SVB and the Wine Industry
- Thread starter Jeff Grossman
- Start date
Cole Kendall
Cole Kendall
Thanks; paragraphs like this always amuse (especially when the institution failed shortly thereafter):
It’s a little embarrassing in hindsight, but I can remember sitting in business school while professors were teaching about management miscues in companies or about products that are no longer with us. The case studies were always presented in such a way as to lead the reader to a textbook conclusion. So I always came away from the case study thinking with youthful hubris, “Those people must be idiots! I could do better than that! The train was on the tracks, the lights were on, the horn was blaring, but the company never evolved or changed!”
...
But there are plenty of examples of companies whose leaders saw the writing but kept doing what they were doing because “that’s what we do, and it’s always worked!”
It’s a little embarrassing in hindsight, but I can remember sitting in business school while professors were teaching about management miscues in companies or about products that are no longer with us. The case studies were always presented in such a way as to lead the reader to a textbook conclusion. So I always came away from the case study thinking with youthful hubris, “Those people must be idiots! I could do better than that! The train was on the tracks, the lights were on, the horn was blaring, but the company never evolved or changed!”
...
But there are plenty of examples of companies whose leaders saw the writing but kept doing what they were doing because “that’s what we do, and it’s always worked!”
Eden Mylunsch
Eden Mylunsch
What Cole said.
And:
As one wallowing in the miasma aswirl in the nebulosity between "wine" and the "wine business," I learned early on that there are things you do for the art and other things you do to put groceries on your table. Filing it under "client maintenance" instead of "whoring myself out" makes it seem more businesslike. It's a necessary evil having everything to do with appeasing the person you answer to who is invariably the person who signs off on your monthly retainer. They're not all bad people, but most of them have to answer to someone higher up on the chain and by the time it reaches the top there's rarely anyone specific to blame.
The fact is, many of the shot-callers are boomers, ie: one or two generations beyond the presumed target demographic. And even a loose reading of the SVB report will glaringly tell you that boomers are the only generation whose rate of premium/collectable wine buying is still increasing. The younger generations are resistant to the marketing come-ons that appeal to boomers, (who amongst us is still talking about that bitchin' Clos du Bois commercial during the SuperBowl?) and the boomer bosses are concerned that the metrics for print "may be more reliable" than the metrics for that digital razzle-dazzle. And they also want to sell cases to customer who'll put them in their wine cellar to enjoy in 20 years when the wines will be deadly soupy, but they'll pay a lot now for the anticipation of what "it's going to become" (and meanwhile, the people who marketed it to them now will be retired or dead or both and don't give a rat's ass if the wines "evolve.") So the creatives get shot down when they come up with any marketing/advertising/PR angle that might appeal to anyone under the upper level of sentience and anyone with disposable income under the age of Alzheimers has moved along to spirits, craft beer, and cannabis and is way more about "collecting experiences" than they are being saddled with a mountain of wine in their cellar to hand down to their grandchildren, who by then will likely be collecting vintage LSD blotters or roach clips from the 1960s and 70s.
And in his latest SVB report, Rob MacMillen of SVB figured ALL of this out and told it like it is and the news went over like a lead zeppelin with all the boomer+ shot callers, most of whom still think "Stairway to Heaven" is the greatest song of all time and remember hearing Floyd's "Dark Side of the Moon" when it was first released, back in what, 1947? And after reporting that the Captains of the Wine Industry were effectively deaf to the masses, Rob's bank got run on and shut down. Cause and effect? Maybe so, but probably not, because SVB's main clientele are VCs who voted for Trump and lobbied for laxer rules on regional banks. And they were the people who demanded their cash back as soon as rumors began rumbling as to the soundness of SVP. Touché. Self-induced self-fulfilling prophecy anyone?
But more to the point, McMillan's annual report is/was the ONLY wine industry pulse check that was worth sitting through the zoom call for. The bank funded it as a loss leader for the wine part of their practice and there are enough younger and semi-visionary people in the biz who reckon that it's worth keeping around. If the wine side of SVB is not resumed by whichever financial entity it becomes, I would expect that some other institution will swoop in and hire Rob and his team and keep the momentum going. They'd also do well to scoop up Paul Mabray. He's one of the few (well, twoP people in the industry who've paid attention to the macroeconomic metrics of the wine biz and has been able to deduce trends of an economic, demographic, and geographic nature that bring a little rationality to this fucking crazy industry. He was really building something at Pix.wine but then the Titans of Industry saw that his forecasts would require a lot of change in the way they conducted business, with the result that they backed out of funding commitments and left Paul twisting in the wind. Things like that happen when people nearing retirement age look down the barrel of having to retool the way they're doing business. Easier to kick the can down the road and let the next squadron of CEOs deal with it.
