Until now, the reason I had deliberately tried to keep my distance from distribution wasn't because I didn't know distribution made money, but because I hadn't had the leeway to get involved in it on top of everything else.
Just thinking about hiring employees, analyzing the commercial districts of each region, and drawing attention with all sorts of events made my head hurt.
But the reason I had still kept it in the back of my mind was precisely because of Dad.
Dad, who had now become a perfect grape cultivation expert, had been managing farms all over Napa Valley—Redwood, Silver Oak, Ironwood, and Lapis Lazuli. Whenever we ate together or ran into each other at home, he would subtly ask like this:
"Wouldn't it be really interesting if we handled wine distribution ourselves?"
It took the form of a question, but he was saying he wanted to do it.
Dad had originally failed in the electronics distribution business. Perhaps because of that, he had shown no sign of it when he first started farming, but he occasionally revealed his desire to get back into distribution.
I didn't think that was a bad thing. Everyone has something they want to do, but people end up doing things they dislike because of the wall of reality.
For Dad, farming must have been a means to feed the family. Now that we had surpassed the level of simply making ends meet and risen to the ranks of Napa Valley's wealthy, there was no reason I couldn't help fulfill Dad's wish.
"Really? To Japan?"
Naturally, Dad broke into a wide smile, delighted.
"Japan is part of it, but anyway, when I negotiated with Christopher before, I excluded the Asian market just in case. So while we can't distribute within the U.S., it's possible to go out to Asia."
"Wait, wait, then..."
Dad clapped his hands in joy and soon began pacing around the office, planning.
"Should we establish a corporation first? Did you decide on a company name?"
"No. I just came back from a funeral and decided it there...."
"Then how about Redwood Holdings?"
"That sounds good."
As if he had been thinking about it for a long time, Dad began laying it out smoothly.
"Let's keep the headquarters in Napa but put a branch office in Japan for now. Then that Golden Slot thing we contracted with Itochu this time would go through our corporation, right?"
"Probably?"
"Good. Then Itochu won't be our importer, but will only act as a local logistics agent that receives our goods and places them for us."
"That's how it would be, right?"
"Distribution is a fight for control. If we load the ships ourselves and manage the lists ourselves, we can maximize profits. Ask around among trustworthy friends I worked with in Korea. Distribution is about people. Especially in the Asian market, whether it's guanxi or connections, you have to go through people."
"Please do."
I had no intention of interfering in or advising Dad on what he wanted to do. I just had something I was curious about.
"Then what will you do first in Japan?"
Dad smirked, sat down, and spoke while looking at me. He seemed to be in a good mood simply at the prospect of teaching his son something.
"The first thing is securing a bonded warehouse. We can't let Itochu receive the goods and put them in their own warehouse. Because from then on, we'd be caught up in their pace, and that won't do. We need to contract a bonded warehouse in Japan under our own name, or legally nail down a dedicated area inside Itochu's warehouse."
"A dedicated area? Is that possible?"
"Itochu has a fire lit under their feet because of the cherries right now, don't they? We have to demand it at a time like this. We need to create a structure where our own staff is stationed there and directly approves releases. That way we can monitor in real time whether they're shoving our wine in a corner or properly placing it in the Golden Slot. Losing 'inventory control' in distribution is the same as handing over the leash."
"Oh..."
Pleased by my admiration, Dad smiled and continued his explanation.
"And second is about bundling. That friend named Kuroda has bet his life on 100 tons of cherries, right? Then we need to write this into the contract. Every time one box of cherries goes out, make them unconditionally include our Serasia leaflet or sample wine. We make the wealthy Japanese housewives buying cherries see the Redwood logo the moment they open the box. We're forcibly injecting wine brand awareness through the cherry distribution network."
Perhaps because he had done electronics distribution, his marketing approach was similar. It was interesting—the way he was directly harnessing the strong demand for agricultural products for wine marketing.
"Was this how you did business back in the day?"
"I learned a lot. It's exactly like bundling high-end speakers when selling new TVs. People are weak when it comes to throw-ins. Especially with limited-edition cherries like these. And lastly, the most important thing."
Dad lowered his voice and looked straight at me.
"We need to prepare our corporation's website in advance. This time we're borrowing Itochu's network, but that's ultimately living in someone else's house. I'm designing a direct line so VIPs who tasted our wine through Itochu can order directly from our site next time and receive it by plane. The flower of distribution is ultimately direct trade without middleman margins."
For a moment, I didn't understand.
"You're sending them individually from the U.S.? Well, it's a groundbreaking idea, but shipping costs and taxes will explode like a bomb, won't they?"
Before the regression, there was a personal customs clearance system where you could pass through customs as if you had a free pass just by entering your name and personal customs clearance code for amounts below a certain threshold, making overseas direct purchases smooth, but not now. Because even if you bought one bottle of wine, you had to file an import declaration through a customs broker or send proof documents to customs by fax.
To my curiosity, Dad smirked and explained.
"Of course we're not shipping them off one by one from the U.S. With the current system, shipping alone would cost tens of thousands of won per bottle—who would buy? What I mean is, the goods should move in bulk using Itochu's infrastructure, but the ownership must be held by our Redwood Holdings."
Dad then picked up a pen and drew a large warehouse-shaped rectangle on a memo pad.
