Sowing the Seeds
John Scharffenberger grows his businesses from the ground up
Soon thereafter he learned one of his most important business lessons: Even the best-developed green thumb isn't enough to grow greenbacks. Scharffenberger graduated from the University of California-Berkeley (in his personally designed major of biogeography) and moved north to work in a winery. Unhappy with bland supermarket strawberries, he started a farm on the side. The strawberries were succulent, but he wasn't able to get enough of them to paying customers before they rotted. That's when he realized that perfecting the technique of growing and producing a delicious product was, for him, the fun beginning of a business. "Distribution is really the hard part," he says now.
He also learned to ignore conventional wisdom. His continuing interest in the influence of a place's geography on its plants and creatures soon led him to the conclusion that the Napa Valley wineries were doomed to produce poor imitations of champagne because the climate was too hot to produce the right kind of grapes. The climate a few valleys closer to the Pacific, however, was more suitable. He started growing grapes on family land in the Anderson Valley. And in 1981, Scharffenberger rented a garage in nearby Ukiah and defied local conventional wisdom by using French processes such as malolactic fermentation on area grapes. "I knew the conventional wisdom was wrong because my taste buds told me it was wrong," he says.
Reagan's toast. Since he knew by then that a good product was not enough, he hired and trained managers to run his operations so that he could spend the bulk of his time throwing parties for waiters and maitres d' and schmoozing with potential customers. "He is a great raconteur," says Tex Sawyer, whom Scharffenberger hired and trained and who now runs Scharffenberger Cellars for the new owners. The combination of a good wine and a charming salesman began to pay off. By 1988, his sparkling wine was highly regarded and was even used for the toast between Ronald Reagan and Mikhail Gorbachev at a summit celebrating the end of the Cold War.
Unfortunately, all his hard work and clever salesmanship weren't enough to put the company on a steady financial footing. So in 1989, Scharffenberger sold a controlling interest to his French competitor Champagne Pommery, which promised to invest in the new plant and vineyard. Unfortunately for Scharffenberger, in 1991, Pommery was bought up by the company that owns Veuve Clicquot. Scharffenberger soon began to clash with executive Mireille Guiliano, who has since gone on to write French Women Don't Get Fat. Scharffenberger left the company for good in 1995. Guiliano soon changed the name of the champagne to Pacific Echo, a brand that bombed. The parent of competitor Roederer bought the plant and vineyard in 2004, immediately re-establishing the Scharffenberger brand. It hopes to sell 24,000 cases in 2006 and, thanks to recent glowing reviews, more than 30,000 next year. "John set the original style and traditional blending patterns. He set the taste" that keeps winning plaudits, says Sawyer.
Scharffenberger's next endeavor showed how large a role luck and timing can play in business success. He was ready for another project in the mid-1990s, when he ran into Steinberg, whom he had known as a physician in Mendocino in the 1980s. Steinberg had quit practicing medicine to enjoy life when he was diagnosed with a rare form of leukemia. Traveling through Europe, Steinberg became fascinated by fine chocolate. He soon began making chocolate from scratch in his kitchen. He wanted to start a real factory but was having trouble. Everyone in the notoriously secretive chocolate industry insisted it would be impossible to make a profit on a small, high-quality chocolate factory in the United States. And Steinberg was stymied by many business details. So he asked Scharffenberger to join him. Though their temperaments are different-Steinberg is very much a cerebral scientist-they agreed on key business strategies such as a fanatical insistence on the very best ingredients, aiming for top quality through every step, and plenty of patience.