XChateau Wine Podcast

• Bringing innovation back to value wine w/ Dom Engels, Bronco

  As one of the major players in value wine, owning Charles Shaw (aka “Two Buck Chuck”), Bronco Wine Co.’s new CEO, Dom Engels, believes that the wine industry needs more innovation and focus on creating new entry points for younger consumers. From packaging to labels, Dom discusses how he’s navigating Bronco through the turbulence of a shrinking market for value wine from both the cost and innovation side. Detailed Show Notes: Bronco - Top 15 winery, owner of Charles Shaw (aka “Two Buck Chuck”)Has its own CA distributionHouse of >200 brandsLarge winery in Modesto, bottling in Napa, a boutique winery in Santa RosaOwns ~40k acres, ~30k acres vineyards, but farming <10k todayOwns Bivio, a logistics companyCharles ShawNo created by Bronco, acquired by Fred Franzia (co-founder of Bronco)Was a successful, premium, luxury Napa brand, 1st vintage 1978Went bankrupt in the 90s, Bronco bought the trademark in 19991st product in 2022 - $1.99 for good quality wineLow pricing enabled by low margins and Fred Franzia’s “genius” in bulk wine tradingPartnership w/ Trader Joe’s through shared belief in creating accessibility and substantial cultural overlapBelieves the industry needs more good entry-level wines to get younger generations a start in wineThe ethnic makeup of younger people is not the same as that of older generations“Not your father’s Cadillac” - young tend to rebel against what their parents did11,400 wineries in the US create a diffuse set of interests, a lack of clear messaging (e.g., craftsmanship, agriculture) to separate wine from alcoholAccessibility could be driven by the right packages (including formats) and labels; good labels drive trial, good liquid drives repeat salesSignificant marketing spend is difficult due to low marginsIndustry covers the right price points (e.g., Charles Shaw $3.49 in CA), but needs other elements, not a lot of great innovation or marketing at low price points (some pockets of innovation, e.g., XXL focus on high ABV)Need more transparency - ingredients, nutrition, ownership, provenance - Bronco is adding more back stories to brandsEnhancing social interactions is important; e.g., Jack Daniels’ ad that getting together with other people is healthy tooNew Bronco company motto, “better times at every table,” similar to Pernod Ricard’s “conviviality”Believes dislocation of restaurant price vs retail is a core driver of wine industry decline, $14 IPA and $25 cocktails make people drink lessNavigating lower volumes requires being more efficient, sees opportunity in winemaking (most capacity utilization at wineries now <50%), distribution (reduce inventory), and retailLikely too many brands in the US and too much shelf space in retailMothballing a lot of vineyards due to oversupplyCan’t bring back in 1 year, but can in 2-3Cut buds down so vines don’t produce fruitStill requires some maintenance costsVineyards in less optimal areas are to be pulled first, and he does not believe there will be an overcorrectionCompeting in value vs internationalCan’t compete on laborNeed to compete on quality, provenance, and tasteEven tariffs won’t solve the cost gapEU subsidies help democratize wineTariff impactsSome input cost increases (e.g., China for glass)A good thing overall for the US industry, which will lead to more US wine being consumedLikely no structural change Hosted on Acast. See acast.com/privacy for more information.

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• Unpacking the cost of growing grapes w/ Natalie Collins, CAWG

  In an oversupplied market with rising costs, being a winegrape grower is probably the hardest it has ever been. Natalie Collins, President of the California Association of Winegrape Growers, breaks down the cost of winegrape growing in CA, the challenges in the marketplace, and the policy dynamics in the US, CA, and EU that continue to exacerbate the challenges for CA’s winegrape growers. Detailed Show Notes: CA Winegrape Growers - based in Sacramento, lobbies at the state and federal levelCA has ~5,900 winegrape growers and 550k planted acresKey cost drivers of winegrape growing#1 labor, ~45-50% of budget (30-45% CA interior, 45-65% CA coast); doubled in the last 10 years, driven by:High min wage ($16.50; most pay $18-30/hr) → increases take entire pay curve up, not just bottom2016 labor law change reducing hours before overtime pay → reduced farmworker take-home pay (OR provides an overtime tax credit to employers)#2 regulatory compliance (water, air, worker health, safety), ~10% budgetCal State SLO study on lettuce growers - compliance costs ~$1,600/acre (1,366% increase since 2006, 637% since 2022)#3 land - CA has some of the highest land prices in the US #4 crop protection/fertility toolsFarming costs ~$4k/acre Central Valley, $6-8k/acre Paso Robles, $8-10k/acre Sonoma, ~$10-17k/acre NapaGrape pricing not rising w/ input costs - Central Valley ~$500-600/ton, Central Coast ~$1-2k/tonBulk wine from Chile is cheap, and the US can’t compete on priceThe annual CA Winegrape Crush Report shows pricing for all varieties by districtNo US federal support vs EUEU subsidizes at every level (growing, marketing, production)>e2B/year in direct and local support, enabling cheap wine productionCrisis distillation - buy surplus wine to convert to alcohol (e.g., hand sanitizer)Vineyard removal and vineyard planting subsidiesAggressive marketing support (France investing $5B to support wine exports to the US w/ new tariffs)US wines can have up to 25% foreign wine blended in and be labeled as US wine2023-2024 - CA left ~300k tons/year on the vines; 2025 ~50% of vineyards don’t have a contract for the 2025 harvest; industry calling for another 50k acres to be removed (60k removed since 2022); all regions pulling out or mothballing/minimally farming vinesTariff impacts (May 2025)- input costs increase, but can be positive for CA winegrape growers2019 tariffs saw domestic wine increase its share by 10% vs EU winesCanada is actively removing US wines from shelves in retaliation; the US exports 10% of its wines, 40% to CanadaDeportations - creating fear, people are afraid to leave their homes for fear of their families getting separatedSeasonal labor is not big, 90% vineyards are mechanically harvested; H2A temporary workers (mostly from Mexico, all-in cost ~$30/hr, often more productive, cannot be paid more than domestic workers)Economic impact of CA wine - 422k CA employees / 1.1M across US, $73B CA economic impact / $175B/year USAll agriculture is struggling in CA, replacement crops for grapes not easy (some almonds, pistachios, cherries); costs ~$30-70k/acre to plant a vineyardDuty Drawback - a federal tax refund program meant to encourage exportsIf a winery exports wines, then imports them back, it gets 99% of import fees (including the Federal Excise Tax of $1.07/gallon) refundedIf importing ~$3/gallon bulk wine, can save ~30%Mostly used by the top 5 wine companies2024 - 38M gallons bulk imported (70M in 2022) vs ~70M gallons left on the vine in 2023 Hosted on Acast. See acast.com/privacy for more information.

