premium wine business was doing great.
Napa Valley, in particular, was doing great, and what was most
outstanding is that this company had two of the best vineyards I
have ever seen. One in the heart of Oakville--240 acres—the
Oakville Estate. They had three vineyards in Alexander Valley,
which was another 240 acres. Wonderful vineyards.

[looks out the window] Oh, I see it's raining—terrible.
Hicke: Seems like we'll never come to the end of the rainy season!

Huneeus: This is a disaster for the grapes, terrible. We need spring, we
need heat, we need temperature, we need warmth, dry. We are
going to be doing Riesling, that's all.

Hicke: Probably the drought was not as hard on the —

Huneeus: No, the drought was not bad at all compared to this. This is
terrible. Hopefully it is only San Francisco.

Hicke: They said widely scattered, for whatever that is worth.

Huneeus: They did? Okay. In the inventory of wines that were in

Franciscan when I got there, there were some wonderful wines.
Whenever I tasted these wonderful wines, they came from
Franciscan's vineyards. But for some reason they were selling
the grapes of the good wines, and they were buying cheaper grapes
in order to maintain the cheaper price. They had such grapes for
example, that all of Silver Oak [Cellars], which used to belong
to the same owners as Franciscan, all Silver Oak was based on
Franciscan grapes, and the wines were done at Franciscan until
1986. Here was the same source of grape, the same winery, the
same winemakers, one being the most prestigious and the other you
couldn't get rid of. There was something very strange going on.

Ultimately I decided that, yes, I would accept being a
partner.

Changing Directions

Hunneus: I made a plan to eliminate everything that wasn't produced in our
own vineyards, to identify Franciscan with the Napa Valley;
therefore our Alexander Valley vineyards were separated into the
Estancia label, which we created then. Just being very serious
about the winemaking. And that sort of did it.

Hicke: You headed for premium wines?

Huneeus: Yes, definitely. You can't be anything else if you are in

Oakville. We have the best vineyards in Oakville, it is amazing,
the quality of these vineyards, and Alexander Valley too, and the
foothills. We have wonderful soils for Cabernet and Merlot. So
good indeed, for Cabernet and Merlot that I decided to take all
of the white wines out of Alexander Valley, although they are
great. I think that when you have properties that are grand in
Merlot and Cabernet, that's what they have to be dedicated to.
Chardonnay is much easier to find areas to grow it in, and
perhaps colder regions will ultimately be more renowned than the
warmer regions that are good for Bordeaux varietals.

Hicke: There was just an article in the last Wine Spectator to the
effect that Napa Valley's wineries are paying more and more
attention to the land. I don't know if you saw that or not.

Huneeus: Yes, Matt Kramer's article.

Hicke: Again it sounds like you were ahead of your time on that. Can
you tell me in more detail—with maybe a couple of examples—of
the problems that faced you, maybe the day-to-day challenges?

Huneeus : At Franciscan?

Hicke: Of turning this whole thing around.

Huneeus: There was really no sale franchise. In other words there was a
distributor network that didn't want to sell Franciscan, that
couldn't care less about selling Franciscan. There was nothing
in the sales area. In order to sell Franciscan, you had to go to
liquidators like Canned Foods or like—well, like some big
discount people and make deals with them. There was no ongoing
business when I got there. We had inventories. If I had to

apply the normal inventory parameters, we had inventories for
like ten or twelve years in the cellar. We had 1980 Cabernet
for--I think I calculated like for fifteen years at that rate
that it was selling. It was crazy.

That's when we took all of the Alexander Valley Cabernet and
named it Estancia. That worked immediately. That put inventory
in balance; within a year we were already in balance because of
it. We sold 20,000 cases the first year. We were doing probably
2,000 or 3,000 cases of Cabernet before that.

Hicke: You had to go through the whole process of designing a label and
marketing the label, choosing a name?

Huneeus : Yes. My niche was--rather than selling the grapes I would sell
the inventory and I would sell the wine, making a little bit of
money but trying to get the wine to consume all of my grapes .
That is why after '86 we didn't give our grapes anymore to
anybody else, including Silver Oak. We were utilizing them in
our own label, which absorbed it right away. We priced ourselves
very low.

One of the things that taught me--an interesting lesson—was
that the consumer immediately recognized the fact that we were
giving them a fantastic value in the Estancia Cabernet. It was
totally sold out from day one. Now, we released it—this is 1986
or 1987, nine years ago, Estancia— we released it at $36 [a case]
FOB to the distributor. Today it is probably about $70, so it
has doubled, and it is still sold out and it is still one of the
best red wine values in the country, I think. It is a very
quality Cabernet Sauvignon, which sells for about ten or eleven
dollars, very, very nice value.

Hicke: Did you have any restaurant business when you took over?
Huneeus: None at all. There was no on-premise business whatever.

One of the more difficult questions was, what do you do with
a name like Franciscan, which had really been trampled on? Do we
keep it or not? That was a very difficult decision, and I still
don't know whether I took the right course or the wrong one.
Today Franciscan is fine and has prestige and everything. But
would it have been easier to rename the winery? I don't know. I
took the middle of the road course, which was to develop another
brand, which is Estancia, so I did both things. That was a very
difficult thing. Franciscan had been very poorly imaged. They
sold wines at any price at all. The quality was all over the
place . There was no identification between product and winery
and the vineyard. It was just a confusing scene.

Hicke: How did you go about changing the image?

Huneeus: I guess ten years of good wines is what changed the image. It
was just the wines. There is an amazing network in the wine
business. I don't know how it works. The raters weren't as
important when we started, so I can't even say we got good
ratings and that was it. We did get good ratings, but at that
time ratings and Wine Spectator weren't what they are today.
There is a network; when there is a quality change, people know
right away. It is amazing. I would say that the change in
Franciscan was not one stroke of genius--"! did this and it
changed." No, it was just a permanent, constant preoccupation to
improve quality, improve image, improve people, improve
everything, packaging, everything, everything, everything.
Everything we did had to be improved on a permanent basis. There
was no reaching a goal; it was—and still is, by the way--

Huneeus: --it is just a permanent quest for more quality and more image.
Hicke: Sounds like an enormous job.

Huneeus: It was a job; it is a job still. I don't know what is easier, to
take something which is really low like Franciscan and raise it
to the level where it normally would have been anyway--for
Franciscan to be a high prestige entry in the Napa Valley
spectrum of wines is a nobrainer; that's where it should have
been all the time. It was mismanagement which took it down. It
wasn't fabulous management which took it up. Really. You have a
wonderful vineyard, you are in a wonderful area, your neighbors
are great marketers. It is much more complex to manage now a
group of estates like the ones we have, larger volumes, higher
prices. That is more of a challenge.

Hicke: Did you hire a new winemaker and or winemakers?

Huneeus: Yes, that was one of the first things I did: hire a winemaker,
Greg Upton, who had worked with me at Concannon. He was the
number two at Concannon and I took him immediately as number one
at Franciscan. He was very young when I hired him at Concannon,
just out of college. He was trained by Sergio Traverse, who is a
very strict, Bordelais type of winemaker. Greg turned out very
well. He was very dedicated, just did things right. Again, when
you have the kind of grapes that we have, it didn't take any
genius to — it is much more of a merit, I suppose, to take bad
grapes and turn them into good wine. Here we took great grapes
and made them into great wines, and that was what we did. That
was what turned Franciscan around.

Hicke :

Huneeus :

How long did it take, do you think?
now.

You are in pretty good shape

I would say that it has been a steady increase from the year '85,
in which I took it over, to the year '95, in which we find
ourselves. I am not content at all where we are. We are going
to continue our escalation of quality and research and prestige.
We are not going to say, "Hah, we made it."

Estates of the Present Franciscan Winery

Hicke: Can we go through your different estates and talk a little bit
about the character of each one, starting with Oakville?

Huneeus: Yes. Oakville is the one behind the Franciscan label. In other
words, Franciscan is only Oakville Estate. That estate is a
beautiful core of Napa Valley. It is right next to where now
Opus One is situated. We are neighbors of Opus One. (My god,
look at that rain!) Beaulieu's reserves come from there. It is
a very wonderful area for growing. Groth [Vineyards & Winery] is
my neighbor also, Swanson [Vineyards & Winery] now, and the
Gamble Ranch. Oakville has proven itself to be a wonderful
source of red Bordeaux grapes.

One of the products that first caught on in Franciscan was
its Merlot, much before the Merlot craze in which we find
ourselves. That was the easiest product for us to sell from day
one.

Hicke: How do you account for that?

Huneeus: I think that estate is really particularly good for Merlot. It
is a very mellow Merlot, but yet it has a lot of power to it,
mouth feel. Still today it is the easiest product for us to
sell, the Merlot. Our Meritage wine, the Magnificat, is very
Merlot oriented. It has a high Merlot percent. Right now we
have had to replant most of it, and we are about 60 percent
through the replanting.

Hicke: Phylloxera?

Huneeus: Yes, phylloxera—and floods, by the way, this year.

Hicke: Are you replanting with the same Merlot?

Huneeus: We have reduced again--my same sort of mental thing is we have
reduced the Chardonnay. It is Cabernet franc, Merlot, and
Cabernet Sauvignon in inverse order.

Hicke: What kind of rootstock are you on now?

Huneeus: Well, there is such a variety of these things now. I don't even
know the numbers. They are all numbers--5CC, 110R, and this and
that and the other. I don't pretend to identify each. But there
is an evolving and developing science or technique of adopting
the right rootstock for the right soil. We are experimenting
with that, like everybody else. That is the Oakville Estate. I
think it will be dedicated ultimately 100 percent to red grapes,
as all of Oakville and Rutherford should be. I think that it
will be very Merlot oriented. That should grow, when we have it
totally replanted, to about eighty to ninety thousand cases.