-Eden (getting used to my can getting kicked down both forks of the road)
And:
As one wallowing in the miasma aswirl in the nebulosity between "wine" and the "wine business," I learned early on that there are things you do for the art and other things you do to put groceries on your table. Filing it under "client maintenance" instead of "whoring myself out" makes it seem more businesslike. It's a necessary evil having everything to do with appeasing the person you answer to who is invariably the person who signs off on your monthly retainer. They're not all bad people, but most of them have to answer to someone higher up on the chain and by the time it reaches the top there's rarely anyone specific to blame.
The fact is, many of the shot-callers are boomers, ie: one or two generations beyond the presumed target demographic. And even a loose reading of the SVB report will glaringly tell you that boomers are the only generation whose rate of premium/collectable wine buying is still increasing. The younger generations are resistant to the marketing come-ons that appeal to boomers, (who amongst us is still talking about that bitchin' Clos du Bois commercial during the SuperBowl?) and the boomer bosses are concerned that the metrics for print "may be more reliable" than the metrics for that digital razzle-dazzle. And they also want to sell cases to customer who'll put them in their wine cellar to enjoy in 20 years when the wines will be deadly soupy, but they'll pay a lot now for the anticipation of what "it's going to become" (and meanwhile, the people who marketed it to them now will be retired or dead or both and don't give a rat's ass if the wines "evolve.") So the creatives get shot down when they come up with any marketing/advertising/PR angle that might appeal to anyone under the upper level of sentience and anyone with disposable income under the age of Alzheimers has moved along to spirits, craft beer, and cannabis and is way more about "collecting experiences" than they are being saddled with a mountain of wine in their cellar to hand down to their grandchildren, who by then will likely be collecting vintage LSD blotters or roach clips from the 1960s and 70s.
And in his latest SVB report, Rob MacMillen of SVB figured ALL of this out and told it like it is and the news went over like a lead zeppelin with all the boomer+ shot callers, most of whom still think "Stairway to Heaven" is the greatest song of all time and remember hearing Floyd's "Dark Side of the Moon" when it was first released, back in what, 1947? And after reporting that the Captains of the Wine Industry were effectively deaf to the masses, Rob's bank got run on and shut down. Cause and effect? Maybe so, but probably not, because SVB's main clientele are VCs who voted for Trump and lobbied for laxer rules on regional banks. And they were the people who demanded their cash back as soon as rumors began rumbling as to the soundness of SVP. Touché. Self-induced self-fulfilling prophecy anyone?
But more to the point, McMillan's annual report is/was the ONLY wine industry pulse check that was worth sitting through the zoom call for. The bank funded it as a loss leader for the wine part of their practice and there are enough younger and semi-visionary people in the biz who reckon that it's worth keeping around. If the wine side of SVB is not resumed by whichever financial entity it becomes, I would expect that some other institution will swoop in and hire Rob and his team and keep the momentum going. They'd also do well to scoop up Paul Mabray. He's one of the few (well, twoP people in the industry who've paid attention to the macroeconomic metrics of the wine biz and has been able to deduce trends of an economic, demographic, and geographic nature that bring a little rationality to this fucking crazy industry. He was really building something at Pix.wine but then the Titans of Industry saw that his forecasts would require a lot of change in the way they conducted business, with the result that they backed out of funding commitments and left Paul twisting in the wind. Things like that happen when people nearing retirement age look down the barrel of having to retool the way they're doing business. Easier to kick the can down the road and let the next squadron of CEOs deal with it.
-Eden (getting used to my can getting kicked down both forks of the road)
Jeff Grossman
Jeff Grossman
First played by Paul Whiteman and his orchestra. Or maybe that was Flamin' Mamie; hard to tell them apart.
Anyway, it's understandable that boomers like selling to boomers and apres moi le deluge. What then? If there are not buyers for all the wine then the industry and the vines wither. There is need of some clever younger person to make wine experiences collectible or produce cinsault edibles or something.
On the other hand, given the water sitch in the American West maybe de-alcoholized wine will become a thing. Gotta drink something. (Of course, only the better wines will be de-alcoholized, as wines made by irrigation won't exist at all.)
Jay Miller
Jay Miller
On another bored Marcus Goodfellow has had nothing but good things to say about SVB's wine division. Apparently they had a group with a very good understanding of the business and were therefore one of the very few banks willing to lend. He hopes the division gets picked up by another bank.
He had a nervous few days until it became apparent his payroll money wasn't going to disappear.
He had a nervous few days until it became apparent his payroll money wasn't going to disappear.
Ken Schramm
Ken Schramm
Given their place in the trade, I was wondering how SVB was going to play here.
