Napa Valley, Castello Winery.
“Dad, are you still upset?”
Matthew cautiously asked, seeing his father’s face remain stiff the entire time. Ever since they had returned from Mondavi Winery, Joseph had worn a dark expression, absorbed in thought.
“It’s Warren Winiarski. You may not feel it yet because he’s still alive, but he’s a legendary figure in Napa Valley. You have no idea what kind of impact it will have that someone like him has joined another winery.”
“Still, he’s old now... Honestly, it wouldn’t be strange if he died at any time.”
“Robert Mondavi is living past ninety. The time when it wouldn’t have been strange for him to die was thirty years ago.”
“Ah...”
“Let’s say that old man lives just ten more years. How many new wines do you think he could create?”
Matthew thought for a moment, and his expression slowly hardened.
“At least five...?”
“Hmph! If it’s that monster of an old man, he’ll come up with more than ten.”
There were already legendary wineries standing ahead of Castello in Napa Valley. But for such a legend to not quietly retire there, and instead move to a small winery with fresh passion? It was no exaggeration to say that dark clouds were gathering over Castello Winery’s future.
“Still, won’t there be limits to its growth because the scale itself is small?”
At Matthew’s cautious opinion, Joseph nodded this time.
“That’s the one part that lets me feel a little relieved. Redwood’s inherent limitation. The winery is small. Unless an ultra-expensive cult wine worth over ten thousand dollars per case—twelve bottles—appears, there’s bound to be a limit to the winery’s growth. Besides, a wine like that needs a matured story behind it, and with a history of only a few years...”
“Besides, from what I’ve heard, the existing Stag’s Leap blending secrets can never be leaked outside, right? Even if he goes there, he might not be much help...”
“That isn’t important. With all the knowledge he has, do you think he’ll only make the same wine?”
“Hmm... That’s true too.”
Just then, an employee came in from outside and said,
“Sir, you have a guest outside.”
“Show him in.”
Knowing who would be coming, Joseph sat down on the reception sofa without asking who it was. Soon the door opened, and a handsome white man in his late forties entered.
It was Mark Harrington of Harrington Vineyards, known for presenting the finest Pinot Noir in Sonoma.
“You’re here.”
Mark raised a hand once in greeting to Matthew, then flopped down into a seat.
“Did your visit to Mondavi go well?”
“Yes. He’s definitely different from last year. It looked like his strength has declined quite a bit.”
“Hmm... I see. He has lived a long life. What did Robert say?”
Mark, who had already heard that Joseph had met Mondavi, asked with an expression that suggested he was not curious at all. It was probably because he already expected the result. As expected, Joseph stopped pouring the red liquid into the wine glass and gave a bitter smile.
“He said he no longer had that kind of energy.”
Mark snorted as if scoffing.
“I told you, he was never someone interested in this sort of thing. What did I say? Besides, Robert is practically Warren’s mentor. He won’t show any interest in keeping Warren in check. He’ll only be interested in Continuum, the one he made with his second son.”
“If he’s thinking about Continuum’s future, shouldn’t that be all the more reason to join hands with us?”
“It must be hard enough for him just to pass on the knowledge he has to his children before he dies. Do you think he has the room to put his mind elsewhere?”
Feeling there was sense in that, Joseph took a sip of wine and nodded. Then he suddenly looked at Mark and asked,
“You said that Asian young man came to Sienna’s birthday party before, didn’t you?”
Guessing what he was about to say, Mark lifted one corner of his mouth in a wry smile.
“Are you curious how that guy plans to make use of Warren?”
“Even Matthew here doesn’t really know much about that Asian fellow. Other than that he knows an incomprehensibly great deal about wine.”
Mark gave a small laugh. Matthew’s words were exactly close to how he felt as well.
“Then he knows him properly. Hmm... As it happened, right around then, Redwood signed a contract with Grendel Hill Farm in Russian River Valley.”
“What?”
There was practically no one in Napa Valley who did not know about the relationship between Harrington Vineyards and Grendel Hill Farm. Joseph, who knew well that subtle yet sensitive relationship, widened his eyes at the absurd coincidence.
“So I suggested to that Asian bastard that we make an event wine together, one backed by the California state government to commemorate the re-tasting of the Judgment of Paris.”
“You were planning to make that wine with Grendel Hill grapes?”
“Exactly. It was an event wine, and it was going overseas, so I thought it wouldn’t clash with our winery. It was a trick of sorts, but he said he wasn’t interested at all and refused.”
“He said no even though the state government was backing it? Haha...”
If it were any ordinary winery, they would normally roll up both sleeves and jump at such an opportunity. Napa Valley wines might sell for higher prices than wines from elsewhere, but there were still mountains of wine stored in warehouses. If an opportunity arose to dispose of all that overseas, common sense dictated that they would rush in as if they had won the lottery.
Yet for him to turn down even such an opportunity meant that, unless he had confidence he could sell every bottle he produced without the California state government’s support, it was not an easy decision to make.
“He knows wine well and has confidence too. Surely Warren isn’t actually learning something under that guy, is he?”
“Are you asking that seriously?”
Mark responded as if it were absurd, but for some reason it bothered Joseph.
“I don’t know much about that Asian guy. But I know Warren well. That old man never says anything careless. He’s sly and enjoys jokes, but at least when it comes to wine, he isn’t the kind of man who says strange things.”
“Even if that’s the case, what can we do? Wouldn’t it actually be better if he’s learning? At his age, he’ll probably die while trying to learn something.”
“You sound as carefree as Matthew.”
“Hahaha! Don’t let it drain you too much. When I heard Warren had gone to Redwood, I actually thought it might be a good thing.”