Then we have Estancia in Alexander Valley which is, again,
three ranches really, total 240 acres. Also has had to be
renewed practically in its totality. We are about 70 percent
through there; also dedicated to Cabernet Sauvignon, Merlot, and
Cabernet franc. In this particular case, Alexander Valley, I
think it is more Cabernet Sauvignon--! know it is. I think the
Cabernet Sauvignon of Alexander Valley is a very special product.
It is very lush and generous and easy to drink pretty early, very
fruity, and people love it. The Merlot is also wonderful, but it
is perhaps even too mellow in my opinion. It doesn't have the
backbone of the Oakville.

I am personally a great believer in Cabernet franc. I like
what it does both to the Merlot and the Cabernet Sauvignon. It
has a different set of perfume components and flavor. It is just
a wonderful blender. It does very well in Alexander Valley.

Hicke: Have you tried making that a varietal?
Huneeus: We haven't come out with one yet, we may.
Hicke: Are you thinking about it or trying it out?

Huneeus: We are thinking about it. The problem is that right now we have
three red wines in Estancia- -the Cabernet Sauvignon, the Merlot,
and the Meritage. Now, if we were to bring out a Cabernet Franc
on top of it, we would have four, but we wouldn't have more
grapes. We would just divide the same amount of grapes into four
labels instead of three.

Hicke :

Yes, I see.

Hunneus : Then we went to Monterey with our white wines .
Hi eke: This was Estancia also?

Huneeus: Yes, Estancia in Monterey. There we have two ranches really, one
which is in Arroyo Seco and one which is the Pinnacles Ranch. It
is in the foothills of the Gavilan mountains.

Hicke: Where that Pinnacles State Park is?

Huneeus: Yes. Anyway, we are dedicating that to Pinot Noir and to white
wines, to Chardonnay. It is a wonderful Chardonnay area. It is
cool, it is very shy growth- -we get four to five tons at the
most. Very good quality, we like the fruit from that area. I
think it is going to be an upcoming and very prestigious area.
It certainly does the Chardonnay style that we wanted to make . A
little more Burgundian style, less of the very fat Chardonnays of
the north.

Hicke: California style.

Huneeus: Yes. We are very happy with that. That is where all of our
Estancia Chardonnay comes from.

Hicke: You must have acquired that property after you took over?
Huneeus: Yes, we acquired that property.

Hicke: How did you happen to do that? Were you looking, or did you just
come across it?

Huneeus: I was looking for—when I pulled out all of the Chardonnay from
the North Coast, I knew I had to go somewhere with my
Chardonnays, and that was what we found. We found this property,
which used to belong to Paul Masson, so I knew it from my prior
life.

Hicke: But you didn't buy it from Paul Masson?

Huneeus: No, because by then Paul Masson had been sold. I bought it from
Vintners International. We redid the property in its totality.
My partner in that purchase is Howard Tugel, who is our vineyard
manager.

Hicke: When you say you redid it, does that mean you pulled up
everything and replanted?

Huneeus: Yes, almost 100 percent. There still is some old Chardonnay and
some old Pinot Noir, but it was really poorly planted, and bad

clones. By the way, we have also been incorporating rootstock,
resistant rootstock, which Monterey didn't have. We are redoing
that property as we do all of the others. That one is two-thirds
done. We are now putting up a winery there, as we speak.

Hicke: Really, tasting and all?

Huneeus: No, it is just a winery. It is not in the area where you are
going to have a lot of tourism. No tourism at all, in fact.

Hicke: The wines are now made at Franciscan in the Napa Valley?

Huneeus: Yes.

Hicke: Is that true of Alexander Valley also?

Huneeus: All the red wines are now done in Oakville, in our Oakville

facilities, in the Franciscan winery. All of the whites now are
going to be done in Monterey.

Hicke: I see. Mount Veeder--do you still have that?

Huneeus: Yes, that was an acquisition. We wanted to find products that

were different. Definitely found that Mount Veeder--the mountain
fruit of Napa Valley is different. It is called Cabernet, but it
is a very different product. Here is really a terroir kind of
move. We love the possibility of having a very high end product,
top quality California Cabernet. We bought that and we bought it
in 1989.

We had a hard time at first, because the inventory we bought
was very high in tannin, which is because the fruit of Mount
Veeder is very, very tannic, pretty powerful fruit. In 1990 we
already had control of the vineyards. We were really able to do
a good job of running the vineyards, and blending right, and
taming those tannins. It was the highest-rated California
Cabernet, so it put that on the map.

Hicke: What was it when you bought it?
Huneeus: It was Cabernet but it was —
Hicke: I mean, did it belong to a winery?

Huneeus: No, it was a couple there, the Mathiesons, who loved to make wine
but didn't really have too much of a marketing inclination. One
of these people that fall in love with the sight and the idea of
making wines. Making wines is one thing, it is very easy.
Selling it is another story.

Hicke: Could you sell it?

Huneeus: We were fortunate to inherit quite an inventory. We sold it all
off. But it wasn't until the nineties, which was our first
product, when it hit the market, that people didn't open their
eyes and say, "Hah, Mount Veeder." Of course, Hess, our
neighbor, has done a good job. I think that between us we have
taken Mount Veeder to a very prestigious level within Napa.
Mount Veeder, later after we bought it, was approved as a
viticultural area.

Hicke: How does the Mount Veeder Cabernet differ from the valley
Cabernet?

Huneeus : It is a much more concentrated product . The spectrum of flavors
are totally different. They are both called Cabernet, and they
both come, I suppose, from the same family of grapes, but it is a
proof to me that there is a great deal of difference between one
Cabernet and another, depending on where you grow it. These are
older vines, and they are very, very low yield. The tannin
content, if you don't really manage it well, can be overwhelming.
One really has to produce the fruit in the right way, and [do
the] maceration the right way. Everything is difficult in this
area. It is a more difficult product, it is a much longer living
product, I think. Very different in flavors.

Hicke: What happened to the tannic wines that were in the inventory when
you got it?

Huneeus: They have all been sold out. Some people love the high tannin.
There is always a consumer there for you. They were good wines,
but very high in tannin.

Estates in Chile

Hicke: Then there were two in Chile, do you still have those- -Caliterra
and Errazuriz?

Huneeus: No. A few years ago we identified Chile as a source of good
wines and very good values and interesting to explore, and we
wanted to participate in this rebirth of Chile. We developed a
brand, which was Caliterra, in a joint venture with a winery
called Errazuriz. We worked with them for a year or so. Then we
bought 50 percent of the Errazuriz winery, so it all became 50
percent ours . After a few years we parted company with our
partners of Errazuriz. We sold it back to them. The reason was

that they needed to grow. They are a Chilean family, of course.
This was their source of income. They wanted to grow and take
advantage of the market growth in a more aggressive way than I
felt comfortable with. We sold our part, but we kept marketing
rights to the United States. We still market Caliterra and
Errazuriz.

With the funds that we had taken to Chile, we invested in a
new area, which is called Casablanca. We planted vineyards there
which are just coming of age now. We are putting up a winery in
Chile right now.

Hicke: You are developing a label?

Huneeus: We are going to develop a label, yes.

Hicke: What kind of wines?

Huneeus: That is Chardonnay and Merlot right now.

Hicke: It seems like a combination that doesn't go together on the same
land, but maybe- -

Huneeus: This is a new area so we are testing. We have Cabernet, Merlot,
Chardonnay, and Sauvignon Blanc. Sauvignon Blanc is wonderful in
this particular area, but who cares? Nobody cares about
Sauvignon Blanc in this country anyway.

Hicke: Is that right?

Huneeus: Yes, it doesn't sell. It is not a product that excites anybody,
no matter how good it is. We are concentrating on the
Chardonnay. The Chardonnay is very good. Because it is a colder
area, it is sort of a Carneros-like region. My personal thinking
is that Merlot will do very well in that area, because it is
cooler than the central valley of Chile, where the Cabernet and
Merlot are being grown now. In my experience, Merlot wants a
little cooler climate than Cabernet.

Hicke: How about Pinot Noir?

Huneeus: Yes, Pinot Noir would probably do excellently in this property.
Then again, it is another "Who cares?" kind of product. Maybe
not anymore. Pinot Noir is certainly coming of age now, it
seems. This last year it has taken off.

Hicke: Just in the last year?

Huneeus: Yes. Pinot Noir up to now it has been a real—people were

pulling it out, particularly in the Napa Valley there is no Pinot
Noir anymore.

Hicke: Carneros--

Huneeus: In Carneros there is, for champagne. In Rutherford and Oakville,
it was pulled out. In Monterey, it has been pulled out. It was
very cheap up to now.

Hicke: It seems like a very difficult grape to handle.

Huneeus: And it is a very difficult wine to market. It doesn't have a

ready consumer like Merlot or even Cabernet. Zinfandel today is
incredibly high.

Hicke: What kinds of problems does viticulture in Chile present? I

could have asked you this last time from your early days, but now
perhaps you can contrast that with viticulture in California.
For instance, do you have phylloxera there?

Huneeus: Growing grapes in Chile is much easier than growing them here.
There is no phylloxera, there are a lot less plants, there is
plenty of water. I think the difficulty in Chile is more—if you
really want to get very refined, it is difficult to find that
kind of labor and that kind of management.

Hicke: Do you mean professional management?

Huneeus : Yes .

Hicke: What kind of labor?

Huneeus: Dedicated people who really want to do a good job and want to

take pride in what they do. I find it easier to achieve a higher
level of quality work here than in Chile right now. The big
difficulty in Chile right now is the dollar, because the dollar
is devalued so we are getting much less for our grapes then we
used to, much less pesos.

