Eric Kent Wine Cellars Survives Recession with Craftsmanship (and a Little Luck)
The wine business was booming in 2002 when Kent Humphrey sold his advertising company and invested in starting Eric Kent Wine Cellars. Unbeknown to him, the global financial crisis lurked just around the corner. He would have only a few short years to establish his product in both a crowded marketplace and an industry where anything from a bit of bad weather to a bit of bad press can mean the difference between riding high and closing your doors.
To make matters worse, Humphrey recalls, wine production presents substantial cash-flow challenges. Although many new businesses spend some time in the red before sales pick up, winemakers also must contend with the fact that their potential to turn a profit doesn’t exist until the first vintage sits on the shelf for an extended period of time. Because of this delayed start — and because winemakers spend and bring in money in big, periodic chunks (as opposed to steadily over the year) — it’s the kind of business that tends to suffer when the lending climate is unfriendly.
Yet Eric Kent Wine Cellars persevered, never missing a year of growth, and today it's stronger than ever, Humphrey says. How did the company manage to steer clear of the shoals? A big part of it was producing quality wine — yet a lot of wineries that went under when the bubble burst made excellent vintages. What set Eric Kent apart from the competition was its business acumen and, frankly, dumb luck, Humphrey says.
Timing Is (Almost) Everything
His first lucky break came in 2004. Just as Eric Kent’s first vintage of pinot noir (one of the few varietals the company made in its first year) was ready to hit the market, the movie Sideways inadvertently transformed California's wine industry. In the film, actor Paul Giamatti plays an affable wine snob who, in one particularly memorable scene, rants about the demerits of merlot. His preference? Pinot. The movie became a sleeper hit and almost overnight wine drinkers’ palates underwent a startling conversion. Eric Kent Wine Cellars was in the right place at the right time.
"Sales of pinot noir shot up remarkably after the movie gained all the press that it did. And merlot sales did indeed suffer at the same time," Humphrey says, adding that the market has changed since then. "Merlot is actually one of the highest-selling reds strictly by volume now, and pinot sales, while strong, have evened out a bit. Drinkers did talk about it when the movie was out, but not so much anymore. That said, the trend was set in motion and has not waned significantly."
The second stroke of luck was getting some key press, namely in The Wine Spectator. Granted, getting positive reviews isn’t all luck; your wine actually has to be good. But just getting your wine tasted by the powers that be can be a Sisyphean ordeal. "Most winemakers feel ambivalent about big-scale wine reviewers, and we are not any different in that respect," Humphrey says. "In fact, we made a conscious decision not to submit our wines to anyone for review. But we also made a conscious decision to graciously comply if anyone came asking to review the wines. That's how it all started."
Cultivating New Business
When its second vintage met with acclaim, the phones started ringing off the hook and direct sales tripled, Humphrey says. As production increased and media coverage got even better, the company swerved in an unorthodox direction: Rather than reinvest purely in its first label, the company decided to start a new one, Sarapo Family Wines (named for the Humphrey’s mother’s family). The new label would sell at budget price point, and the release would be staggered with that of its sister label, to help even out cash flow.
Eric Kent Wine Cellars today employs four people (including my other half). Its size comes with advantages and disadvantages: For example, the business is vulnerable because it's hard for smaller labels to absorb unexpected costs, such as those that result from a bad grape yield. At the same time, staying small also gives the company flexibility. Eric Kent can respond to changes in public tastes, and because the winemaker tends to produce fewer varietals than its larger competitors, it can bring greater focus to bear on the ones it does make.
Through hard work, talent, savvy, and a little unexpected help from Paul Giamatti, this family-run business has grown ripe on the vine through cloudy weather.