Russ: This is The BusinessMakers Show, heard on the radio and seen online at TheBusinessMakers.com. It's guest time on the show and I'm very pleased to have with me today Steve and Allison Lewis, the Founders of Tithe Wines; Steve, Allison, welcome to the show.
Allison: Thank you very much.
Steve: Thanks Russ, glad to be here.
Russ: Let's start by telling us about your company Tithe Wines.
Steve: So Tithe Wines is about combining a great passion, uh, a great product and probably a greater purpose. The really idea behind Tithe was, you know, taking world class wine, tithing ten percent of the value of the sales of that wine, and using that revenue to drill water wells in the part of the world where water's needed, so, you know, real goal of turning wine into water.
Russ: Cool. All right, now that's pretty significant. So when you say selling wines w-what do you mean, you kind of like buying and reselling?
Steve: No, you know, and it's interesting, the question that seems to come up for most people, number one is - it's where did you buy your vineyard (Russ: right), right? We don't own a vineyard (Russ: okay).
Allison: No, we have three children, that's our vineyard.
Russ: Okay, so that's your vineyard.
Steve: That's our fruit on the vine.
Russ: Right, okay, I understand.
Steve: So, you don't have to own a vineyard to be able to be successful in this business, so we've outsourced most of the pieces of this to be able to bring in the best that we could find (Russ: okay). The grapes are all grown in Napa Valley in the Carneros region (Russ: okay). The grapes are then transported over to Reynolds Family Winery on Silverado Trail (Russ: okay) where one of the topmost respected wine makers in the country now, Steve Reynolds, takes over and starts to do all the crush and fermentation based on our very specific design of how we want this wine to turn out.
Allison: And that's what's so significant - significant about what we're doing because we can pick the region, we can pick the wine maker. We can also pick our costs, we can keep costs down, we can do all of these things. You know, when you have a vineyard, if your grapes - if it's not a good season, there goes your wine (Russ: right). With us, we can go hey, let's go to this region (Russ: okay), let's try this. And so we can do a lot of different things and what we've learned is this is a great way to start a business like this without having to spend a bunch of money.
Russ: Sounds good but it still doesn't sound inexpensive either.
Steve: Well, you know, this is absolutely one of those situations where if somebody said let me show you all you would have to go through to make this work (Russ: right), I would never have done this (Russ: okay). And the hardest part of this business is the regulations involved in the wine business. You've got a lot of regulations and you've got to follow all of these things to be able to actually market wine.
Russ: Okay. Well in general we're, uh, anti-regulations (Steve: okay, all right) here on The BusinessMakers Show so we feel your pain but w-what is the status right now of the company? So are you - have you already been producing product and sending money, uh, for the water cause?
Steve: We started - our first vintage came out probably January, February of this year which was a 2010 vintage of both Chardonnay and Pinot Noir (Russ: okay). Sales have been going very well (Russ: good). We actually very early on, uh, were offered by a large retailer to just take all of our wine (Russ: cool); we - we chose not to (Russ: oh?).
Allison: The wine has turned out very well and…
Russ: That's good.
Allison: That's great (Steve: yeah) for - for the rookies that we are it's gotten great reviews.
Russ: Okay, so describe the starting point.
Steve: So, as a start, we started off with a hundred and fifty cases of Chardonnay and a hundred and fifty cases of the Pinot Noir (Russ: okay). We will be doing the same this year (Russ: okay) and we're adding a hundred cases of the Cabernet in addition to that. But even though - and that's not a large volume, it's actually fairly small volume, but it was the right way I - we felt to get started (Russ: okay) because even of the three hundred cases (Russ: mmhm), there's a certain portion of it that you keep back as what they refer to as library wine (Russ: okay); meaning that we'll always have those vintages available (Russ: okay). And then there's a certain portion of it that we keep back as wine to donate and use for tastings (Russ: okay). We've already offered it up in some charity events, you know, things of that nature. So, um, you know, that to us felt like the right amount to get started with, we want to keep growing it but that felt right.
Russ: So I didn't do the math, so when it comes to how much you have for actual sale (Steve: yeah)
Steve: No, all in all, of the three hundred I'd say two hundred and sixty (Russ: okay) - two hundred and sixty cases will be sold (Russ: okay), hundred and thirty of each (Russ: okay) and forty cases get libraried or just tasted out or donated.