Quint essa - Rutherford

Hicke: I have also a note that you acquired Quintessa - Rutherford.

Huneeus: Yes. Quintessa is a very interesting property. I was telling
you about Mistral Vineyards south of San Jose--it is in Gilroy,

actually. We sold that because we decided—with my wife Valeria
--that we didn't want to have one vineyard in the south and the
rest of our operation in the north, because we never meet. We
decided let's sell that and let's look for something up there,
which can also be somehow integrated into our operations.
Mistral was all sold to Concannon, all the grapes. She started
looking- -because she runs tjie vineyard.

Hicke: That is her operation, then.

Huneeus: She started looking and we didn't find anything in the Napa
Valley or Sonoma that we could be comfortable with, either
because it was the wrong varieties and the wrong soil, or because
it was phylloxera-prone--on A X R. All of the vineyards that we
saw were really pull-outs. Then we made up our minds to say,
"Let's just buy land and plant."

She started looking for open ground and then she fell into
this property which is quite remarkable. It is 280 acres on
Silverado Trail, actually west of Silverado between Conn Creek
Road and Zinfandel Lane. It is a property that had never been
planted to vineyard, which is remarkable because there is no such
thing in the Napa Valley. It is all in one piece, and it is
very, very beautiful. It is all rolling hills, it is not flat.
It has a wonderful twenty-acre lake in it. We fell terribly in
love with this—she did mostly—and bought it. Bought it with my
partners, again.

Then she proceeded to- -this was probably the first vineyard
that was developed 100 percent after the phylloxera. So there
were a lot of new things incorporated into the concept. First of
all, the rootstock selection and adapting it to the soil. You
are going to ask what rootstock, but I am not going to give you a
recitation of all of them.

Hicke: It is a variety, right?

Huneeus: It is a variety. The other thing which has happened is that we
are getting a little more recognizing of clones in Napa Valley.
We have three or four clones of different Merlots and different
Cabernets and different Cabernet francs. Then we have, in
Quint essa, about five different climate zones and about four
different types of soil, so it is a very, very interesting
vineyard in respect to the production we get and what we can do
with the wines. It is a fascinating vineyard really.

Hicke: Have you planted experimental plots?

Huneeus :

Hicke:
Huneeus :
Hicke:
Huneeus :

Huneeus :
Hicke:

We planted the whole thing; I suppose it is all a little bit
experimental but hopefully 90 percent is going to be okay. We
have already two harvests from it, because it was planted in
1990, I guess it was. We had a '93 harvest and a '94 harvest.
It has proven to be the best property we have. One shouldn't say
that, but definitely I think that the wines that are going to
come from this property are very unique. That is the next stage.
That we are going to be releasing next year.

Is that under its own label?

Quintessa, yes.

It is going to be Cabernet and Chardonnay?

I think that the top wine would be a blend of whatever the
winemakers come up with, a Heritage wine. There will probably be
a Cabernet Sauvignon from one of the blocks that they seem to
think is very, very unique. There will be a Cabernet Franc and a
Merlot, each from different blocks.

How interesting!

Yes. I am looking forward to that one for sure,
wonderful vineyard.

That is a

Appellations

Hicke: Speaking of Rutherford, let me just ask you about appellations.
Have you been involved in that discussion? I'm thinking, of
course, about the Rutherford Bench appellation.

Hunneus: Yes, very much so. We were very much involved by the way, in the
Rutherford and the Oakville appellation. We were very much
involved in the controversy of whether there should or should not
be a Rutherford Bench appellation. We were against the concept
of a Rutherford Bench, mostly because there is no Rutherford
Bench, there is no bench. Bench being a geographical formation
that we don't have, we thought it was silly to call ourselves the
Rutherford Bench.

Hicke: How did that get started then?

Hunneus: I don't know. Apparently it was started because a group of guys
used to go hunting, and they used to call an area of Rutherford
in the mountains Rutherford Bench, and that's where they used to

hunt. That is how it got started, so we fought that. Of course
we won. The group that said there is no Rutherford Bench won.
The Rutherford bench was eliminated, and now there is a
Rutherford and there is an Oakville [appellation] . We have
Oakville Estate in Oakville, and we have Quintessa in Rutherford,
so we are part of both appellations . We are part of Mount Veeder
appellation, and of course we are part of Alexander Valley
appellation, and part of Monterey. We have more groups that we
go to, let me tell you.

Hicke: They each have their own associations.

Hunneus: Right, and we all pretend to be different and market ourselves as
different, and whatever.

Hicke: You meet yourself coming and going?

Hunneus: Yes, it is really a little too much right now. We start with the
Wine Institute. We have the Napa Valley Vintners. Then we have
the Monterey Vintners, then we have Alexander Valley Growers,
then we have the Oakville appellation, we have the Rutherford
appellation and the Mount Veeder appellation, and the Monterey
appellation.

Hicke: What do you think of the division into smaller and smaller
appellations? Is that helpful to a winemaker and marketer?

Hunneus: I strongly believe in the identification of terroir. I think

that should be much more important. Terrolr should be much more
important than variety in getting to know the wine. Carneros is
more important than it being a Chardonnay, because Chardonnays
can be from Carneros or they can be from Fresno and they are a
totally different product, so I think in that case, the location
is very important. Unfortunately the way the appellation system
works in our country is that it is political, and it doesn't mean
much. I don't think Napa Valley means much in terms of
appellation. By appellation I mean it doesn't mean a lot in what
it tells a consumer about what the wine tastes like.

Hicke: How could winemakers make better use of the appellation system?

Hunneus: I think that these groups that we have been talking about, like
the Rutherford group and the Oakville group, could start
delimiting a little bit the styles and the varietals protected by
each appellation group. For example, to give you an absurd
example that no one will argue with, I would say that within the
Rutherford appellation group, we should say that we are going to
protect under our name the Cabernet, the Merlot, this and that
and the other, but we will not, for example, protect Riesling or

French Columbard. They can call themselves Rutherford, but they
don't form part of this. I am telling you something that nobody
argues with, but I would go much further than that and I would
say that there should not be a Rutherford Chardonnay, because it
doesn't mean anything. It does fine but it doesn't mean
anything. There is no difference at all. There is nothing
special about a Rutherford Chardonnay. Like that, I think that
each appellation- -Monterey or Arroyo Seco for example, should not
protect Cabernet, I don't think, or maybe it should- -but I think
it is too cold. There is a tendency for Cabernet to be too
grassy.

Hicke: How would you educate the consumers to understand this kind of
thing?

Hunneus: Educating the consumer in the wine business is the key. I think
that the consumer educates himself very quickly. That is the
network I was telling you about. How was the consumer educated
to know that Carneros is very good for Chardonnay? I don't know
how it was, but it was. There was no educational campaign. How
is it that the consumer is coming to recognize Mount Veeder as a
special area? There is a network. There is a word of mouth,
right now it is--

Hicke: You were just saying there is a lot of talk on the Net.
Huneeus: Have you seen that? It is full of wineries and things.

Hicke: You told me that CompuServe has that. We have CompuServe but I
haven't figured out how to get into it.

Huneeus: I don't know how to get into it either. CompuServe has the

Bacchus Wine Forum. That is fun. I go into that once a week and
check out what people are talking about; it is fun. But Internet
has another monstrous thing. They tell me that 200,000 people go
into the wine part — what is it, a week or a day? Anyway, it is a
huge number of people. That should be fun for them. That is the
kind of network that exists.

Hicke: So, what you are saying is that it is really not a marketing or
advertising service?

Huneeus: No. The premium wine business does not communicate through

media, period. That is a fact of life. We communicate through
the network and the network includes us, our sales people, the
distributor, their sales people, then the retailers and

restaurateurs and their sales people.
the consumer.

That is the way we get to

Marketing to Restaurants

Hicke: Are restaurants—we started talking about this before—considered
as a special category in marketing — require a special approach?
1 guess my question is: how do you get situated in a restaurant?

Huneeus: It's one of the marketing difficulties. We are in an

overcompetitive market. For every slot in a shelf, in a wine
list, or in a store, there are probably 2,000 competitors. You
have to be a little more clever than most, and I think we do
better at some things. Restaurants are special in the way you
market to them, and of course it depends on what level a
restaurant it is. Some restaurants won't touch you if you are a
well-known brand, because they want to have exquisite little
things that they discover. Others will not touch you if you are
something small, because they want you to be there all year long
with no risk of running out. Each restaurant is a different
story, and they are all prima donnas.

Hicke: Sounds like a challenge.

Huneeus: It is the most important part of our business in terms of
communication and image.

Hicke: I guess the key there is educating the person who orders the
wine.

Huneeus: Yes, that is the key.

Hicke: How do you go about doing that?

Huneeus: Our sales people do that a lot. That is their missionary work,
we call it. We invite people to the winery. We invite
restaurants and their staff to the winery, and we send them our
newsletter, every way.

Trellis ine and Canopy Management

Hicke: I would like to go back a little bit to talk about the vineyard,
There are some things I want to ask you about—trellising and

canopy management. What is going on there?
different for the different estates?

Are your ideas

Huneeus : Yes. Trellising is really a function of what you want to achieve
with the grapes. Trellising is a way to balance crop and leaves.
That is basically what it is. In most of our vineyards, we don't
go for volume; so we use a very simple vertical trellis. We
don't use the double styles that are abundant now in Napa, the
Geneva double curtain or the V or anything like that. We just
have one cordon and we have, usually, higher density. We are
doing about 1,400 plants per acre, which is pretty high density.
Cordon—we usually do a single cordon, rather than the double
cordon. We try to keep the manipulation of this whole thing to a
minimum .

