Harlan Estate: a new wine dynasty

One of the first generation of superstar modern-wine growers in California's Napa Valley, Bill Harlan – founder of the renowned Harlan Estate – is facing a new challenge: passing on a successful family business to his children.

In a rugged wedge of California's Mayacamas Mountains, coyotes, bears and deer roam freely, as if they own the forests covering its unyielding terrain. But then they have had little indication that they are not the rightful proprietors of this land over the past three decades; its owner has left them largely undisturbed. Amid thick woodlands, it is as if Harlan Estate is a land that Napa forgot, and which, if founder and proprietor Bill Harlan's "200-year plan" comes to fruition, will remain so, except for the few acres of precious vines that have turned this once-overlooked part of the Napa Valley into the maker of some of the world's most expensive and sought-after wines.

It has taken a lifetime's hard work, and a self-confessed bit of luck, for Bill Harlan to create his business. His love affair with the wine region began in the late 1950s, when he was a fresher at UC Berkeley, across San Francisco Bay. While studying communication and public policy, he discovered that nearby Napa Valley was the perfect location for extracurricular activities: "The girls liked coming up here, the wine-tasting was free and they didn't check your ID."

At that time, Napa was little more than a rural backwater with a trickle of inquisitive visitors. The first grapevines had been planted here in the late 1830s and success had quickly followed. Yet at the end of World War Two, there were just 13 wineries left in the Valley. Only the most obstinate vineyards remained alongside fields of grazing cows, walnut and plum trees, following the triple whammy of phylloxera, World War One and Prohibition. Today, the Valley bears little resemblance to the Napa of the early 1950s. Vines cover almost every plantable spare block of the 48km (30 miles) of varied terrain and diverse soil. Wineries flank the main highway, and affluent visitors flock to the region in their millions, all here for one thing: wine.

The Napa Valley experienced a Phoenix-like revival in the second half of the 20th century. From being a fledgling region, Napa Cabernet Sauvignon has taken its place at wine's top table, sitting comfortably alongside fine Bordeaux and Burgundy in the cellars of the cognoscenti. France's finest producers, including Domaine de la Romanee-Conti's Aubert de Villaine, and the owners of Châteaux Mouton Rothschild, La Fleur-Petrus and Rauzan-Segla, are now also a part of the Napa landscape. The Valley's proximity to Silicon Valley means it has lured members of the tech community looking for a more bucolic setting, too. Whether they come for the weekend or for life, they are prepared to pay for the best, which invariably means signing up to a waiting list before being offered a meagre allocation of a wine costing three or more digits per bottle several years later.

Names such as Screaming Eagle, Opus One and Eisele Vineyard, as well as Harlan Estate, have built Napa's reputation as a producer of fine wines. And the increasing scarcity of land means the Valley's vineyards are the most expensive in the US. The finest sites can fetch as much as $400,000 (€344,000) per acre (0.4 hectares), two to three times more than the best dirt in nearby Sonoma. In 1980, when Harlan was looking for what would become his eponymous property, land was around $25,000 (€21,570).

If Harlan had purchased land in the late 1950s, when he vowed he would eventually become a Napa vintner, he could have picked up an acre for $1,000 (€863). "I came up here in 1959, and decided what I would love to do, if I could ever afford it, would be to plant a vineyard, find a wife and raise children. That was the dream." It took Harlan three decades to fulfill this dream, traveling the world, learning to sail, racing motorbikes and running a successful real-estate business in the interim to fund it.

The vineyard was the first piece of the puzzle to fall into place. He bought an initial piece of land in 1979, three years after Napa Valley had stunned the wine world, beating the French at their own game. In what became known as the Judgment of Paris, a group of Napa Valley Cabernet Sauvignons and Chardonnays lined up alongside France's very best: the Napa wines prevailed.

However, not all Napa vineyards were born equal: the late Robert Mondavi, considered the godfather of modern Californian wine, questioned the site Harlan had chosen. It would not be very good for grapes, Mondavi explained, but was the perfect spot to house Auction Napa Valley, the region's now-glamorous charity wine auction, which has, since then, raised over $145 million for local community-health and children's-education non-profit organizations. Thus began Harlan's luxury resort Meadowood, which hosts the annual event to this day. In 1980, Mondavi also organized a five-week trip for Harlan to the historic wine regions of Bordeaux and Burgundy. It proved seminal in shaping Harlan's long-term business philosophy. Having soaked up the centuries-old traditions of France, "I returned with a perspective of time," says Harlan. "And that's when I came up with a 200-year plan."

The plan included finding a more suitable piece of land to establish a vineyard with fine-wine ambitions. He took an educated bet on an untouched 97-hectare (240-acre) uphill property that would become Harlan Estate, and in 1984 set about planting the first vines on the site's volcanic and sedimentary bedrock. Then in his mid-forties, Harlan upped the pace on the last pieces of the puzzle: in the three years that followed, he met and married his wife Deborah; they had a son, Will, and daughter Amanda two years later; and produced the first Harlan Estate wine (vintage 1987, although it has never been released). In 1996, Harlan released the 1990 vintage - and the winery's star shone bright. Then the world's most influential wine critic for the past four decades, Robert Parker Jr, handed the 1994 vintage a perfect 100-point score and collectors were desperate to secure a bottle. By the late 1990s, it was clear that Harlan Estate had become a part of the 'cult Cabernet' scene, a term coined in the 1990s to embrace a group of high-flying Napa reds made in tiny volumes for which collectors would pay prices that were normally reserved for Bordeaux's most-wanted.