“Really?”
At Joseph’s incredulous gaze, Mark leaned forward and slowly, clearly laid out his thoughts.
“Real estate is shaking. Wall Street is collapsing. Warren isn’t what matters right now.”
“Then?”
“Think about it. Think about how much debt Napa’s wineries are living on. If interest rates rise sharply, they won’t be able to endure it, and good properties will pour onto the market. That’s what we should be aiming for.”
“You’re saying we should target the wineries directly?”
“That’s right. Who knows? Though we may not have gotten Stag’s Leap, we might end up getting a decent property.”
Joseph gave a bitter smile.
“Clearly, since Pinot Noir is your main focus, you think differently from me.”
Mark shrugged. In fact, Joseph was not wrong. Because Napa Valley was centered on Cab, Joseph was greatly concerned by Warren’s movements, but to Mark, it was practically someone else’s business.
The Pinot Noir market was firm, and Harrington Vineyards’ reputation was solid as well, so even if Warren released an incredible Cabernet Sauvignon at Redwood, from Mark’s standpoint it was a story from another world.
It was only because of that, however, that Redwood receiving Grendel Hill’s Pinot Noir irritated him all the more.
“Try to think positively. Ah, anyway, hurry up and make whatever event wine you’re going to submit to the California state government and send it over. The state government official keeps asking for materials. You can easily earn ten million dollars with this, so don’t pay too much attention to other wineries. The only thing I’m worried about is whether this damned subprime mess will cause the event to be scaled down.”
Having lightly calmed Joseph that way, Mark patted Matthew on the shoulder and left the office.
“Damn it... That fox...”
At his father’s irritated expression, Matthew grimaced.
“I guess he has no interest if it isn’t Pinot Noir.”
“He’s being foolish. If Redwood grows, they’ll produce far more Pinot Noir than they do now, and he doesn’t realize that...”
“Then what should we do?”
“What do you think? Starting now, you’re going to school and studying and researching without rest. They say wine is half marketing, but in the end, the center of evaluation is the wine’s quality, and that comes from research.”
“I understand.”
Matthew answered with a firm expression.
---
June. Two hedge funds under Bear Stearns, one of the five largest investment banks in the United States, announced a suspension of redemptions after suffering massive losses from failed investments in subprime mortgage bonds. Fear began to spread through Wall Street that derivatives once rated at the highest grade, AAA, could in reality become scraps of paper.
But even at this time, Napa’s wineries felt only a vague fear. They could not yet foresee how the tremors in the financial markets would sweep over the wineries.
Until S&P and Moody’s simultaneously downgraded the credit ratings of tens of billions of dollars’ worth of subprime-related residential mortgage-backed securities, and Bear Stearns’ two funds entered bankruptcy proceedings, it merely felt frightening that the giant called America was shaking. But from August onward, everything began to change.
In August, when France’s largest bank, BNP Paribas, abruptly suspended redemptions on three funds, the fear that banks might not get their money back suddenly spread among them, and they began refusing to lend to one another. As a result, the LIBOR rate—the interest rate used when banks lend money to each other—soared, and the interest on funds borrowed by wineries began to soar along with it.
“This, this... It’s come this far? It’s an enormous relief that your winery has almost no loans.”
Amid the despairing news that continued day after day, Warren shook his head.
“When our sales were good last year, we paid off most of our loans.”
Because we had known things would come to this, we had repaid most of our loans regardless of whether interest rates were high or low, and had set funds aside.
“Michelle Wine and Antinori are probably shaking badly too. They must have raised funds to acquire Stag’s Leap.”
When acquiring a company, almost no one does it solely with their own capital. Most borrow from banks to make the acquisition, and since it was close to two hundred million dollars, by now they might be deeply regretting having acquired Stag’s Leap.
“If you were going to sell it anyway, you sold it well.”
“It depends on their situation, but from my standpoint, yes. It wouldn’t have mattered much if I’d kept it, but if I’d tried to sell it after this situation, I would have had to lower the price significantly.”
While we were discussing one thing and another, worrying about the market shaking like this, a guest arrived. A guest who had promised to come once around this time—Christopher White.
“Hello. You’ve been well, haven’t you?”
Though it was summer, he was neat and always impeccably dressed, and he looked stylish no matter when one saw him. But seeing his strangely dark complexion, Warren asked,
“We’ve been doing well... but did something bad happen?”
Christopher immediately let out a deep sigh.
“Whew... Well, you see. It’s not just the United States right now—the whole world is in chaos, isn’t it?”
“That’s true.”
“Because of that, distribution networks are completely breaking down.”
“They are?”
“Wine distribution usually involves borrowing money, buying wine, then selling it and paying the money back. But since interest rates have skyrocketed, everyone is canceling their wine contracts.”
“Oh dear...”
Problems were arising even in areas we had not expected.
“Fortunately, thanks to Redwood, we have funds saved up, so it isn’t a big problem for us, but I imagine other wineries are in serious trouble right now. There’s a strong possibility that export contracts overseas will be canceled one after another. If the wines have a solid overseas enthusiast base like Mondavi or Stag’s Leap, that’s one thing, but if they’re middling wines, distribution companies are reducing their share, so many contracts will be canceled.”
“Hmm... I suppose so.”
“They say even Silver Oak right next door is in an uproar.”
Because it was Silver Oak, our neighbor whom we had bickered with all this time, I could not help asking back.
“Silver Oak? Have they run into serious problems?”
“I heard their exports to Europe have completely fallen apart. The funds that should be coming in this year will be frozen solid, and interest rates have surged... It depends on how much they borrowed, but if the scale is large, it will become a major problem.”
Christopher shook his head with a look of pity.