We, five years ago or more, were going crazy with stripping
the vine of the leaves that would shade the fruit. Now we have
come back a little bit. We try to shade partially. We are not
fanatic about exposing the fruit to the sun, as I hear a lot of
people talking about. We do a lot of leaf pulling in this time
of year. We thin a lot also in this — right after bloom we try to
do that. We maintain our yields at a level which we determine
seems to be the optimum. Nobody knows that, by the way. That is
the most difficult thing in the world to ascertain- -what yield
the vine wants to grow the best wine at—very difficult. We do a
lot of work on that. It is mostly subjective. That is why
Valeria does a very good job with Quintessa, because she has very
close contact with those vines.

Hicke: I remember a year or two back we were driving around France and
all of the tops of the vineyards were sheared off along a level
line. We couldn't figure out what was going on. I guess it was
summer pruning.

Huneeus: They do that a lot. They call it hedging.

We don't do that here. The problems of French viticulture
and the problems of California are almost opposite. The French
are always short of sun and they are always afraid of rot. Those
are the two big things in France. We, on the contrary, have too
much sun, and it is very dry; so rot, except for this year, is
not a factor, not as serious a factor.

We have a different set of problems, which is vigor,
perhaps, because of our soil conditions and our water supply and
every thing- -vigor is what we have to worry about. That goes
against quality. For example, if the French over crop- -the
French are very clear in this relationship between yield and
quality, and it has to do with sun. A certain number of heat

Hicke:
Hunneus :

days will mature a certain number of grapes . If you have more
grapes than those, then you really don't mature those grapes.
The whole problem with a bad year in France, or an over crop in
France, is that those grapes don't get the sugars or the maturity
they want. Here we can mature lots of grapes. If we were to
guide ourselves by that French concept — that whatever you can
mature well is the optimum yield—we would be heavier in yields.

We don't copy the French anymore. We don't hedge as much,
because when you hedge, you develop secondary shoot growth a lot.
We try to keep our vines growing vertical, in order to avoid
shade, or over shade. We don't want too many leaves either,
because we have come to the conclusion that when you have more
than twelve to fifteen leaves in one shoot, you start getting
vegetative character back into the grape for some reason. You
want to keep a very strict balance between the number of leaves
and the number of grapes. That is what the whole trellising
system is about. All of this is amazing. Every day we learn
that it is so undeveloped yet.

California doesn't have several centuries of wine growing.

No. That article by Kramer1 is very apropos, because what is
happening in California is the appreciation that not all
territories, not all properties are adequate for all varieties.
There is now a sort of definition of what kind of climate, what
kind of soil you want for that kind of style. It is beginning,
but we're very far from definitions yet. The replanting of the
vineyards in this generation is going to produce an incredible
improvement in quality of Napa Valley, Napa and Sonoma, an
incredible improvement. We are looking at a completely different
decade coming of quality wines, scary. Scary because it is going
to be much more difficult than it was before to have the edge on
quality. To be a little better than the others is going to be
more difficult, because everybody is better now. What are we
going to do for improvement? I don't know.
[Interview 3: August 10, 1995] II

Trimming Vines at Quint essa

Hicke: Let's just pick up on a few things that we were talking about

here a minute ago, and that is about Quintessa. I'm interested
in the fact that the vines are being sheared, as we talked about.
Can you tell me a little bit about that and about the person from
Bordeaux who was over here?

'"The Resurrection of Napa Valley," (see Appendix A).

Huneeus: Okay. I have seen this year, for the first time, almost

extensively in Napa, this — it's not shear; we call it something
else- -trimming. Highly trimmed vines, very much like the
Bordelaise did and do. It coincides with what we have decided to
do at Quintessa. What we've been striving for a long time is to
reduce the shade on the fruit and the shade on leaves. We don't
want shaded leaves in the vineyard, so we've been figuring out
how to do that, and we came to the conclusion this year that we
wanted to keep them very trimmed. We found a very interesting
machine that does this from France.

So you saw it in our vineyards, but the curious thing is
that the same thing happened to a lot of vineyards. I'm seeing
this all over the place, and we have never sat down and said,
"Well, let's keep our vines trimmed." It's just, we've all
arrived at the conclusion together, for some reason or other. So
yes, they look prettier, don't they? [laughter]

Hicke: That's a side effect, I guess.

Huneeus: We'll see if the wines are better later on. But they are very
pretty, and the machine does wonderfully well.

Hicke: Yes.

Jacques Boissenot

Huneeus: The visit of Jacques Boissenot was of very big importance to us.
He is one of France's most renowned enologists, and he, among
other clients, for example, has Chateau Lafite, plus a hundred
others, he told me. He said he had about a hundred chateaus that
are his clients, apart from Antinori, for example, in Italy, and
most of my friends in Chile. So now we are his California
client.

He adds quite an interesting dimension to our winemaking
team. The French are much more dedicated to blending than we
are, they're more dedicated to what they call finesse or elegance
in wines; we're more dedicated to finding strength and richness
and power. So it's interesting to compare notes with him.

Then he is very much into terroir, finding the differences
between different areas. We don't even deal with that in this
country yet, much. When he speaks of terroir, he's talking about
little areas within a vineyard. When we speak of terroir, we
speak of Napa Valley or Carneros or very big districts.

Hicke: For instance, you were telling me that there are at least five
different blocks in Quintessa.

Huneeus: There are five different terroirs in Quintessa, yes. And it's a
combination of soil type, climate, and of course then everything
else that you do in the vineyard affects it--the varietal, the
rootstock, irrigation, everything does influence.

Hicke: And you indicated that you're going to keep these blocks separate
for at least a while, to make some wines.

Huneeus: We harvest everything separately, and for the foreseeable future,
every block is kept separate. Then the winemaker will probably
decide that our best wine is going to be a blend. That's what
Boissenot is going to do for sure. They are into blending. And
he would like to blend the different styles of wine that come
from different terroirs, different blocks, and also different
varieties.

Valeria Huneeus

Hicke: It must be complicated to keep track. Since we're on Quintessa,
would you tell me about Valeria Huneeus and a little bit about
her background? She's management, the head of everything at
Quintessa?

Huneeus: She is. Quintessa is her project, and it came about because we
used to have another vineyard in south San Jose, Mistral
Vineyards, which was close to Gilroy. She used to run that for
me--for us, actually. Then when I started coming to Franciscan
in '85, she started going south, so it was geographically getting
farther apart. So we decided, Let's sell the south and find a
vineyard up here. And she did that. We didn't find a vineyard,
because all the vineyards here were replanting projects,
basically, because of phylloxera and because of the lack of
adaptation between the soil and the varietal. Everything here
was planted without thought of this adaptation; it didn't make
any difference, that was Davis [professors] of that time, they
told them that it grows there so it's good.

So she found this property, and this was unplanted. It was
virgin territory, had never been planted with grapes. Probably
the last one in this area. So she put the whole project together
and planted. She has a scientific background; she's a Ph.D. in
microbiology and nutrition, and before that, she had studied

agriculture and enology in Chile. So her background was very
adequate, and she's very meticulous in terms of management.

The advantage of Valeria over our typical farm manager is
that she is very dedicated to the detail, and of course, when
you're dealing with this level of quality, you're dealing with
absolute detail, absolute detail. You can't just farm the place
in a general way. Every vine has to be spoken to, and she does.

Hicke: Does she keep records on a computer somehow?
different blocks?

Does she track the

Huneeus: No, no. Well, we track the productivity of each block, and as
harvest approaches, she of course keeps track of all of the
numbers. No, but it's a very personal, subjective thing. For
her, it would be like putting your children's progress on a
computer. She doesn't need to do that. She is so much on top of
it that she doesn't need that. She really keeps track of
everything. If there are three vines that are not performing,
she'll take care of those three vines. Very detail-minded, which
I think is the way to go.

Hicke: I think her background in nutrition is interesting, too, in view
of all the pairings of food and wine and the health concerns and
so forth. Does she do anything along those lines?

Huneeus: She did a lot of research. She did her Ph.D. and her research
projects were all on cholesterol metabolism, very highly
sophisticated stuff. Not food; food had nothing to do with it.
It's very medical, really. She worked at the Veterans
Administration and UC San Francisco.

Tannins

Hicke: There was one other thing you told me that M. Boissenot talked
about, and that was the tannins, the difference in the tannins.

Huneeus: Yes. I think that one of the things that he remarked on was that
we were much heavier on tannins than they would like for the
French. We have to understand that he's coming from Bordeaux,
and Bordeaux has a completely different set of problems. They
have much less powerful wines. So for them, tannins like ours
would really stand out. We cover tannins a lot because of the
power of our wines, concentration, and so forth. So according to
him, we tend to harvest with greener tannins than they would
accept. He finds in general that California wines are too

tannic. So he's helping us work on how to reduce that tannin,
and we ' re going to test all this before we put it into general
practice.

But tannins could possibly be a way to improve California
wines, 1 mean eliminating or maturing tannins a little further.
His whole concept is that we harvest much too much depending on
the sugar content of the grape. He says that the sugar content
and the tannin maturity don't necessarily match, so we should
look more at the tannin maturity itself.

Hicke: Can you test that some way?

Huneeus: Maybe you can, but that's not what he was saying. He talks about
flavor.

Hicke: You taste the grape?
Huneeus: Yes, just taste it.

Hicke: And is he going to be advising you several days a year, on a
regular basis?

Huneeus: Yes, he's going to be coming—for the time being we've said two
periods of time a year. One is right now, before harvest, and
sort of preparing the process of what we're going to do, and
tasting year-old wines. And the other is about three months
after harvest, when we're doing our first sort of selection of
wines. I think it's going to be a very interesting addition to
our thing, anyway.

James Laube; Maker of Wine Industry History

Hicke: To switch gears here: as I walked in, you introduced me to Jim
Laube, who was just walking out, and you said he's making
history. Can you tell me a little bit about that?