Russ: Okay. Now I can buy it today (Steve: mmhm) at - at a restaurant (Steve: mmhm), and which restaurants?
Steve: Tony's (Russ: mmhm),has it, Branch Water Tavern (Russ: mmhm). Uh, we've got it at (Allison: Cullins in Clear Lake) Cullins in Clear Lake (Allison: and Reef), Reef (Russ: okay), uh, here and Mark's is picking - picking it up.
Russ: Okay, and so I can go buy just as an individual off of the website.
Steve: Off of the website (Russ: okay), the Pinot Noir is fifty dollars a bottle (Russ: okay), the Chardonnay is thirty-five dollars a bottle.
Russ: Okay, and so if I bought a bottle of Pinot five dollars would be going to the water cause?
Steve: That's right We're continuing to sell the 2010 while the 2011 is being bottled this next week (Russ: okay), the end of Au-Au-August, and 2012 will crush in September (Russ: okay). We have made our commitment to Living Water International who is our partner in the water side. One of the things I decided, when you outsource making the wine, you don't decide all of a sudden that you're gonna be the guy that drills the water well in another country, right (Allison: yeah, right)?
Russ: Right, so you outsourced that.
Steve: You stick with the outsourcing model in that. And so Living Water International who, uh, is by far - uh, we did a lot of research on this (Allison: we did) - is by far one of the absolute top charities in focusing on that great water need, will be drilling the first well for us in Africa and we are going to be presenting them with the money for that at their gala this year.
Russ: Cool, so. But now for our audience and to set the record straight, is this business a for profit business, Tithe Wines?
Steve: It is a for profit business (Russ: right). Our budgets and our expectations are that we would not actually gain any profit from it for a few years (Russ: okay). We are tithing on our gross revenues (Russ: okay), not on our net revenues (Russ: okay), so as you can imagine, we have to have at least ten percent gross revenues.
Russ: Take a pretty big haircut (Steve: yeah, right) right up front, okay.
Steve: And in the wine business so much of this is about, you know, volume (Russ: right). We would have to grow our volume - which is our intention - we would have to grow our volume before we would have enough money to meet the tithing obligation and make a profit. Tithing is going to be the number one and most important piece of this (Russ: okay), so we're gonna make sure we do that first and foremost.
Russ: Okay. Well that's real cool and a real neat cause but, back to the wine, I mean, you talked about selecting the grapes and the region and so forth; I- I assume you were both already wine, uh, fans and maybe connoisseurs?
Steve: Where would you put yourself along that before you met me?
Allison: I was a working girl. I didn't have time to go around to Napa and sipping wines so luck-lucky for me I found him.
Russ: All right, cool, cool.
Steve: I, on the other hand…
Russ: Have been focused on it most of your life.
Steve: I, well, I've been focused on it for a number of years (Russ: okay) and - and if you talk, eh, when you speak to most people who really enjoy wine (Russ: right), they'll tell you the one of the reasons they love it is because it has so many variables that you could never learn everything. You can never understand everything (Russ: right). Yes, there's Master Sommeliers out there that have taken tests and pretty much know it all (Russ: right), but most of us know a region (Russ: right) or most of us know of a (Russ: right) and you kind of - you know what you like (Russ: right); um, so it's never a subject you can get bored with. And I joke around with people all the time and say how great is a business that if it all fails you just drink the inventory and forget about the pain, right (Russ: touché)? You know, so…
Russ: But was it a big moment that first time that you had your first experience and taste of what you were bottling or was it frightening or…
Steve: Well, it was absolutely frightening (Russ: yeah), right? Because the - the one thing that I didn't know, I'd never really consumed wine in process, right (Russ: okay). I have you (Russ: no, no I haven't) - I don't know if you ever have, right? So
Allison: And I was pregnant, so I couldn't.
Russ: All right, so you couldn't, wow, wow.
Steve: She couldn't, so in the midst of all this I'm making decisions with the wine maker on what I would only characterize as kind of odd tasting grape juice (Russ: okay), right? And so I was worried, I said, you know, this doesn't taste like the bottle of wine you opened up at Tony's last week (Russ: right), right (Russ: right)? And you had to learn that you're measuring it in its process. So you get to that day that you're actually tasting it and here's what happens is all the wine ends up back into, generally speaking, a big stainless steel vat before it's about to go into bottling, okay.
