Shelton's Key to Success at Joseph Phelps Vineyards - 'Grow the Company by Getting Smaller'

Aug 24, 2004, 01:00 ET from Joseph Phelps Vineyards

    ST. HELENA, Calif., Aug. 24 /PRNewswire/ -- By any standard, Napa Valley's
 Joseph Phelps Vineyards is one of the most successful wineries in the
 world-making consistently outstanding wines like Insignia, Backus, Le Mistral
 and Ovation, acquiring and developing fine vineyards and being an effective
 leader in the complex business, social and environmental issues that affect
 the wine industry.
     Over the past decade, the key to this emphatic success is the winery has
 "grown by getting smaller."  This seeming oxymoron is not voodoo vineyard
 economics or a crafted pr spin -- it's a fact.  When Tom Shelton took over as
 president and CEO in 1995, the winery was annually producing in excess of
 120,000 cases of wine; now production is slightly under 90,000 cases. But
 because of a very focused strategy on advancing quality, dollar sales have
 more than tripled -- an unusual result in today's marketing schemes.
     "This strategy was a team decision, that enjoys the full support of
 Joe Phelps, Bill Phelps, Craig Williams, our winemaker, and the entire team
 from vineyard to production," according to Shelton.  "We were very sure that
 in order to remain both very independent and very successful, we had to find a
 distinctive niche.  We all agreed that our niche would be at the top of the
 luxury wine segment and in that rarified niche, to be the benchmark winery in
 that niche.  Once we determined that was to be our goal, then we could focus
 on every effort it would take to get there and stay there."
     Although Phelps already had great vineyards in 1995, the winery
 essentially doubled its acreage by acquiring two vineyards in Napa -- Soscol,
 for cool climate Cabernet, and the great Backus Vineyard, which is just now
 coming in to full production; a fine vineyard in Monterey for the winery's
 Rhone program and our newest vineyard project in Freestone, in the Sonoma
 Coast appellation, for Chardonnay and the winery's first Pinot Noir in
 decades.  A new, small winery also is in the near future.
     Shelton continued, "These vineyards in widely varying places gives us the
 opportunity to strongly emphasize regional wine styles and identities.  These
 excellent vineyards strongly dictate the marketing plan; we are fully
 production driven, not market driven."
     The Backus Vineyard project was a prime example; the winery had leased the
 vineyard since 1977.  Shelton notes, "Backus has a unique terroir and steep
 western facing slope; we produced a special vineyard designated wine from it
 that already was a very high scoring wine and a favorite with collectors.
 When the vineyard owners decided to sell in 1996, we had to buy it, but more
 than that, we put two years of work and an extraordinary amount of money into
 the optimum development of Backus in order to make an outstanding wine even
     "Vineyard acquisition and development is just a start in our plan.  We are
 constantly refining crop management and our farming techniques and then do
 very careful selection to keep raising the bar on wine quality.  For example,
 in a good year we may make 20,000 cases of Insignia, as we did in 1997.  In a
 year that is difficult, we may only produce 8,000 cases, but even in a
 difficult year, Insignia will be among the highest scoring wines because of
 our stringent selection process.  Making outstanding wines in difficult
 vintage years is the true measure of a great winemaker like Craig Williams.
     "Our experienced team also allows me the luxury of working on behalf of
 the wine industry in general, especially important issues in the Napa Valley.
 I love the political process, trying to get things changed for the better.
 With the Phelps family's great support, we pushed for better farm worker
 housing and continue to advance improved trade relations and stronger
 environmental standards."
     Joseph Phelps Vineyards, founded in 1973, is located in the Spring Valley
 near St. Helena, off the Silverado Trail.  The winery has its "home" vineyard
 in Spring Valley, as well as vineyards in the Stag's Leap District,
 Rutherford, Oakville, Carneros, Oak Knoll and Monterey and a recently
 developed vineyard in Freestone, Sonoma County for the production of Pinot
 Noir and Chardonnay.

SOURCE Joseph Phelps Vineyards