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• Replicating the Farmer’s Eye w/ Kia Behnia & Mason Earles, Scout

  Having met at the UC Davis Wine Executive Program, Kia Behnia, CEO, and Mason Earles, CTO, founded Scout to replicate the best sensor in the vineyard, “the farmer’s eye.” Leveraging off-the-shelf hardware, Scout uses AI to process images taken from a tractor to automate vineyard mapping, vine counting, yield forecasting, virus identification, and more. From managing vineyard assets to implementing precision agriculture to improve quality, Scout is harnessing the power of AI to optimize vineyard management.Detailed Show Notes: Mason’s background - UC Davis Professor, Apple, AI & agricultureKia’s background for Scout - owns the Neotempo wine brand, worked at Splunk, the “data for everything” companyThe official company name is Agricultural Scout, dba Scout, the website is agscout.ai, so it can be called any of those namesFounded in 2022, initially more hardware-based, but pivoted to an intelligence company using off-the-shelf hardwareThe goal is to “replicate the farmer’s eye” with an AI-based solution using cameras, tractors, and Scout cloud and mobile app (which can be used offline); the brain is centered around a phoneUS only today (~50-100 clients, 300 blocks, 2M vines, processed 56M photos), going international in 20264 main use cases currently: Automate vine count, inventory, and mapping of vines - 4x faster than people could doEstimate crop performance - both vigor and fruitYield forecasting - can use every step in the growing season to forecast yield with historical performance and weather forecastsHealth performance and vine mapping - leveraging AI for virus detection3 types of clientsEstate wineriesVineyard management companies (“VMC”)Real estate investors or owners to track vineyardsBenefits include: $400-1,200 savings/acreProductivity gains through managing more acres with fewer people, identifying low-performing vines, and the program tells farmers where to sampleRemote monitoring of faraway vineyardsEarly season yield forecastingDisease management - virus can cause $170k/acre damage over 3-5 years, costs $40/PCR test, the goal is to keep virus <15% not to lose the whole block, has a 7,000 photo database on vine diseaseBench Vineyards discovered 1 acre of missing vines out of 24 acres and filled them inPricing is a subscription model, $150-180/acre per scanVolume discounts >50 acresNeighborhood and AVA discountsStarter - 2 scan package (for inventory and virus)Professional - 6 scan packageTypical customer starts w/ 2 and upgrades to 6Monarch promotion, customers get 1 free scanUp front hardware costs ~$3,000New product in beta in July 2025 - ChatGPT Scout for vineyardsMarketing mostly through word of mouth, industry trade shows, and webinars have been effective, as has partnership with Monarch (already tech enthusiasts)Barriers to purchase are often due to farming budgets built around labor Hosted on Acast. See acast.com/privacy for more information.

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• Efficiency, then Sustainability with Praveen Penmetsa, Monarch Tractor