"Didn't I say we'd contract a dedicated area in the bonded warehouse? When Itochu takes the cherries, tell them to load our wine together but instead of clearing customs, stack it in that warehouse first. Then won't the shipping cost drop sharply to bulk freight rates?"
"Ah...... So we put the goods in Japan in advance, but make the owner us?"
"Exactly! When an order comes in through our website, we shoot it out right away by courier or parcel delivery from the local warehouse in Japan. Then from the Japanese consumer's perspective, wouldn't it feel like 'direct overseas purchase' where they order today and receive tomorrow? And our corporation can handle fighting with customs locally in bulk."
Should I call this clever scheming? Or business acumen?
"Then why did you fail before?"
Dad flinched for a moment and quickly averted his gaze.
"Partnerships aren't something you enter lightly..."
"Ah... but what about website payments...?"
"How about borrowing Itochu's payment system? On the surface it's our site, but we link Itochu's payment module, or make them use their convenience store payment network. They get to keep a bit of payment processing fees, so they're happy, and we get to stack the home addresses and purchase tendency data of Japanese VIPs on our server intact—what a profitable deal."
"Receiving Serasia and other premium wines at a convenience store?"
"Well... isn't that a good idea?"
"It's good."
It really was. If it wasn't a cult-level wine like Astra Veil, but wines of the Aesilon or Sylphid class, direct delivery wouldn't degrade the quality.
Having assessed the situation, I headed to the Deer Ridge Country Club in Brentwood where Chloe and Frederick were the next day.
"Welcome."
Judging by the heart-shaped eyes with which he looked at me, it seemed Frederick liked me more than Chloe now.
"I actually came because I have something to tell you. This is japchae and LA galbi."
I handed the food Mom had made to Chloe, who hugged me the moment she saw me, and then went out to the garden overlooking the wide-open golf course. It was a peaceful landscape, but these days, California's farmers were screaming in exact opposition to this beautiful scenery.
"Mister, how's the cherry market these days?"
At my question, Frederick let out a long sigh while clearing away golf clubs and such from the garden.
"Don't even ask. It's nothing short of a disaster. Eighty percent of all farms in Brentwood are finished. Jack from the farm next door has given up on this year's harvest entirely and is cutting down trees."
"Is it that serious?"
"As you know, the frost damage was too severe. On top of that, the subprime crisis made things worse. Small farms are wiped out. Thanks to that, market prices have gone crazy, but... The Royal Tioga that was $3 per pound this time last year—now wholesalers call for $8 but can't get any stock. Retailers have it priced at over $15."
Frederick continued with a bitter expression.
"I understand why Itochu is clinging to me. The Jenno Group swept up all the San Joaquin stock, so they've become complete fools in Japan. But I have trust with domestic distributors in the U.S.—I can't just send everything to Japan blindly, can I?"
I nodded. With supply shrinking and prices skyrocketing, from the producer's standpoint, there was no reason to go through complicated export procedures and take risks.
"Mister, I'm trying to make a special contract with Itochu."
"A contract? You?"
"Yes. That 100-ton volume Redwood was going to take this year. Please hand over half of it—50 tons—to Itochu."
Frederick's eyes grew wide at the sudden suggestion.
"No, Brian! That 100 tons was contracted for your cherry wine. With the cherry supply short this year due to frost damage, your wine production will decrease as it is—are you saying you'll hand that over to someone else?"
"That's right. I'm planning to reduce wine production this year. Instead, Itochu has agreed to purchase all 1,200 cases of our cherry wine inventory at full retail price."
Frederick tapped a mental calculator for a moment and burst into a hollow laugh.
"1,200 cases at retail price? And if you hand over 50 tons on top of that... Itochu must be desperate, huh?"
Frederick's face was full of smiles despite his words. He couldn't help it—sending 100 tons of cherries to Redwood meant he couldn't get more than $3 per pound. Because the contract between Redwood and Harris Farm clearly recorded the annual price increase rate. But if 50 tons of that went to Itochu, he could get at least $8.50 per pound for those 50 tons. My proposal was attractive enough to both mister and Chloe.
"I'm trying to secure a spot in the wine distribution network by doing this. If you say okay, I'll call someone from Itochu here to sign the contract right away. Is that alright?"
"Of course, of course. We're all for it. That'll benefit Serasia sales in the long run too, right?"
"That's right. It will turn out that way. We'll probably need even more cherries next year than what we're short this year..."
I said that and then lowered my voice slightly.
"You said the nearby farms are struggling, right?"
At that moment, Chloe leaned her upper body toward me and asked in a similar whisper.
"And?"
I smirked at Chloe's cute appearance and asked.
"Is there anywhere selling their farm cheap?"
Surprised, Chloe and Frederick asked simultaneously.
"Why? Are you going to buy it?"
"Hey, that's not it. I have enough with just the vineyard..."
Then Frederick swallowed hard and leaned his head toward me again.
"You're telling me to buy it?"
"You made a lot of money this time. When buying the pear farm, it was Chloe's funds, and the almond farm too—you bought it after liquidating the olive farm... If you're struggling, there's nothing you can do about it..."
"I don't have the funds. Even though I earned some money now, it's tough..."
Frederick, having said that, suddenly brightened.
"But that doesn't mean there's no way at all..."