Huneeus: Yes. I think that in the last, let's say ten years, or maybe a
little more, there has been a fundamental change in the way we
look at wines and the way the consumer looks at wines, the way
wines are sold, and it is related to the importance that these
ratings that the [Wine] Spectator and [Robert] Parker have are
being looked at. I think that today every winemaker is dependent
to the greatest possible—to an absurd extent, perhaps— on the
ratings of the Wine Spectator and Robert Parker for commercial
success. Therefore, they very, very much try to please those two

palates, which makes those two palates and whatever they like
extremely influential in winemaking.

I think that one of the things that this means is that Jim
Laube's direction has become the winemaker's direction, which is
good because Jim has a very good palate, but it's dangerous
because it scares everybody from being very diverse.

But there are a couple of wonderful things that have
happened with these rating systems. [laughter] The most
important is that he has shattered many myths. It used to be
that if you established a reputation, you could really have
terrible wines out there selling very expensive, and because of
that reputation and the people's insecurity in their palate, you
could get away with it. We used to taste hare, we habitually
taste competition [wines). I would say that up to five years
ago, there was not one tasting of high-end wines which didn't
have one or two bottles that you'd say, "How can they possibly do
this to the consumer?" I'm talking about expensive wines.

I think that today, nobody can rest on their laurels,
because they taste and they'll give you the rating based on that
particular bottle, not on the history of the winery; if you're
not good that year, you're in trouble. So people are much more
careful about releasing a wine which is not up to their
standards. That has been a very positive thing.

Another very positive thing is that Jim has destroyed the
relationship that people think exists between price and quality.
If one were to study the ratings of the Spectator, or Parker,
there would be no correlation between the ratings and the prices.
It is not necessarily that higher priced wines get better
ratings. Now, this is something which is very slow to sink in,
but I think that this is an important advancement, because
pricing in this country is not a matter of the quality of the
wine, it's a matter of the marketing strategy. Jim has shown
that to be—it's a little bit like the emperor's clothing.

Hicke: That's fascinating. But you know what that means for the

consumer? It means buying wine is a completely different thing
from buying anything else. If you're buying furniture, for
instance, you expect to get what you pay for.

Huneeus: I think that wine is different. It's much more subjective, much
more subjective.

Hicke: Right. So consumers have to learn how--

Huneeus: Yes, what they like. And if you are unfortunate enough to like
the Christian Moueix Merlot better than mine, then you're going
to have to pay $400 for a bottle, instead of $10 that you can pay
for mine, or $12. So that's a matter of your personal taste. I
would never agree that [Chateau] Petrus is better than my Merlot;
I prefer mine any day. But enough people prefer his to pay that
kind of a price. But that's what's being shattered, you see.

Hicke: Yes. That is interesting.

Huneeus : There is that aspect of wine marketing which 1 think is going to
fall by the wayside. I think that we're all going to be finding
that it isn't true that these big names are better than the other
ones always. Maybe sometimes, maybe more times than not, but no,
we have to make our way every single year now. And in that
sense, I think that Jim has influenced our industry in those
aspects very positively, and in one very negatively, maybe, which
is the diversity issue. But influence he does have. So I think
he deserves a very important position in the history of our
winemaking .

Hicke: Also, what you're saying means that those ratings are going to be
even more looked at and listened to, because if price is not a
factor, and every year is different, how does a consumer walk in
and buy a bottle of wine? Assuming they can't taste it.

Huneeus: Well, traditionally, of course, that is the role of the wine

merchant. That's why they exist, that's why they're important.
That's why throughout history, they've been so important, because
there's always a sea of wine to choose from, and there's also
always a big diversity of consumer needs and likes. So it's been
the role of the wine merchant to do that, and they've abrogated
that role to the raters. Which is okay, maybe, but if I were a
wine merchant, I would like my clientele to listen to me rather
than anybody else.

Hicke: And the same with a sommelier, 1 guess.

Huneeus : Yes .

Hicke: He has a kind of role to play.

Huneeus: Yes, of course. The sommelier and the wine merchant, you're
right.

Heritage Wines

Hicke: Okay. I want to be sure and ask you about the Heritage

Association. Can you tell me about founding that and what the
impact has been?

Huneeus : Well, Heritage—the term—is, of course, not an association.

That's very much a sideline, whether there's an association or
not. What we found was we, being a group of about forty vintners
or winemakers, that the best wines we could make were many times
blends of varieties, particularly the Bordeaux varieties. We
were limited by law as to how much we could blend. So in order
to liberate ourselves from the restrictions imposed by the law,
we would lose the name of the varietal, if we would use less than
75 percent. So we said, "Well, that's ridiculous. So let's
create a term that will permit us each to have our own blends and
not worry about 75 percent anything."

Already before us, there were a lot of them being done, like
Opus One or like Insignia or- -there were quite a few. But what
we felt was a mistake was that each of the vintners would have to
come out with their own proprietary name, and that would be
confusing, terribly confusing. So we said, "Let's invent a
generic name that would cover this particular type of blend."
And we came to the term Heritage. The term itself is sort of
irrelevant, eventually a term adapts, it just connotes whatever
is behind it, so it doesn't— Hercedes is not a good name for an
engineered German car, right? But nobody thinks about it.

Hicke: It's going to mean what you want it to mean.

Huneeus: Yes. So it didn't make too much difference. But we needed a
word that had no prior meaning, and we needed a word which we
could copyright .

Hicke: Did you indicate that maybe it's not a formal association?

Huneeus: It is a formal association. But I de-emphasize its importance;
the association is only there for somebody to be able to own the
trademark.

Hicke: Yes. What about marketing or promotion, you don't do anything
like that?

Huneeus: No, we don't. We did at first to get the name out, but I don't

think I met, for example, with them for more than a year. So the
association itself is not a factor here. The important thing is
that a term was developed for the first time in history, and it's

Hicke:
Huneeus :

around, the term. Some people like it, some people don't. We
all use it ultimately. People say, "Well, this is a blend of
this," eventually they'll say, "It's a Heritage," even though
they don't like the word.

So do you use it on your labels?

Yes. We use it on the Estancia label and the Franciscan label
right now. We have a Heritage in each one of those brands.

Other Varietals

Hicke: Okay. And then I wanted to ask you about Sangiovese and any
other of the well-known varietals.

Huneeus: Sangiovese- -well, we have been testing Sangiovese. We have it in
the Estancia line. It grows in Alexander Valley in our Estancia
vineyards, and it grows wonderfully well and makes a beautiful
wine. I think that the jury is out whether Sangiovese is a wine
that will play a major role in California. I think that—this is
very personal- -where I can grow great Cabernet, I'm going to grow
great Cabernet and nothing else, because I think Cabernet is the
king of all red wines, and probably land for a great Cabernet is
the most difficult site to find. Hy Estancia vineyards have
proven themselves to be very good, just like Rutherford here, for
that kind of wine, so I'm not going to experiment too much with
other varietals there.

I think that the Sangiovese- -it's a bright red wine. I
don't think it's a great one. I think it's easy to drink and to
like, but I don't think it's a classic. I find that, for
example, in Tuscany, which is sort of the seat of Sangiovese,
whenever they can blend it with Cabernet, it turns out to be a
super-Tuscan, as they call it, and they can sell it for ten times
as much. So I just suspect that it's not going to take the place
of Cabernet.

But if we find Sangiovese to be interesting, we'll find a
vineyard area in which to place it, in which to grow it
adequately. Estancia is very good for it, but I want to dedicate
that to our red Bordeaux.

Hicke: What about Viognier or any of the other varietals?
Huneeus: No. No, I don't like Viognier at all. Personally.

Hicke: So you're not planning it, right, or you're not making it?

Huneeus: Right. We have Dolcetto. What we tested is Sangiovese, with

which we've been very successful. We have one of the better ones
in California, according to the ratings again. Dolcetto, which
we're just testing this year, and Pinot Gris, or Pinot Grigio, as
they call it in Italy. And that's an interesting white wine
which has been very successful in Oregon and Washington, and now
I'll see.

Hicke: Yes, okay.

Huneeus: But we don't have any more vineyard space. Everything I have is
already dedicated to what we sell already, like Chardonnay or
Cabernet Sauvignon, Merlot, Pinot Noir. Zinfandel, my god,
that's a wonderful wine and we don't have enough area to grow it
in. I'd love to grow more Zinfandel.

Hicke: Is anybody else making Dolcetto?

Huneeus: I think there is; you know, Mondavi is coming now with their La

Famiglia label, and Michael Moone has La Luna Winery, and I think
those are both Italian takeoff s. They'll have to have Dolcettos.
Whether it's a great variety or not, I don't know.

Wild Yeast Fermentation

Hicke: Well, I'm just going to skip around here and try to pick out what
we can cover. Wild yeast fermentation. Is that an important
aspect of your winemaking?

Huneeus: That's something we are very keen on. We try to be distinctive.
That ' s one of my premises : that each wine should try to
distinguish itself and be different. That's why we are estates
and not brands. The concept of estates lends itself to doing it
with your natural yeast. Each estate seems to have a different
set of yeast. And it is just another layer of distinctiveness.

Now, what natural yeast does versus commercial inoculation
yeast does: I think maybe these yeasts give different flavors.
But one thing they do is they certainly ferment differently in
timing. Since the wines are not inoculated, it usually takes
about a couple of days to start fermentation, for example. And
then I think the fermentations are less uniform.

Hicke: Isn't that difficult to deal with?

Huneeus : Yes . And it ' s also dangerous . Sometimes we see a barrel that
starts and stops, and we have to just inoculate it and then it
gets declassified. Or else it doesn't start, and gets
inoculated, in which case it goes into a regular Chardonnay
program.

