It’s not just the Europeans who can boast wine dynasties. There are a number of Australian wineries that have stayed in family hands for generations. MARGARET RAND finds out how they have succeeded to pass their legacy on to the next generation..
Families are the most unreliable things even amongst Australian wineries. They start wine companies; they pass them on to their children, perhaps their grandchildren; and then what happens? The next generation want to be poets or estate agents. Hopeless.
There you are, needing a winemaker or a vineyard manager, and all your children want to do is make up rhymes or flog other people’s houses. In the end you give in, and sell the company, probably to Constellation. End of dynasty. It’s the same all over the world: families do not necessarily breed the right talents in every generation. There may not be enough of them, leaving you with key roles to fill; or there may be too many, and an excess of people wanting to join. And if the lack of suitable heirs doesn’t get you, the taxman may: in California, 75% of winery owners are first-generation, and transferring a 32ha (hectare) winery in northern California to the next generation can mean $2–3m in tax.
In Bordeaux, the only Médoc châteaux classified in 1855 and still in the same family hands are Léoville-Barton and Langoa-Barton. In California again, one of Warren Winiarski’s aims in founding Stag’s Leap Wine Cellars was to pass the company on to his children; instead, it has been sold. The wonder is that any family companies survive at all. And yet there are a number of Australian wineries that have been in the same hands for four or five generations, and continue to defy the tentacles of Foster’s and Constellation. How, in an industry built upon consolidation and then more consolidation, do they manage? The desire to pass the company to your children is the great motivator; otherwise most would sell up and retire on the proceeds. That, after all, is the expectation of most people who start businesses; and one gets the impression that the younger a company is, the less emotional the owners are about whether their children join or not.
But Tyrrell’s, for example, is 150 years old this year, and CEO Bruce says: ‘The number-one thing that drives the whole place is getting it through to the next generation.’ In spite of that, Bruce and Pauline Tyrrell never put pressure on their children to join; yet son Christopher is installed as assistant winemaker, with daughter Jane in the sales force.
At Angove’s, Victoria Angove says that the reason her grandfather persisted with the company through tough times was that her father John wanted to take over in due course: without that spur, he would have sold up. Both companies have had good offers. Working with your family is never easy. Sons feel crushed by powerful fathers; daughters know that nobody has a greater knack of saying precisely the wrong thing than their mother. The ideal succession might be father to daughter, but then, that doesn’t always work. Working together requires far more maturity, diplomacy and generosity on both sides than working with strangers. Anybody who works with their family will admit, if they’re honest, that it is not always sweetness and light. And by the time you’re able to cope with your parents, you’re probably middle-aged yourself, and trying to cope with your children.
Australian wineries: the next generation
What you have to do then is decide just how much immersion in the business your children should have, and from what age. Do they spend Saturdays in the winery? Do they spend their school holidays on the back of a tractor? At d’Arenberg, Chester Osborn’s mother used to carry him around as a baby telling him that he was going to be a great winemaker; at Brown Brothers, Ross’s,John’s and Peter’s children were put on to blending and marketing a ‘Kid You Not’ range of wines as a way of getting them interested.
Pauline Tyrrell just waved Christopher off to the sports field, which was what he liked best. It’s like playing a fish: you daren’t try too hard. Everybody these days, in fact, encourages their children to go off and work in other fields, other companies, for a few years; at Wakefield (called Taylors in Australia but not in Britain), for example, they are currently setting up a family constitution, setting out the guidelines for entry: family members must have a degree, at least three years’ practical experience, and they must be able to offer a skill that is needed. ‘They must be people who can cut it anywhere,’ says MD Mitchell Taylor. But it can backfire. If they have too much fun doing something else, they might not want to come home: none of the next generation of Browns are working at Brown Bros.
At some point in their growth, many family companies are faced with the necessity of being run by an outsider. At Best’s, Viv Thompson’s son Ben, who represents the fifth generation, is passionate about vineyards, which could leave a gap in the MD’s chair; it could be the moment when a non-family member is brought in to run things. Douglas Green, general manager at Best’s on a five year contract, has brought more order and will probably help them make the mental leap to taking on an outsider permanently. It’s a leap McWilliam’s made some while ago: there are 10–15 family members in the company out of a total workforce of about 300, and four family members on the board, says Karen McWilliam, who is in the finance department. But in 1993, they appointed Kevin McLintock as CEO, who successfully changed McWilliams from a fortified wine company to a table wine company. Being run by a non-family member is now clearly not a big deal at all. The alternative is to get your children to marry the right talents. At De Bortoli, Steve Webber runs the Yarra Valley estate by dint of being married to Leanne De Bortoli, who also works there. ‘I’m quite happy to be kept,’ he says. Still, there has to be a succession plan in place, and it’s better if shareholdings are not too dispersed.
There is no inheritance tax in Australia if a company is passed down to a family member. Every couple of generations, there may need to be someone tough enough to buy out the others, and with the vision to know what to do next.
Since passing on the company to the next generation is what fixates most family companies, and is what motivates them to resist takeovers, it’s easy to think that it’s their only focus. But, says Steve Webber: If you ask Leanne what a family company is about, she’ll say it’s about leaving a legacy and looking after people, and profitability and sustainability will come from that. It’s about family values versus shareholder values. If you’re appeasing shareholders, you’re only looking 12 months ahead.’ And for winemakers, he adds: ‘It means only having to convince me, not the shareholders, so they can follow their passion.’ Bruce Tyrrell agrees: ‘Len Evans used to say that Foster’s would look after Grange and be very good owners – but they would never find the next Grange.’ So different from other companies do Australian family firms feel that around a dozen of them are grouping themselves into an association. As Bruce Tyrrell says: ‘Family companies have to punch above their weight… It’s about having a face and a soul.’