The heirs to one of the nation's most prominent winemaking families are branching off from their family's Sonoma-based wine company to grow the business in new directions.
The three children of Don and Nancy Sebastiani will soon become sole owners of The Other Guys, the higher-end division of the family's successful negociant wine company, Don Sebastiani & Sons.
Creating an independent company will allow it to explore new wine markets while giving the three Sebastiani children greater independence.
"My dad's always had the desire to give us separate things to do so we're not fighting over the same piece of meat on the plate," said Donnie Sebastiani, 32, the eldest child and head of Three Loose Screws Wine Company, the main wine division of Don Sebastiani & Sons.
Three Loose Screws owns the popular Smoking Loon and Pepperwood Grove brands, among others. The wines generally sell for under $10. The company, which purchases bulk wine from other wineries and markets it under its own label, sold 1.7 million cases of wine last year.
That's down from 2 million cases the previous year, a drop attributable to price increases of about $1 per bottle on most of its wines, Donnie Sebastiani said.
The drop in sales was "a speeding ticket" given to a young company that had grown too fast, and a sign it needed to regroup to set the stage for the next phase of growth, said Don Sebastiani Sr., 56.
Spinning off The Other Guys will let Donnie focus on rebuilding the large wine division while giving his brother, August Sebastiani, the space to experiment.
"The big company has grown up and Donnie, who is the most grown-up of all of us, has been given the keys to the grown-up company," said August Sebastiani, the 29-year-old president of The Other Guys.
The smaller scale of The Other Guys will give him more freedom to try novel marketing ideas, he said.
"We kind of enjoy making mistakes," he said. "This way, if we were to fall, we don't fall that far."
The Other Guys division began several years ago as a way for the company to sell new wines directly to restaurants and retailers, bypassing powerful distributors and reaching new markets. The venture struggled initially.
"There was one point where I would load up the way-back of my Tahoe and drive down to Monterey and hit three restaurants and head home," August Sebastiani said. "Not terribly efficient."
The company later dropped its direct sales model and switched to selling wine through distributors, though with a separate sales force and different distributors than its parent company.
The strategy is one that had worked well in the past for Don Sebastiani Sr., a savvy marketer with a long history of creating new wine brands for different markets.
While running Sebastiani Vineyards, the winery established by his grandfather Samuele Sebastiani in 1904, Don Sebastiani Sr. partnered with brother-in-law Roy Cecchetti to create a fast-growing portfolio of value wines. The wines, which included the popular Pepperwood Grove label, were largely sold in different markets by different distributors.
Consolidation among alcohol distributors in the U.S. makes it harder for individual wineries to command their attention, and tough for wineries to accomplish all their goals with a single distributor, Don Sebastiani said.