Hicke: When you say declassified, are you keeping the wines separate

that are made with wild yeast, is that what you're talking about?

Huneeus: Oh, definitely, yes. We sell them--our Estancia Reserve is 100
percent wild yeast, as is our Franciscan Cuvee Sauvage. Those
are 100 percent wild yeast, so we can't use any other.

Hicke: Are people interested in the wild yeasts particularly, or do they
just like those wines?

Huneeus: Well, you know, the geeks like this kind of stuff. [laughter]
They really do. And they find it different, and yes, there's a
lot of interest, I would think. A lot of people thinking about
it, tasting it. I mean really. Anything that's different.
There are 5,000 Chardonnays out there; there are 5,000 labels and
there are ten different flavors, or tastes, or styles. So how do
you try to develop newness and distinctiveness? Anything that
you do is going to create interest.

Hicke: Are there any other examples of distinctiveness that you do?
Huneeus: You mean examples of other things to make wines distinct?
Hicke: Unique, yes.

Huneeus: Blends. I'm going to make my wine slightly different than

anybody else's; if I use straight Cabernet from Oakville, what's
going to differentiate me from Mondavi, who's my neighbor with
Cabernet from Oakville? We're going to be the same thing. We
use the same technology, the same barrels, the same equipment,
and we grow the grapes in the same place in the same way. It's
not going to be so different. So blending can make a difference,
and wild yeast makes a difference.

Travel and Marketing

Hicke: Do you do a lot of travel — events and winemakers' dinners and
other kinds of promotions?

Huneeus: I am personally doing less now, I find. I travel the market about
once a year; I visit my important distributors—twenty
distributors or so—all the time. And apart from that, I will do
three or four dinners and things , special things , and then I will
go to a couple of events, like an expo [wine exposition]. But
I'm letting the younger crew now do that kind of thing more and
more, definitely.

Hicke: Who are the younger crew?

Huneeus: Well, the people that work here. The head of sales and the
marketing heads. We have different marketing heads for the
different estates, so they go out and they do their thing. So I
travel less. But a lot of hospitality is done here at the
winery. A lot of people come here, and I love to see them here.
It's a much better venue. But we have to travel. And one trip a
year I can never refrain from doing, because that's my contact
with the market. Sitting here and making all these decisions,
one can really make mistakes, which I often do. But going out
there, looking at the stores, realizing what's competing, what's
doing well, what isn't; going to your distributor and finding out
what's going on there is very important, too.

Hicke: It's not just talking to them but listening, too?

Huneeus: Listening to them, around them, listening to their salespeople,
finding out what pressures they have. Very important.

Huneeus: And maybe it's a cliche, but this is a people business. So my

relationship with the distributors is key to their interest in me
and my interest in them, and we do better when we're friends,
very much so. Then the younger crew likes to meet the owner of
the product that they're selling. It's natural. Since wines are
so alike, the differentiation to a great extent is the people
behind them.

Hicke: I was just reading an article of an interview with a sommelier,
and he said it's more important to talk about the vineyard and
the people behind the wine than it is to describe the wine
itself.

Huneeus: I think so, sure. How can you really describe the wine?

Hicke: Yes. He said people should find out what the wine is like
themselves .

Huneeus :

Hicke :
Huneeus :

Hicke:
Huneeus :

Yes. Because there are very few adjectives that define a wine.
Blueberries, raspberries — it doesn't tell you anything.

Kiwi flavors. [laughter]

Kiwi flavors. There's another one—tropical,
they don't mean anything.

All these things ,

But I thought it was very interesting that he would like to know
about you if he's going to be selling your wine. It's exactly
what you said.

That's right. That's why we have to be out there. I think that
to sell wine in the super-premium business, there has to be a
face behind the wine.

Judgings and Auctions

Hicke :

Huneeus :

Hicke:

Okay. How about Judgings and auctions?
those, and what's the impact?

Do you participate in

Judgings --well, the contests, since the advent of the ratings
that we were talking about a few minutes ago, the contests have
really fallen from importance. Gold medals—nobody follows,
nobody cares. Well, not nobody, but it's not half as important
as it used to be. They're local, and locally you get a spurt of
sales. But they're not as important, definitely. And I don't
participate in Judgings any more because that really takes a lot
of time and an expertise that I don't feel I have. I don't feel
that 1 can judge other people's wines.

With respect to auctions, well, we participate, of course,
in the Sonoma and the Napa Valley wine auctions . Those are
charity events, and those are the only ones really that are
important to us. Auctions where they sell old wines in
Christie's or in New York — they're doing it a lot now; if our
wines are sold, we don't even know. We don't sell the wines at
auction.

That seems to be establishing some kind of a price niche for some
of these old wines. Is that right?

Huneeus: Yes, definitely. It always has happened. In Europe, the

Christie's and the Sotheby's auctions are very important. But
it's new here in this country, because New York just approved it
last year. I don't know what the restriction was which isn't

Hicke :
Huneeus :

there any more. It has something to do with the fact that you
can now sell wines even if you don't have a license, if you go
through a licensed person to sell them for you. In other words,
I don't think that before, if I had a wine collection, I could go
to let's say Sherry Lehman's or Peter Morel and sell my wines.
Now that can be done. So something has changed. Which was a
major breakthrough, by the way. They're having a ball over there
in New York doing it. They love it, and it's great.

But you don't know if your wines are part of this?

I don't think that any vintner knows whether his wines are being
auctioned, because these are private things. The wines are
already owned by somebody else. No, I wouldn't know, unless I
got everybody's catalogue or something.

Health Aspects of Wine

Hicke:
Huneeus :

Hicke:

I understand that the neo-Prohibitionists are not as active now
as they have been in the past. Have you found that?

I had been thinking about that,
we'd better even think that.

but I dare not. I don't think

Okay. [laughs] Somebody up there might notice.

Yes. There has been, I think, something different. I think that
there has been a recognition of the fact that wine is not harmful
and that wine can be healthful in certain circumstances, and I
think that people in this country are fed up, and rightly so,
with all of these people telling them what to do, and what to
drink, and what to eat, and all these labels that say millions of
things that you can't possibly understand. So I think that
there's a certain freedom that is coming out. I don't think that
prohibitions or limitations of this sort are politically correct
any more. And if they're not political, then nobody espouses
them. So I think that there is a little less aggressiveness in
the anti-alcohol lobby because of that.

And it's been proven so absolutely without a shadow of a
doubt that these restrictive things don't ever help. I mean, the
more we restrict things, apparently, the more they sell, or
something.

Of course, everything I read about the research that's being
done, it's all positive.

Huneeus: I think that there's absolutely a recognition of the healthful
effects of moderate alcohol and wine. I think that there's
nobody in the world now that doesn't understand that wine is a
complement to food and to gracious eating and to gracious living.
There's no way. No matter where you go, if there's a banquet, if
there's a church event or a government event, there's wine. It
plays a role.

This country, of course, has a way of going from one extreme
to the other. We'll see what happens. I wouldn't count on
victory on that front ever.

Hicke: Not total victory?

Huneeus: Not total victory. There will be restrictions. But I hope that
this increase in the price of grapes is somehow reflecting an
increase in demand.

Price Changes

Hicke: Yes, I wanted to ask you to talk about that a little bit, about
the present crop and the prices.

Huneeus: I've never in my life seen as intensive a price movement as there
has been this year, 1995. Grapes went crazy. Many of them, even
Pinot Noir, doubled in price in one year. Because they were very
scarce, of course. But Zinfandel is unreachable, Merlot is
unreachable, Cabernet is extremely expensive, Chardonnay is
expensive.

Now, is that due to the fact that we pulled out a lot of
vineyards because of phylloxera? Maybe. Maybe yes for Napa and
Sonoma. I think that it has to do also with consumption. I
think '94 was a year of explosive growth for most people. When
they buy grapes for 1995, they're going to sell those grapes in
1998 if it's red wines, right?

Hicke: Yes.

Huneeus: So what companies do, of course, is they make a projection based
on their current year, and they project that in 1994 we sold
this, so in 1995 it's going to be the same increase, and 1996,
because now we ' re good . It's not that the market has changed ;
everybody thinks that they are selling more because they're more
clever. And they'll continue to be more clever for the next few
years, so every year, they take the same increase. So in 1998,

Hicke:

Huneeus :
Hicke:
Huneeus :

three or four years down the road, you're looking at a
consumption, if you're that clever, which you were in 1994, of
maybe 60 or 70 percent more than what you sold in '94. So that
you have to buy in "95 in order to satisfy that need.

Now, there's no way that the country is either going to
consume that amount of wind, or supply it. So what 1 mean to say
by that is that if you were to be magic and to be able to add
everybody's marketing plans for 1998, which is what causes the
purchases of 1995 grapes, you'd have a total wine consumption
projected that is absurd for the country. Right?

Well, we're supposed to be having up to five glasses of wine a
day, you know, according to the latest study. [laughter]

That would certainly put the anti-alcohol group into—

Orbit.

But I think that that's what's happening.

Future Trends

Hicke: Let me just ask you to talk about the future of Franciscan and
the Napa Valley and the wine industry for a couple of minutes .

Huneeus: Yes. I took Franciscan over ten years ago, and we were doing

about 30,000 cases. Today we're doing 400,000 cases. If I were
to look—and I do--at ten more years down the road, the
projection would be more than 4 or 5 million cases, which is
huge, more than Mondavi. I don't know whether that's true or
not, but I do know that in the next five years, we will be
probably doubling, and in order to do that, we are doing—as a
matter of fact, these days, that's why I've been so busy- -major
restructuring of the company and of our facilities. We're
doubling this facility. We're building a winery in Monterey. We
have the other winery being built in Chile. We're redoing our
Mount Veeder winery. We've redone offices here. I mean, we're
really making a major step forward in order to prepare ourselves
for that growth. Our vineyards have been totally pulled out- -the
bad ones- -and replanted. So we're going to have a new vineyard
base, which is more quality and probably more production than we
had with the phylloxera vines .

