Sunday, July 10, 2011

Doug Watson

An Interesting History

While General Manager of C. Mondavi & Sons, Bob Mondavi spent a large amount of time on sales trips. In 1965, while on a six hour flight from San Francisco to New York, he sat next to management consultant Doug Watson of McKinsey & Co. They talked the entire time about the California wine industry. Doug Watson, who received a B.S. in Mechanical Engineering and an M.B.A. at Stanford University, had been with McKinsey since 1944, and had clients around the world.

Soon after both returned to the Bay Area, McKinsey was hired by C. Mondavi to review the marketing plans of the C. Mondavi brands, Charles Krug and CK Mondavi. Doug Watson was chief consultant and it became apparent to him that there were family differences about the brands. Bob Mondavi felt the less expensive CK jug-wine line should be eliminated and the more expensive, cork-finished Charles Krug line expanded. Other family members, including his brother Peter Mondavi, did not agree. The CK line was the biggest portion of their sales volume and much of the wine in that line came from grapes grown in the Lodi-Woodbridge region. The Mondavi family had past history in Lodi.

This battle, among others, led to removal of Bob Mondavi from the family management, although he still retained a part ownership in the family business. He soon found financial backing and started Robert Mondavi Winery in Oakville. About ten years later, Bob Mondavi asked to be paid for his share of C. Mondavi & Sons. The value of Bob Mondavi’s share was settled in the Napa Superior Court in 1976. The judge ruled the family wine company should be sold, from which Bob Mondavi would get his ownership share.

In early 1977, the ruling judge created a triumvirate to oversee C. Mondavi & Sons to be sure the wine company would not lose its value in the market place. He appointed Doug Watson as the chair of the triumvirate of receivers and the company C.E.O. Soon, all Mondavi family members were removed from management positions and Doug was managing the winery on a daily basis.

During 1977, Doug saw that the CK Mondavi line could be made in a more cost effective manner. Most of the wine was made from Lodi-Woodbridge grapes custom crushed for C. Mondavi & Sons by Lodi wineries. It was then shipped to St. Helena to be finished and bottled at Charles Krug. Doug reasoned that the wine could be produced, finished and bottled in Lodi. He began to search for a production facility in that area.

Wells Fargo bank was carrying a bad debt on their books. The debtor was the Felice Winery, dba Montcalm Winery, in Woodbridge. The bank had installed a Wells officer to oversee the operation. Doug Watson felt the bank had carried the debt for too long a time. He met with the Wells officer at Montcalm Winery and negotiated a lease-buy option for C. Mondavi & Sons. This is where they could produce and bottle the CK Mondavi line.

At that time, the Mondavi brothers were still negotiating the terms for satisfying all family members. In June of 1977, an agreement was reached. Among the items asked for by Bob Mondavi was money, land and the lease-buy option on the winery in Woodbridge. The family consented to the requests.

In December of 1977, the judge dissolved the triumvirate of receivers. Doug Watson could go home.

Doug Watson was still “retired” and living in St. Helena. He did not forget the wine industry. In 1980 he and two partners, Peter Brucher and George Vierra (VIerra bruCHer watsON =VICHON), started a joint venture with a group on investors and created Vichon Winery in Oakville. The wine style was different than most other Napa Valley wineries and by 1984 they sold about 40,000 cases of wine. It was reported by John E Murphy “…Robert Mondavi invented Fume Blanc in California, everyone knows that, by producing a dry wine from Sauvignon Blanc in the style of a Pouilly-Fume at a time when most California Sauvignon Blancs were off-dry (like most California Chenin Blancs).  It became a huge success, and was the number one selling wine in American restaurants for a time.  Meanwhile, Vichon Winery started and invented Chevrier Blanc (later "Chevrignon"), a dry white blend of Sauvignon Blanc and Semillon, a la a white Graves.  It soared in popularity, and  . . . it replaced Mondavi's Fume Blanc as the #1 selling wine in U.S. restaurants!” So, during Doug Watson’s tenure as president at Vichon the winery had done well.

However, it soon became clear that there were different interpretations of the Vichon joint venture and the winery was sold in 1984 to the Robert Mondavi Winery. Currently, the Vichon brand and winery is no longer owned by the Robert Mondavi Winery.

So here’s the ironic twist to this history and another example of Doug Watson’s influence on the California wine industry. Robert Mondavi wanted to have his family drop the CK Mondavi line. When he settled with his family in 1977, he assumed the Doug Watson negotiated lease buy option C. Mondavi & Sons had with Wells Fargo Bank. Robert Mondavi eventually exercised the buy option and used the Woodbridge winery to make his “Bob White” and “Bob Red”. The Woodbridge winery is now producing and selling several million cases of the “two-Bob’s” and other wines under that brand each year.

On Tuesday, June 21, Douglas Watson died at the age of 94. He was born in Redwood City and grew up in San Francisco. Before Stanford he went to Galileo High School. He is remembered by his wife of 70 years, Marie K. Latshaw Watson, and children Margaret Rother, Douglas L Watson, Jorane Autry, Thomas S. Watson, Wade B. Watson and Hanalee Washburn and all their children and children’s children. He also has quite a few surrogate sons.

If you’d like to, donations can be made to (Stanford Graduate School of Business) in Douglas Watson’s name.

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