Quality Driven Co-op w/ Roman Horvath MW, Domaine Wachau

Co-operative wineries, popular throughout Europe, are generally associated with higher volume, lower quality wines. Not at Domaine Wachau, where Winery Director Roman Horvath MW has been leading the quality vision for its family growers to great success. Roman discusses how co-ops work, how they pay their growers to get to zero income, and how managing a co-op is different from other companies. 

Detailed Show Notes: 

Roman’s background

• He started in wine in his mid-20s
• Worked in restaurants, wine internships in Chile & France was a buyer/importer in Austria
• Been w/ Domaine Wachau for 17 years

Co-op definition

• Produces wine from grapes from grower-members
• Every member has a share in the company
• Each grower manages its own vineyard
• Co-ops in Europe - Spain/France/Italy - >50% of production, Germany ~33%, Austria - ~15-20%
• Most co-ops are volume-driven with some exceptions
• Most were established in the 1920-1930s to balance the power of small farmers with strong retailers
• Since the 1990s, the increase in wine quality worldwide has left many co-ops behind as they are too large and volume-driven
• Crucial to separate grower function from management, which needs professional expertise

Domaine Wachau

• ~400ha (~1,000 acres)
• ~250 family growers (each family may have multiple owners)
• Avg family ~1-2 ha, largest 8-10ha, 3-4ha+ for full-time growers
• Small vineyards led to a deep specialization in the site
• Growers must follow the co-op’s quality schemes
• Precise picking plan for all growers
• Up to 70-80 different wines, ~3M bottles/year (~250k cases)

Domaine Wachau vs other co-ops

• Growers can have some of their own production; most co-ops are “all in or all out”
• Push for quality - driven by a strong vision, community, and communication with growers
• The goal is to increase the salary/income of growers

Co-op management

• Very democratic - each grower votes in the General Assembly for the board of directors (8-10)
• Each grower has one vote, not weighted by vineyard size
• Management driven by the management team
• Not profit-driven
• Pays growers technically in €/kg of grapes, but with a complex system (e.g., higher payments for terraces, hand work, Riesling vs. Gruner, sustainable/organic farming)
• Payment split over the year every other month
• Goal: pay as much as possible for grapes to get to $0 profit
• Option to leave the co-op, generally on 3-5 year minimum contracts
• Anyone can join but have strict quality qualifications
• Try to increase wine pricing every year (for quality positioning and inflation)
• In small harvests, have the balance sheet to balance payments between years

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