Scott Mcculloch is editor of Families in Business magazine.
Marchesi de Frescobaldi may be one of the world's oldest winemaking dynasties, but that hasn't stopped the family business from grabbing the mantle of modernisation with gusto. Scott McCulloch reports
Vittorio Frescobaldi cuts a dash in his immaculate Italian suit. He is a softly-spoken salt-and-pepper-haired man who probably enjoys a glass of Chianti almost as much as striking deals with big hitters in the curious world of winemaking. For in the viticulture sector the ongoing quest for organic growth is taken very seriously indeed.
He has been chairman since 1980 when the winemaking group was transformed into a joint-stock company. It was a critical period in the 700-year history of Marchesi de Frescobaldi, one of the world's oldest wine producing dynasties whose vineyards are depicted for everyone to see on a 16th century map in the Uffizi gallery in Florence. "It was just something inherited by our father," Vittorio says. "We didn't have a board of directors." Indeed, it was not until the 1990s that a formal structure was put in place with one executive to oversee day-to-day administrative functions and a second to focus on mass production of wine.
The Frescobaldis have quietly modernised and expanded their estates over the past 30 years. By the mid-1990s they had contributed in no small measure to the transformation of Chianti and other Tuscan wines from cheap mediocre products into quality wines mainly sold in Bordeaux bottles and which critics have said could be realistically compared with good claret or Burgundy.
In the early 1970s Frescobaldi was the first in Italy to age white wine in small oak barrels traditionally used by French producers. Like other Tuscan producers, the Frescobaldis have experimented with new grape varieties to develop high quality table wines at the same time as improving their traditional Chiantis.
The quest for supreme quality began to bear fruit when Vittorio and the family first set their sights on Montalcino. In the late 1960s the small hilltop town, 40km south of Siena, was a deserted place with among the lowest incomes in the Tuscan region, and there were no more than six wine growers in the area. The Frescobaldis only discovered it in the 1970s. The large 800-hectare estate of Castelgioncondo was up for sale and Vittorio remembers walking through the chaotically hilly landscape, with its Brunello vineyards and oak and chestnut forests inhabited by wild boars, to consider its possibilities. Outside of Italy, the dark long-aged Brunello wines were at the time recognised as some of the country's greatest by educated and well-read wine critics. The land was cheap, but the Frescobaldis were initially outbid by a group of foreign banks, including Hambros and Banque Paribas.
In the end Vittorio and the family were victorious. Although the purchase price raised eyebrows at the time, upon reflection the patriarch believes it was the best deal he had ever done. Vittorio himself took charge of the estate. New vineyards were planted and modern production facilities and cellars constructed. Today Frescobaldi farms more than 1000 hectares of vineyards, around one-quarter of its total landholding.
It has been long been said that Italy can achieve as much success as its French rivals in making wines of the highest quality. Vittorio, as you would expect, agrees. But, as any master winemaker will tell you, much depends on the fickle finger of mother nature. Last year Frescobaldi's Italian vineyards experienced a fresh and rainy spring season. Summer temperatures were below seasonal levels and nights were generally cool. It is an elusive combination that yields high quality vintages. "The two are very difficult to combine," says Vittorio with both frustration and relief in his voice.
His son, Lamberto, elaborates: "One [necessary] condition is a cool summer, not hot and dry like the ones we had in 2003 and 2001." Sunshine, rainfall and compliant temperatures are crucial, he says. As a viticulture graduate of University of California Lamberto is rather well-read on the peculiarities of the humble grape. Today, Brunello, the rich red wine made from the Sangiovese grape, has become one of the most sought-after in the world, turning medieval Montalcino into one of Tuscany's richest spots. The temperamental Sangiovese, says Lamberto, has an early bloom and is susceptible to frost. "But this year offered perfect conditions – no frost, which is quite unusual, so we had quite a lot of fruit."
That means Frescobaldi wine drinkers can expect "some very nice aromas" come tasting time for the year's vintage. "We had a long season and a good level of ripeness." Last year's climate will also mean the acidity of the wine will be slightly higher than usual but Lamberto believes this will work in favour of the vintage – the wine will age better. "We are very satisfied this year. I would say that this is a five-star harvest."
Five stars indeed, but 2003 will no doubt go down as the year in which Europe found itself in the grip of an unforgiving summer heat wave. As for the vintage, Lamberto says the spring frost, hot July and elevated evening temperatures resulted in unusually fruity wines with low levels of acidity. He cautions: "For most of the market I would say [Italy's] wines were very well accepted."