One might wonder if the other institution will swoop in and keep Rob's team and their downward pressure on momentum going.
There is a crew of 30 somethings that are using the meadery fulfillment office for weekly tastings as they prepare for Somm testing. Wine is a magnificent thing, and in the long haul, it has not failed to persuade any generation of its appeal in the last 250 generations or so. Cannabis is great, and those seltzer things may be fine for the teeny boppers, but eventually the people with brains, money and tongues want something that really kicks ass with the Osso Bucco.
There is always a drumbeat of doom for things old as things new come into the picture. Lots of people want to be the one who correctly predicted something's demise. Movies aren't gone. Over-the-air radio isn't gone. Hard cover books aren't gone. Newspapers morphed, but I'll bet on Wordle power and decent journalism, which we all value (the journalism part), to keep the NYT going. Yeah, pay phones are nearly impossible to find these days, but phones themselves have never been more a part of our lives. Color me forever skeptical of doomsayers. I am also dubious of those who doubt the staying power of our love of an alcohol buzz. The wine biz will look different, but it will still look.
If there is any lesson to take from SVB, I am pretty sure it lies in whether you should put your faith in Crypto or the full faith and credit of an actual governmental currency.
Ken Schramm
Ken Schramm
Ken Schramm
Ken Schramm
Wild. Don't know what happened there, but fixed, I think. Thanks, Mark.
Jeff Grossman
Jeff Grossman
Alas, poor Yorick (McMillan)! FCB has been sold to a Behemoth Bank....
Eden Mylunsch
Eden Mylunsch
Everything worked out just fine for all concerned (at least for those with a wine business POV). Everybody still has their job and SVP is now being run by people who are in The Banking Business, not in the wannabe VC biz.
The new nabobs at the First International Bank of Behemoth (AKA: First Citizens Bank & Trust) have taken the same approach to SVP's wine practice in relationship to the rest of the bank's activities as say, ad directors used to think about the mole above Cindy Crawford's lip. Sure, it's there, but it can stay in place and we'll work around it. The wine stuff is a sort of a lagniappe for First Citizens (they'll drink much better in the headquarters executive dining room) but its real value is that funding wineries will draw attention to the rest of the bank's moneymaking chunk of business and the wine wing of the building can be easily divested when its plusses as a novelty expire (much like Ms. Crawford divested herself of Richard Gere while keeping the mole, so maybe in a few years First Citizens keeps the wine gang and lays off their division evicting widows and orphans from their houses and they'll put Snidely Whiplash out of work rather than Rob MacMillen.) Besides, the wine division's yearly expenses could probably be charged off to marketing and PR and the IRS wouldn't raise any eyebrows.
-Eden (let's not get too wrapped up in the self-importance of the wine industry in the big game; on our best day, we're the ring in the nose of that statue of the bull on Wall Street, on not-so-good days maybe we're the ring piercing Dionysus' nipple as he attempts to clamber aboard the bull in an attempt to garner attention for his boozy, potentially rumunerative, lifestyle)
The new nabobs at the First International Bank of Behemoth (AKA: First Citizens Bank & Trust) have taken the same approach to SVP's wine practice in relationship to the rest of the bank's activities as say, ad directors used to think about the mole above Cindy Crawford's lip. Sure, it's there, but it can stay in place and we'll work around it. The wine stuff is a sort of a lagniappe for First Citizens (they'll drink much better in the headquarters executive dining room) but its real value is that funding wineries will draw attention to the rest of the bank's moneymaking chunk of business and the wine wing of the building can be easily divested when its plusses as a novelty expire (much like Ms. Crawford divested herself of Richard Gere while keeping the mole, so maybe in a few years First Citizens keeps the wine gang and lays off their division evicting widows and orphans from their houses and they'll put Snidely Whiplash out of work rather than Rob MacMillen.) Besides, the wine division's yearly expenses could probably be charged off to marketing and PR and the IRS wouldn't raise any eyebrows.
-Eden (let's not get too wrapped up in the self-importance of the wine industry in the big game; on our best day, we're the ring in the nose of that statue of the bull on Wall Street, on not-so-good days maybe we're the ring piercing Dionysus' nipple as he attempts to clamber aboard the bull in an attempt to garner attention for his boozy, potentially rumunerative, lifestyle)
Florida Jim
Florida Jim
Yeah, but we’re the nipple ring we’re interested in.
Eden Mylunsch
Eden Mylunsch
Yeah, but we’re the nipple ring we’re interested in.[/quote]
As they say at the company water cooler confabs, "if the shoe fits, drink from it.
-Eden ("better to be a dominatrix than domineering" is what I always say)