Business World

Saturday 23 August 2014

Barefoot got up and running by taking the snobbery out of wine

Sarah Stack

Published 12/06/2014 | 02:30

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Lifelong partners Bonnie Harvey and Michael Houlihan now lecture on business

IF MICHAEL Houlihan had followed the advice of his Irish-born grandparents he would have settled for a secure, pensionable job and a fairly comfortable lifestyle – and there's a chance we would not be sipping the near nine million cases of wine sold in Ireland each year.

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Luckily, for him and our taste buds, he broke ranks and with lifelong partner Bonnie Harvey took the plunge and stepped in to the unknown world of wine-making.

The couple – who founded California's award-winning Barefoot Wines almost 30 years ago – pride themselves in developing a product and brand that took the snobbery out of wine and turned it into a fun everyday item in our shopping trolleys.

While tight-lipped about the profit made when Barefoot was sold to E&J Gallo in 2005, the pair are still living off that success by penning a business bestseller and passing their wisdom on to students and entrepreneurs worldwide – including at the ICSB World Entrepreneurship Conference in Dublin this week.

"Ireland is a country of entrepreneurs. When you come to the States you see Irish entrepreneurs. Entrepreneurship is what has changed America from the the Depression to what it is now," said Houlihan.

"If you are an entrepreneur there's a good chance of your business getting acquired by a large company, which means there is light at the end of the tunnel," Houlihan said.

"If you can establish a market for your product somebody will buy it, because they don't want the other guy to buy it."

By the time the couple sold Barefoot Wines – described like seeing a child graduate from college – some 600,000 cases were stacked on shelves across the US and in 28 countries – including Ireland where Houlihan's ancestors had migrated from in the late 1890s.

But his grandparents – Limerickman John Francis Houlihan and Nelly Donohue from Donegal who met and fell in love on a cattle steamer from Cork to Ellis Island – had warned him against setting up shop.

"They wanted you to play it safe, to get a civil service job and have security," said the business consultant.

"My grandmother was not happy I quit my job."

The hardworking couple had settled in San Francisco and vowed to educate their only son, John Charles, who went on to become an attorney and Mayor of Oakland, a town across the bay.

John Francis managed a horse stable in the city when it was devastated by the great earthquake of 1906. In return for saving the then mayor's horses from a blaze he was appointed beat cop in the city's Irish ghetto, Mission District, until he retired in 1941.

"He became judge, jury and executor," added Houlihan, who plans to trace his ancestral roots next week.

Hard work was also the motto in the Harvey household in Portland, Oregon.

OPPORTUNITY

Her mother Mable was a welder for liberty ships during World War II – a real- life version of Rosie the Riveter, the cultural icon which represented American women who worked in factories during the war.

"That's when women started making a living," said Harvey, a business graduate.

"They were given an opportunity to make a living. It was quite a shock for them when the war ended and the men came back looking to take their jobs away."

It was actually Harvey who first spotted the opportunity to enter the wine business.

She was working with small business in the wine growing region Sonoma County when she met a grape grower owed $300,000 – equivalent to $1m today – by a nearly bankrupt wine-maker.

With little or no cash – but the $300,000 worth of wine and bottling facilities still on site – they started running the business from the laundry room of their modest home.

"We knew nothing about the wine industry when we started," Harvey recalled.

"We took over the debt of the winery, the bulk wine and the bottling services and thought we'll bottle it up, sell it and pay the grower back. How hard can it be?"

The business plan was to repay the farmer – now award-winning wine maker Mark Lyon – and move on within three to four years.

"It took 20 years, so I guess it was five times harder than we thought," she said.

Believing the average consumer was scared by wine snobbery, they set about creating a niche – a "Tuesday and Wednesday night wine" for everyday people like beer drinkers.

They developed a soft, easy drinking, non-vintage product with Lyon's advice and hired winemaker Jennifer Wall, who went on to win several accolades.

"We talked about 'Get Barefoot and have a great time', that was our tagline," Houlihan said. "Barefoot in California means a day off, being by the beach or a pool.

"We introduced the idea of having a great time with wine which had never been done before."

Harvey "juggled the balls" at home, designing the iconic Barefoot label and overseeing quality control, bottling, supply and all financial aspects of the business while Houlihan travelled "on his hand and knees" begging buyers to sell it and stocking shelves once they agreed.

With no money to advertise they also pioneered "worthy cause marketing", giving their produce away to organisations and not for profits for events or auctions and noticed sales grow in each suburb.

Step by step the spirit of Barefoot spread – and remarkably they did it all without ever actually owning a vineyard, a winery or tasting room.

Instead, they contracted out services and put their time and energy into management, sales and distribution.

"Distribution management is the most important part of the business and is what most entrepreneurs overlook," Houlihan said. "They don't think 'how is my product going to actually get on a shelf in Tesco in Dublin?

"How many people do I have to go through, how many government agencies do I have to go through, and how many taxes do I have to pay?

"And how do I make sure it stays on the shelf so that when Mary Kelly buys off the shelf in Dublin it gets replaced on the shelf. It has to stay in stock.

"Those were the issues we faced early and often and we thought, you know what, we don't need a winery, we don't need a vineyard, we can have all that stuff done for us if we have a good winemaker and excellent contracts."

Has the power couple got any other tips for the 900 delegates in Dublin this week?

"You have to keep your good people, pay them right and treat them right," Houlihan added.

"You can't cap a sales manager's salary even if he or she earns more than you."

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