  From 200 mph electric cars to 20 mph electric tractors, Praveen Penmetsa, CEO of Monarch Tractor, leveraged his passion and expertise in vehicles, robotics, and batteries to develop the first smart, electric tractor. Making farmers more profitable and efficient first, and then sustainable, are the core tenets that drive Monarch’s business. Praveen discusses the core benefits of using an electric tractor and how it works with farmers to take advantage of government incentives, making farming more efficient and cost-effective. Detailed Show Notes: Praveen’s background: mechanical engineering, loves fast cars, worked on electric vehicles, robots, and battery systemsFounded Monarch in 2018, the company is currently the only company selling smart, electric tractorsNow on four continents, with most sales in the US, pilots internationallySolution is a smart electric tractor with an app and piloting autonomous drivingFits in 5’ rowsRuntime 10-14 hrs for pushing, 8-11 hrs for mowing, 4-6 hrs for heavy operations; takes ~6 hours to chargeCore markets - vineyards #1, dairy #2, orchards, horse ranchesCore benefitsSave $7-12/hr on diesel savingsRemote service and support, day and night - can submit a service ticket on the machine and get help remotelyProduct gets better over time with SW updates (e.g., released the ‘row follow’ feature)Can power other things, be used like a generator (e.g., night lights for harvest)Easier to train operators (smart screen vs 20 manual controls)Environmental impacts - reduces carbon emissionsWith increasing automation (mowing is 1st operation), more labor savingsAutonomous driving has guidelines by CA OSHA (need signs that the autonomous tractor is running and no people in the block), but there are no legal guidelines in other placesPricing$90k baseline price + options + subscriptionsGov’t incentives can make it cheaper than a diesel tractor, 20-70% savingsMonarch helps apply for subsidies, including charging infrastructure and solar installationSubscription charge for connectivity and SW has various levels; some charges can be offset by incentives with carbon offset reporting (e.g., Dannon gives dairy farmers incentive payments for the carbon offsets)ROI driven by tractor usage, payback ~2 years; has an ROI calculator on the website; needs to be cheaper and more efficient before sustainability elements come into playMost farmers want autonomy to reduce labor costsSells through a direct sales team and dealersMarketing driven by non-electric tractors today, podcasts are helpful, social media, and demos have been very effectiveSocial media, primarily Facebook and LinkedIn for owners, Google SEO, and local dealer supportDemos are essential; most farmers want to try before they buyPartnering with other companies to use their technology inside, also partnered with AgScout to leverage AI for vineyardsBarriers to purchase primarily worry about service and support, and wanting more autonomy for labor savingsContinuously update both HW and SW on machines, some tractors now close to 4,000 hours of operation (vs. standard tractors need to be replaced after 4-6k hours) Hosted on Acast. See acast.com/privacy for more information.

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• Helping wineries run better businesses w/ Ashley Leonard, InnoVint

  Drawing on her background in winemaking and Silicon Valley, Ashley Leonard, Founder and CEO of InnoVint, has developed a modern platform that tracks everything from the vineyard to the bottle. From getting granular with COGS to automating TTB compliance, InnoVint gets the winery out of spreadsheets and into a modern, cloud-based, mobile-centric system. This system is designed to accomplish InnoVint’s mission: Helping wineries run better businesses.Detailed Show Notes: InnoVint overview - mobile-driven winemaking platform, tracks and manages all winemaking options, and automates compliance>600 winery clients (~80% of wineries still using Excel)92% of clients in North America, 8% InternationalMission: helping wineries run better businessesTTB requires reporting for producers >500 cases4 productsGrow - vineyard tracking platform from the winemaker’s lens; phenology dates, yield estimates, applications, harvest scheduling, historical trendsMake - winemaking from fruit reception to bottling; work enablement platform with digital work ordersFinance - tracks all costs associated with making wine, final COGS; the finance team applies overheadsSupply (2025 launch) - case goods management, inventory tracking, integrates with DTC platforms & distributors, has allocations as a planning toolHas open APIs; integrates with TankNet and VinWizard for winery automation, receives data back for actions taken; integrates with quality control labs (e.g., ETS) and can take action more quicklyCore benefitsKey differentiator: profitability per SKU and true COGS/product (w/o InnoVint, calculated once per year)Efficiency, working smarter, better decision making, and more transparencyReporting to be able to manage qualitySome wineries use data to track carbon footprint (e.g., water use, weight of glass)Reduces the risk of an auditCompliance reporting (e.g., TTB 5120, export reports) - Gloria Ferrer went from 3 people over 2 days to 15 minutes for 1 personLarger wineries tend to have more tangible benefitsDomaine Chandon saved $75k annually by making the workflow paperlessPatz & Hall saving 40 hours/monthOnboarding5-step self-serve process (vineyard sources, lots, volume, vessels, current inventory) takes a couple of days for small wineriesPremium package for larger wineries includes team training, and full data migration takes 2-8 weeksPricing - SaaS modelScales based on size (production) and complexity (# of locations) of the wineryNot user or usage-basedImplementation ~$1-2kSubscription starts at $2,400/year for a boutique winery for MakeMarketing - “has tried it all”, tries to add value to the end userDoes a lot of speaking engagements/webinars on being a healthy wineryManages The Punchdown, a free digital community that is a peer-to-peer exchangeReferrals from clients are the most effective marketingLaunched the State of the Wine Business Health Report (2024) - surveyed with >500 participantsTo reach wineries that don’t go to conferences - LinkedIn/social, co-marketing, financial webinarsPaid advertising sometimes works, but it's not a top lead generatorBarrier to purchase - resistance to change, case studies help overcome (e.g., Domaine Carneros saw what Chandon was doing and bought the product)The product roadmap includes Supply module, AI applications, and embedded tools Hosted on Acast. See acast.com/privacy for more information.

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