So I'm looking at a pretty positive scenario for the future.
I think that we as a company are positioned fairly well because

of our system of estates rather than brands. We're not one big
brand growing, like Mondavi or like Kendall-Jackson, like the big
guys, which I don't have too much faith in long-term; having run
Paul Masson and all those things, I see how they grow into sort
of lower categories. So I think that we're poised for growth.

I think that the Napa Valley is, of course, as we all know,
limited now. There's no way Napa can grow; it can't grow any
more grapes. All the grapes are out, so that's it. I think that
what remains for Napa now is just to continue doing better wines,
which they will, because the renewal of the vineyards has been a
major, major improvement. And it's just going to be more
prestigious, I suppose, in the context of all California and
American wines, and world wines. We're going to be all the time
selling at higher levels.

And I do believe, by the way—you asked me about Napa wines-
-I do very strongly believe that we are increasing consumption.
I think that part of the grape supply problem today is increased
consumption, and I think that once people drink wine and start
including it into their habits, it grows on them, because it's a
wonderful thing and it's a wonderful product--! believe that,
obviously, right? So I think we're creating more converts, and
maybe wine consumption will grow. Maybe we were right in the
seventies when we thought that we were going to get the American
consumer to include wine into some sort of a habit, into an
everyday occurrence rather than a festive kind of thing. Maybe
it's taken longer, but it's slowly getting there. So as you can
see, I'm pretty optimistic.

Hicke: That's great. Okay, let's stop on that. And thank you very much
for an excellent interview.

Transcribers: Lisa Delgadillo, Shannon Page
Final Typist: Shana Chen

TAPE GUIDE- -Agustin Huneeus

Interview 1 :
tape 1,
tape 1,
tape 2,

March 6,
side A
side B
side A

1995

Interview 2: May 15, 1995

tape 3, side A

tape 3, side B

tape 4, side A

Interview 3: August 10, 1995

tape 5, side A

tape 5, side B

1
1

10
17

26
26
37
48

51
51
62

APPENDICES—Agustin Huneeus

A Kramer, Matt, "The Resurrection of Napa Valley,"
Wine Spectator, May 31, 1995

B Franciscan Estate Selection wine labels 71

C Franciscan Estate Selection Brochure 72

One of the most astonish
ing transformations in
American wine is
occurring in — where
else? — Napa Valley.
The astonishment is
that the changes are
subtle and insinuating,
et profound. These are not adjectiveb
usually applied to Napa Valley, which
ometimes seems more inspired by
•lollywood than, say, Hermitage.

Nevertheless, Napa Valley has again
wcome something it hasn't been for
'ears: the most exciting winegrowing
>lace in California. Commercially and
ocially, Napa Valley has always been
timulating. Ambition and big money
lave a permanent attraction. But when
t came to growing grapes, Napa Valley
;rew moribund. Too many producers
vere complacent. Others were just plain
:errified of losing their place at the
•rough. Too many vineyards were planted
to inappropriate grapes. But they sold
anyway, carried by the Napa Valley
name. There was no reason to change.
You could practically hear the snoring.

Then, two powerful forces arrived
that swept all before them: phylloxera
'and appellation. They arrived simultane
ously, gathering secret strength in the
"80s and emerging full-blown in the
;'90s. Their joint emergence powerfully
'reinforced their separate, but comple
mentary, effects.
Appellations gained force in the mid-

Appendix A

Wine Spectator, May 31, 199:

'80s as Napa's growers realized that fine
wines taste as if they come from some
where. All those trips to Burgundy,
Bordeaux, Italy, Australia, New Zealand,
Oregon and Washington resulted in new
insights about what it takes to make real
ly fine wine. Not just varietal wine, mind
you. But the real thing: Wines that taste
like they can't be grown anywhere else.

As Napa Valley subappellations
became inevitable — Howell Mountain,
Stags Leap District, Carneros, Oakville,
Rutherford, Mount Veeder and others —
the growers' lots were cast. No longer
could a grower simply offer a winery
brand to be judged higgledy-piggledy
against all other Napa Valley brands.
Appellations are an invitation — a
demand, even — to have your wine judged
in a particular, more exacting context.

Today, the talk of Napa Valley is utter
ly different than what was heard even a
decade ago. Once, the vineyard mental
ity was an imposition on the land: level
it, irrigate it, bend it to your will. Today's
mentality is one of submission: Vineyard
decisions now proceed from nuance
rather than brute ego. Growers replant
not with the intent of making a mere
varietal wine, but instead to try to tease
from the land a distinction of place. After
all, that's what appellation is about.

For example, growers now engage in
nuanced investigations of their vineyard
soils, the better to match just the right
rootstock to the right soil. A single row
of vines, as it cuts across several soil

The

Resurrection of
Napa Valley

types, from gravel to sand to clay, will
have the same grape variety planted on
a half-dozen different rootstocks.

What's more, an array of different
clones is being planted. And the vine
yard spacing — between vines and across
rows — is often closer, even though the
cost is formidable (more vines, more
labor and new, smaller tractors). And
because whole vineyards are being
uprooted, elaborate drainage systems are
being installed that would otherwise
have been decades away. The new aware
ness of soil has made drainage — even in
seemingly dry Napa Valley — a nuance
that probably will lead to better grapes
from currently lesser sites. All this to
achieve an increase in quality, something
unmeasurable yet recognized as real.

None of this would have happened on
such a wholesale level were it not for the
devastation of phylloxera. By the end of
this decade, the majority of Napa Valley's
vines will be brand-new. Grape quality is
almost guaranteed to be better than
ever — at a staggering cost. The financial
burden — new vines, lost wines — is esti
mated at upward of $300 million.

It's an altogether new game, and
tremendously exciting. What is happen
ing in Napa Valley today is not that
the goalpost has been moved. It's that
the goal itself has changed, transformed
by appellation insight and quick-
marched by phylloxera.

Matt Kramer is the author of the "Making
Sense" series of wine books.

/I
FRANCISCAN ESTATE SELECTIONS

A GROUP OF DISTINCT ESTATES

Appendix B

FRANCISG\N

OAKVILLE ESTATE

NAPA VALLEY CHARDONNAY ,'

THE FRANCISCAN OAKVILLE ESTATE
Oakville District, Napa Valley

MOUNT

veeoeR

WINERY

/V\€RITACe

NAPA VALLEY
R6D TABLE W1N6

MOUNT veeD€« WINERY
NAPA.CALIFOttNtA
AlC U5»BYWX

THE MOUNT VEEDER ESTATE
Mount Veeder Appellation, Napa Valley

THE ESTANCIA

MONTEREY ESTATE

Monterey County

THE PINNACLES ESTATE
Monterey County

THE ESTANCIA

ALEXANDER VALLEY ESTATE

Sonoma County, Alexander Valley

O\ M \\1\1I-\NO
kl:SI:KV\

ERRAZUPIX

, \ \1 I l;\

Mil KM 1 -, •

THE CALITERRA ESTATE
Chile

THE ERRAZURIZ ESTATE
Chile

72
FRANCISCAN ESTATE SELECTIONS

PHILOSOPHY & COMMITMENTS

OUR PHILOSOPHY

1 Terroir: We are estate based. Franciscan Estate Selections represents a portfolio of
estates, not brands. We are dedicated to growing our own grapes and to producing
wines from them exclusively. Each of our wines seeks to express the unique terroir of
its specific estate.

2 Class Marketing: We seek out the most interesting classes of urine in which to participate.
By class we mean specific appellations, varietals and price categories. Every wine
which we produce will have a "reason for being" and a place in the wine market.

OUR COMMITMENTS

1 Our Quality Commitment: In every class that we participate, we endeavor to excel
in quality. We make every effort possible to be the best within our class. Every one
of our wines seeks to excel among its competitors.

2 Our Value Commitment: With each of our wines, we commit to reasonable pricing
based upon our costs and efforts rather than on hype and "prestige pricing." We
intend to be an excellent value in every class that we participate.

3 Our Long-term Commitment: In our search for the most interesting classes, and in
our efforts to produce excellent wines at reasonable prices, we are investing in the
future of our company and our industry. We commit to being in the wine business
for the long term. Estates, not labels or brands, will ultimately be the basis of the
California wine industry.

FRANCISCAN ESTATE SELECTONS

POINTS OF DIFFERENCE

I. TERROIR

.here is no precise translation for "Terroir" in the
English language. Loosely defined, Terroir is the
combination of soil, climate, landscape, exposure,
varietal and clone which are unique to a specific
vineyard.

Terroir is the basis of the appellation system in
Europe, defining the quality and reputation of
wines based upon the vineyard in which they were
grown. Despite Europe's example, terroir has played
a minor role in the evolution of winemaking in the
"New World," California in particular.

"Terroir is the wine culture of Europe. Terroir is the

freedom to let the earth express itself in our wines.

We over manipulate our wines, rather than allowing the

earth and the dimate express itself."

California wincmaker's have been preoccupied with
"varietal character," which limits wines to the expres
sion of the five or fewer varietals recognized in this
country, in an industry which produces thosands of
individually labeled wines whose only distinguishing
elements are price, packaging and marketing.

Franciscan Estates is dedicated to the concept of Ter
roir. We believe that the quality and character of a
wine are decided in the vineyard. We produce wines
exclusively from our own vineyards which have been
selected for their unique Terroir and are planted to the
varietals which we feel arc best suited to each estate.
Each of our wines seeks to express the character of the
vineyard: its Terroir.