Harlan explains that his original vision for the Estate was to create a "first growth of California". In Bordeaux, there are just five ‘first growth’ or Premier Cru wines, including Château Lafite Rothschild and Château Latour. While Harlan Estate does not share their rich history nor track record of producing age-worthy fine wine for centuries, its Cabernet Sauvignon-based wines have consistently astonished experts in its short lifetime. Parker, for instance, awarded six perfect scores to Harlan Estate's wines between 1994 and 2013, prompting him to declare: "Harlan Estate might be the single most profound red wine made not just in California, but in the world."

While high-profile plaudits came within a decade of producing the first Harlan Estate wine, it would have been impossible for Harlan to have created this business with shareholders clamoring for dividends. "Twelve years [between the planting of the first vines and the release of the first wine] and not a nickel of revenue, let alone profit," he says. "The American way is Return on Investment and quarterly earnings, but the plan I created was not for a Return on Investment but a Return on Life." Blame his 1980 trip to Burgundy, where grapevines have been tended for millennia. "Once we change our perspective on time and have more clarity of purpose, it makes it a lot easier to have patience, and that is partly the foundation on which the Estate was built."

The 200-year plan for this undulating part of Oakville, however, requires its next guardian. Harlan is not immortal and, aged 78, his plan is only 30 years deep. Succession looms large on the horizon at Harlan Estate, and an heir to the throne was far from assured until recently. It is an issue currently confronting many Californian wineries: a staggering 88 per cent of those in the state were established after 1975, according to a 2008 survey of the wine industry by Silicon Valley Bank, and many admitted that they have yet to prepare for the hardest of handovers. Over four in five family wineries in the US are still in the hands of first-generation owners and the odds are not in favor of successful transitions: the Family Business Institute calculated that 70 percent of businesses do not pass to the second generation and only three percent survive past the third.

Bill Harlan has always been one of the few, however, so when his son Will roared back into the Napa Valley on his Ducati in 2012, the scene was set. Will, now 31, and his sister, Amanda, 29, did not initially plan to go into the family business, despite the winery's international success. As well as the flagship Harlan Estate, there is also its 'second selection' wine, The Maiden, and Bond, a portfolio of wines for which grapes are sourced from the best sites across Napa.

"I never planned to work with the family. I had a small interest in wine, but did not think it was going to be part of my life path," says Will. After graduating from Duke University in North Carolina, he moved to San Francisco and co-founded an outdoor-wear shopping engine in the city's tech hub. But during his time at college he would come back to the winery when the team were assembling the annual Harlan Estate blend. In between terms, he would also blend a few barrels from young vines that had not yet reached their full potential. Initially shared with friends and family only, The Mascot first went on sale in 2008. Despite having released a wine brand himself, Will still did not think he would go into the family business until the 2012 harvest. "I spoke with our winemaker about working in the cellar. I had to convince him I was serious; I think he was rightfully a bit apprehensive about having the owner's son come in and maybe just slack off or not give it the full effort," says Will, laughing. "It was a transformative experience. The work isn't easy but it is rewarding. It gave me an incredible appreciation for what went into what we were doing that I had not had before."

With Amanda heading up the sales and relations side of The Mascot in Southern California, the die was cast. But Harlan Sr (who can be found swimming laps while most are still nursing their first coffee of the day) is not handing his children the reins until they have served their time establishing the family's latest venture, the more mineral-driven, earthy wine Promontory, whose vines are set on rugged, steep landscape, complete with a tangle of forest, to the south of Harlan Estate. Harlan had chanced upon this oft- forgotten part of the Napa Valley in the 1980s. After a tip-off that it was going to be sold in 2008, he acquired the wild 340-hectare (840-acre) swathe of land, of which only 10 per cent is plantable. It was seemingly untouched by humanity but for a small parcel of vines much of which has since been replanted. Production will more than double from its current 1,600 cases when the new vines reach maturity. With Promontory, Will has been given the opportunity to pursue his own vision while preparing for the future. Harlan Sr explains the reasoning: "They need to be stewards, but the next generation also need to create their own thing while learning how to steward the things the first generation started."

The Harlan workforce, too, is being prepared for the generational transition. Harlan has some of the Valley's longest-serving staff: Director of Winegrowing Bob Levy and Estate Director Don Weaver have been at Harlan since its inception, and thirtysomething Cory Empting has been brought on by Levy from teenage intern to the full position as Winemaker. "We have to nurture the next generation of talent as well as the next generation of family," explains Harlan.

Harlan's next generation is being nurtured as carefully as its Cabernet vines, with an impressive training ground preparing them for their greatest test: the Harlan handover. For this is a business based upon a long-term philosophy: Napa Valley is not Silicon Valley, as Harlan Sr points out. Change occurs much more slowly, moving with the four seasons rather than quarterly reporting dates. Based on the prices charged for a bottle of Harlan Estate and clearly an insatiable thirst for the wine, Harlan Sr will pass on a healthy balance sheet. The dividends, however, have been a more personal affair.

This article first appeared in the May 2018 edition of WERTE, the client magazine of Deutsche Bank Wealth Management.