They are. With prices for Bordeaux, Burgundy and top California Cabernet and Merlots reaching absurd levels, more and more wine lovers are learning to love Tuscany, which produces some of Italy's most complex and elegant wines. A key reason for this is the 10-year old joint venture between Frescobaldi and the Californian wine making family Robert Mondavi. Most Americans are familiar with Frescobaldi through its involvement in the highly publicised venture, which turned the formerly ossified house of Marchesi de Frescobaldi into one of the most dynamic wine producers in the world. The two wine makers first collaborated in 1995 to produce Luce, a good-quality red wine that blends Sangiovese and Merlot grapes. Although the joint venture is seen as a successful blend of old and new world skills, Vittorio and Lamberto acknowledge the productivity gains Frescobaldi secured from its American partner. "There were a lot of major changes," says Vittorio. "We were joined with the more well-known producer of wine that was Robert Mondavi."
Certainly Marchesi de Frescobaldi gained technological expertise, but Vittorio is quick to point out that Robert Mondavi has gained a stronger foothold in the larger European market. "They wanted to export to Europe because they were trading mainly in the domestic market," he says. "The largest wine market is Europe so the joint venture was an opportunity for them." If the company's balance sheet is anything to go by, the move proved prescient. Group consolidated income grew nearly five-fold from €14m in 1995 to a peak of some €64m in 2002. Income in 2003 began levelling off. "The market has slowed and there is more spare capacity," says Lamberto, who heads up production.
The Mondavi joint venture could not have come at a better time. Although at the avant-garde of the Tuscan wine renaissance, the Frescobaldis craved the recognition given to their Tuscan counterparts, in particular their old Florentine rivals, the Marchesi Antinori. "We have been very understated," Marchesi de Frescobaldi vice president Ferdinando Frescobaldi told the Financial Times in 1996. "We have often been criticised for not being more aggressive in marketing ourselves. It has not been our style." Ferdinando should know – he's been working in the family business for over 40 years.
That's a twinkling of the eye compared with their long and colourful family history: bankers and tax collectors to the English crown in the late 13th century; prosperous wine producers since the 14th century with branches not only in England but in Constantinople and Damascus and dealings with China. The family still lives in what has been described as 'an aristocratic commune' in the Palazzo Frescobaldi, a few steps from the Ponte Vecchio in Florence, a Renaissance city surrounded by the wine-growing hills of Chianti and home to what Unesco estimates to be a disproportionately large collection of the world's most important artworks. The Palazzo has always been their headquarters and to this day it houses the family wine business – run by seven directors, two of whom are non-family members.
Today six family members control the company. Ever the patriarch, Vittorio holds more than 20% of the family business and has wine coursing through his veins. He graduated in agricultural science in 1953 and soon after he joined his father Lamberto in the business. Upon his father's death, Vittorio became leader and during the 1960s he found himself beset with the formidable challenge of restructuring the estates.
Winemaking has changed dramatically over the past 20 years – investors can now own a piece of premium wine brands in the US, such as Robert Mondavi and Chalone Wine Group. Not so for the Frescobaldis, despite the capital-intensive demands placed on modern vintners. Yet for Vittorio it's a no-brainer. "Let's put it in a very easy way," he says excitedly. "When you are on the stock market, you need a very short-term vision. Every three months shareholders ask you how things are going and [in the case of] luxury wines, you need a vision of at least ten years. External shareholders do not have that kind of patience."
Some analysts believe wine consumption in North America will increase by as much as 25% in the next five years, owing in part to strong growth prospects for premium wines. The prospect is promising, says Vittorio, but this time round his quiet Tuscan patience could be divided between inspecting his grapes and waiting for the frail US dollar to rise from its sick bed. "At the moment we have the problem of a very weak dollar and a very strong Euro," he laments. "How long will this go on for – six months, one year, three years? We really don't know."
No matter. In the interim, Vittorio's son Lamberto – one of four – intends to painstakingly build the family brand so that Frescobaldi becomes not just a byword for premium quality, but a household name. "That is one goal," he says. "The second is to be more capable to communicate our product. We strongly believe that the soul of each vineyard goes through the wine itself."
Vittorio takes an equally philosophical line in pondering tomorrow's challenges. Certainly economic upheaval poses problems. But he is quick to add a caveat: "For entrepreneurs, it offers opportunities. There are new nations with large and increasingly wealthy populations, so we have an opportunity. There are consumers that like good wines and I think we'll see an increase in sales in those markets." Why? "Because a good glass of wine is good in good moments and also it is also good in bad moments."