ALEXANDER
VALLEY •

• RUTHERFORD^;

\ • OAKVILLE
\ * MOUNT VEED;

"Terroir is the combination of an infinite number of factors:
temperature by night and by day, rainfall distribution, hours

of sunlight, slope and drainage, to name but a few. All
these factors react with each other to form, in each part of
the vineyard, what the French wine growers call a terroir"

Peter Sichel, proprietor Chateau Cos D'Angludet
The Vintners Art

Indeed, winemaking can affect the characteristics
of a wine. But even the most talented winemaker
cannot make a Meursault in Australia or a Chateau
Lafite in Spain. The recognition of the distinct
characteristics of a property - its Terroir - is what
differentiates wine from other mass-produced con
sumer products. Each property, each region has a
different set of conditions, and it is this difference,
this expression of uniqueness, which we strive for
at Franciscan Estates

FRANCISCAN ESTATE SELECTONS

POINTS OF DIFFERENCE

II. WILD YEAST FERMENTATION

. east arc the tiny micro-organisms that trans
form the sugars of the grape into alcohol, trans
forming juice into wine, through the process of
fermentation. Until Louis Pasteur discovered that
this process was induced by yeasts which were pre
sent on the berries in the vineyard in the 1 860's;
winemakers were aware of the results of fermenta
tion, but not the cause.

As winemakers became aware of the particularities
of the fermentation process, they found that they
could avoid stuck-fermentations and fermenta
tions which were too hot by using yeasts which
were proven to achieve consistent results.

Despite the efficiency of developing yeasts for uni
form results, we are now discovering that the yeast
which are native to a particular vineyard can add
distinctive qualities to the wine which are not
achieved by cultured yeast. This observation is

"In France, the non-interventionist approach extends

right through the winemaking process. Natural yeasts

for both primary fermentation and malolactic fermentations

an considered essential: they are an extension of

the expression of terroir, providing subtle but

palpable complexity to the wine."

Hugh Johnson, The Vintner's Art

shared with our counterparts in Burgundy who
continue to wild-yeast ferment their finest wines
to achieve additional nuance and character.

Franciscan Estate Selections was among the first
producers in California to experiment with wild-
yeast fermentation in California. The release of
our first Franciscan Oakville Estate Cuvec Sauvage
in 1987 confirmed our belief that we could pro
duce wines which expressed the unique qualities

of our vineyard by utilizing the native yeasts pre
sent in our Oakville Estate. We have expanded
our wild yeast program to the wines from our
Pinnacles Vineyard as well. We arc convinced
that the distinctiveness of this wine could not be
achieved if we were to use commercial yeast
inoculation.

Although the process of wild-yeast fermentation
requires more attention and involves more risk.

"Wild yeast fermentation is a matter of achieving

complexity and nuance. Such things have been lost in

the culture of winemaking as we

pursue consistency."

we believe that the complexity and character
achieved justify these hazards. As California
continues to evolve, we predict that those who
have the benefit of estate-grown fruit will seek
the distinction of their yeast flora to distinguish
themselves from the many uniform wines being
produced in California.

POINTS OF DIFFERENCE

III. BLENDING

.hroughout the history of winemaking, most
great winemaking cultures have sculpted their
finest wines by blending. Most wincmakers have
strong technical skills, but it is their palate - their
ability to conceive and express the nature of a

"In most old world regions blending was taken for

granted...The New World, though, has generally been

hesitant about sullying the 'purity' of its 'varietals.'

The assumption has been that if Cabernet Sauvignon

is good, 100 percent Cabernet must be best for better

or worse 'varietal character' has been and still is

pursued as a goal in itself."

Hugh Johnson, The Vintner's Art

particular vineyard - which has made a selected
few great. Over the course of the last decade, the
better winemakers of California began to divert
from the "varietal fixation" in order to produce
wines of superior complexity and sophistication.
Because of the efforts of these few innovators,
some of the most prestigious wines of California
were created.

Today, more than forty of California's premier
vintners are producing blends from the Bordeaux
varietals. In order to avoid the confusion, the

term "Meritage" was developed to inform the
public that the wine is not merely a "Table Wine,"
but the winemaker's finest effort at expressing the
traditional Bordeaux varietals.

Franciscan Estate Selections believes that the most
interesting wines that we can make of the Bor
deaux varietals are blends. We have found that the
elegance and austerity of the Cabernet Sauvignon
from our Oakville Estate is tempered by the lus
cious Oakville Merlot. The Cabernet Franc and
Merlot from Estancia's Alexander Valley Estate
adds depth and structure to the round, forward
berry fruit character of the Alexander Valley
Cabernet. The unique concentration of our
Cabernet from Mount Veeder is made more com
plex by the Mount Veeder Cabernet Franc and
softened by the Mount Veeder Merlot.

VARIETAL PROPORTIONS OF WELL
KNOWN BORDEAUX BLENDS

ESTATE

Cabernet
Sauvignon

Metttx

Cabernet
Franc

Malfcec

Pent
Verdoi

Lantf-Roeruchild (Pauillac)

Franciscan Menugr

Mount Vetdcr Menuge

Esunoa Menuge

Maigaux

Laccmr (Pauilbc)

•0

Mouton-Rothschild (Pauilbc)

Haut-Bnon (Gnv«)

Leovilk-LoB Cam

•

La Mission Haut-Bnon (Cnvn)

Chcvil Blanc (S( Emilion)

• •

Pecrus (Pomcrol)

t»

The merits of blending are also displayed in the
white Bordeaux varietals. The very delicate floral
character of our Monterey Sauvignon Blanc is struc
tured and refined by blending with Semillon.

Determining the exact composition of each of these
blends is an art form - the creative element which is
obscured by the single-varietal wine \

INDEX- -Agustin Huneeus

Amerine, Maynard, 22
appellations, 46-48

Boissenot, Jacques, 52-53
Bronfman, Edgar, 26

Caliterra label [Chile], 42-43

Casablanca vineyards [Chile], 43

Cassel, Chris tiane, 8

Coca-Cola company, 19

Concannon Vineyards, 18, 20-22, 31,

Concha y Toro winery, 9-14, 22
corporate ownership, 26-30
Cox, Virginia [mother] , 1
Curtis, Jim, 18

Dan Thomason cooperage, 30
de los Reyes, Richard, 18

entrepreneurship, 28-30
Errazuriz label [Chile], 42-43
Estancia label, 25-26, 35, 36, 39,

59
Estancia in Monterey, 40

fish meal business in Chile, 8-9
Fordham University, 4-7
Franciscan Estate Selections, Ltd.,
33-67

Guilisasti, Eduardo, 9-10

Huneeus, Agustin [father], 2
Huneeus, Valeria, 13, 14, 44-46,
53-54

Independent Stave Co., 30
International Distillery and

Vineyards, 21, 31
Internet, 26, 48-49

judgings and auctions, 63-64
Laube, James, 55-57

marketing, 23-26, 49, 61-63
Heritage Association and wines, 58-

59
Mount Veeder label, 41-42

oak, American, 29-30

oak, French, 30

Oakville Estate label, 38

Pacific Land and Viticulture, Inc.,

30-31

palate education and tastings, 22
Parker, Robert, 55-57
Paul Mas son winery, 19,27
pricing, 65-66

Quintessa vineyard, 44-46, 51-54
rootstocks, 39-41

Seagram, Joseph E & Sons, 14-16, 27
Sichel, Peter, 33
Silver Oak Cellars, 34
Souverain Cellars, 31-32

tannins, 54-55

terroir, 41, 52-53

trellising and canopy management,

49-52
Tugel, Howard, 40

Upton, Greg, 37

Vial, Ricardo, 11
Vina Tocornal, 12

wine, health aspects of, 64-65
Wine Spectator, 55-57
winemaking philosophy, 23
Wineman , J im , 18

yeasts, use of wild varieties in
fermentation, 60-61

Noble Vineyards, 17-20, 31

77
GRAPES

Barbera, 18
Cabernet franc, 39
Cabernet Sauvignon, 39
Carnelian, 18
Chardonnay, 65
French Columbard, 18
Merlot, 38-39, 65
Pinot Noir, 43-44, 65
Zinfandel, 65

WINES

Cabernet Franc, 39, 46

Cabernet Sauvignon, 20, 22, 35, 39,

41-42, 43, 46, 59

Chardonnay, 20, 22, 23, 30, 40, 43,

Cold Duck, 23

Dolcetto, 60

Lambrusco, 23

Magnificat [Heritage], 38, 39

Heritage wines, 58-59

Herlot, 23, 35, 38, 39, 43, 46

Petite Sirah, 20-22

Pinot Noir, 40,43

Ricasseteli, 21

Sangiovese, 59

Sangria, 23

Sauvignon Blanc, 20-21, 43

Viognier, 59

Zinfandel, 60

Zinfandel, White, 23

Carole E. Hicke

B.A., University of Iowa; economics

M.A. , San Francisco State University; U.S. history
with emphasis on the American West; thesis: "James
Rolph, Mayor of San Francisco."

Interviewer/editor/writer, 1978-present, for
business and law firm histories, specializing in
oral history techniques. Independently employed.

Interviewer-editor, Regional Oral History Office,
University of California, Berkeley, 1985 to
present, specializing in California legal,
political, and business histories.

Author: Heller, Ehrman, White & McAuliffe: A
Century of Service to Clients and Community, 1991;
history of Farella, Braun & Martel; history of the
Federal Judges Association.

Editor (1980-1985) newsletters of two professional
historical associations: Western Association of
Women Historians and Coordinating Committee for
Women in the Historical Profession.

Visiting lecturer, San Francisco State University
in U.S. history, history of California, history of
Hawaii, legal oral history.

3 5566

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