Winery Profile

Scheid Vineyards

By Christopher Weir

Reprinted by permission of
Adventures in Dining
Winter 1999

 Farming was the last thing on Alfred Scheid's mind when he earned his degree at Harvard Business School. And the idea of producing wine was even more remote. After spending 10 years with E.F. Hutton, he was now launching his own investment banking firm, an entrepreneurial escape into the great unknown. Little did he know that the unknown would yield thousands of vineyard acres across the fertile expanse of Salinas Valley.

 "I worked a few summers on my uncle's farm as a kid, pitching hay and that sort of thing," chuckles the Ohio native and CEO of Scheid Vineyards. "That was the sum total of my farming experience."

 But when E.F. Hutton-one of his inaugural clients-asked Al to explore vineyards as a potential tax shelter for its senior executives, he decided to investigate the viticultural frontier of Monterey County. The year was 1971, and the numbers looked good.

 "I got back to them and said it was a great idea," Al recalls. "So we set up a company, started buying land and planting vineyards. I became president of the company, Monterey Farming Corporation, because nobody else wanted the position. I didn't particularly want it, either, because this was really just a sideline operation."

 Al continued to diversify his endeavors, inspired by his professional freedom and blessed with a Midas touch. In 1982, E.F. Hutton approached Al with the idea of starting a biotech company in Palo Alto. "It started with a check for $120,000," Al says. "Three years later, we had a market value of nearly $400 million."

 Another biotech venture followed, this one in Texas. Then, in 1988, Al was offered the opportunity to buy out the other partners in Monterey Farming Corporation.

 "I wanted to get out of the biotech business, anyway," Al says. "The farming company had been a moneymaker from the first day. But, more than anything, it was a labor of love."

 The timing was right, too. The California wine industry was enjoying a viticultural revolution in the late 1980s, employing new philosophies and techniques for tremendous strides in vineyard quality. Al's company, renamed Scheid Vineyards, joined the revolution and initiated $11 million in improvement projects.

 "The science of growing grapes has changed so dramatically over the past 25 years, it's just unbelievable," Al says. "The curve was a slow rise for the first 15 years, but over the past decade, it's been virtually vertical."

 Recent years, he adds, have also witnessed a dramatic shift in the development and recognition of Monterey County as a winemaking community.

 "When I was working in Texas in the late 1980s, you couldn't even buy Monterey County wines there," he says. "People had only the vaguest idea that wine was being made in this area. Of course, now it's a whole different story."

 It's now a whole different story at Scheid Vineyards as well. On July 24, 1997, the company became the country's first vineyard-driven operation to go public, offering two million shares that ultimately raised $18.5 million. Scheid Vineyards continues to develop new vineyards and recently announced a long-term grape contract with Beringer Wine Estates. Other clients include Hess Collection, Joseph Phelps, Chalone Wine Group and Gundlach-Bundschu. Scheid Vineyards now owns 3,700 acres and manages another 1,580 acres in Monterey and San Benito counties.

 Another recent addition to the Scheid portfolio is a line of premium wines produced from the company's grapes. In addition to being featured in select restaurants and retail outlets, Scheid Vineyards wines-Cabernet Sauvignon, Merlot, Chardonnay and White Riesling-are also part of a company dividend program: 50 cents off retail per share up to a 50 percent discount on eight cases or less annually.

 "We started making wine about nine years ago primarily just to test our grapes," Al says. ""We could say to winemakers, 'Look, here's what our grapes can do.' We did that for a few years, and the wines started getting pretty darned good."

 Three years ago, Al decided it was time to go commercial with the Scheid Vineyards brand, whose labels feature paintings by Dominic Man-Kit Lam, an artist friend and biotech scientist from Hong Kong. Production remains small, and the wines are made by Steve Storrs at his winery in Santa Cruz. The 1995 Scheid Vineyards Chardonnay won a gold medal at last yearÕs Monterey Wine Festival. Scheid Vineyards' bottlings can be sampled and purchased at a new tasting room off Highway 101 just south of Greenfield.

 Over the years, Scheid Vineyards has also become a family affair. Son Scott left Wall Street in 1988 to become the company's chief operating officer, and four years later daughter Heidi left Ernst & Young to become chief financial officer. Son Tyler recently took a year off from his graduate viticulture studies at California Polytechnic State University, San Luis Obispo, to participate in the development of a new company vineyard in Hames Valley. All of them work closely with Kurt Gollnick, vice-president of vineyard operations.

 Scheid Vineyards recently posted $5 million in after-tax earnings on $19.5 million in sales. "That's just about the outer limits of where a company can go with any product," Al says. "Most companies would be extremely happy with a 15-percent pre-tax margin."

 He adds, "The wine business is very entrepreneurial. You're not making automobiles. It's sort of a wide-open ball game. And if there's one thing I've learned over the years, it's to concentrate on what you do really well, then do it better. That, I believe, is the key to our success."