Now if it came from oaks barrels, which ours will spend part of its time in oak, part of its time in stainless, some in new oak, some in old, but it all comes back getting ready for bottling and pre-bottling it goes through a filtration process. When you look at your wine in the glass at the restaurant, it's that nice, crisp, clean wine (Russ: right), well that's not the way it sits inside that barrel. And that filtration process puts you out of the market for about three to six months. But I had a chance to drink that wine two days before we put it into the bottle and I ran over to Ali, I said it's REALLY good, you know, and I did not know up until that moment (12:39-Russ: okay) because everything I had tried up to that point was just something I hadn't ever tried before.
Russ: Okay, cool.
Allison: The good part about this though, regardless, it's been something where Steve has been able to go okay, I'm done with my day job and now he has his passion and at night (Russ: right). And he'll sit on that computer until two or three in the morning, but it's because he's doing something that he wants to do (Russ: right) and it's not just for him, but it's for our family. Someday if Tithe and Decimus continues to do well, now are kids are involved (Russ: right) because of course I'm the mom here with the three kids (Russ: right) at home, I'm doing all of this stuff, trying to do some of the accounting for the (Russ: right) business now and raise the kids and I'm going there's a purpose behind it. And also the purpose is to give our children an example of what it's like in this (Russ: cool) day and age to do something outside of just the everyday job (Russ: cool) you do to do something for our family (Russ: great, great), right? And for other families of course around the world by giving back.
Russ: Great parenting lesson there before but also, you said, you know, a while ago you said I was working, uh, before when I started there might be people watching right now that recognize you, you had a TV career (Allison: That's right, I did, many years) going quite well, right?
Allison: I did many, many years and I came to Houston and worked for KHOU channel 11 (Russ: okay) as an anchor and a reporter for them and of course I met Steve two weeks into the job (Russ: oh, and that changed everything). And so here it is, I thought I was the career lady, just going to do the career (Russ: right, right) thing forever and then it changed my whole life (Russ: right). Unfortunately for channel 11 (Russ: right, right) because after about three and a half years, um, we - we'd - had our second child on the way and we decided look, this is getting to be too much, I'm gonna step out of this job right now so I can A, help with the children and our family and then B, be his backup, with Tithe.
Russ: Cool, really cool. Well I'm real - I'm real curious about - and this has always been a good story here at The BusinessMakers Show - what was the exact point that sort of triggered the idea to start Tithe Wines?
Steve: Allison and I both grew up Catholic so we go to the Catholic church on the weekends, but then we have a tendency to also go to other churches on the weekend (Russ: cool) and so I'm in one service at the Catholic church and I'm hearing the - the message about tithing (Russ: mmhm), okay, okay, like that? We end up over at Fellowship of the Woodlands not too far from our house and Carrie Shook is talking about taking the - the passions you have in life and using them, right? Okay, these things are starting (Russ: wow), you know, you can see where this is starting to form (Russ: oh yeah, yeah). And the next day I'm on a business trip driving in the car and I'm listening to business radio, which I think everybody should spend time listening to business radio (Russ: absolutely) and there's the story about the gentleman who started Tom's Shoes. And for those people that don't know Tom's Shoes, the, uh, the concept behind it was is every pair of shoes that they sold they put a pair of shoes on a child. So these three things are all hitting my mind at the same time and to me it just was that was the - that was the point, it was you need to figure out a way to make really great wine, tithe it away, and help out people who really could benefit from it. The water just started to make sense. I did think about, you know, some of the other potential things but just water made sense to me.
Allison: Well there's such a huge need (Russ: mmhm, absolutely) (Steve: yeah). Once you get out of America you see that this a huge (Steve: yeah) obstacle for (Russ: yeah) countries all over the world.
Russ: Really neat. Okay, so now you're into it (Steve: mmhm), a year (Steve: mmhm), uh, you've got some investments still hanging in there that you haven't gotten a return on, are there challenges right now at this stage or do you have the future just mapped out and it's a piece of cake?
Steve: One of the things we're struggling with a little bit is, you know, the name of our wine is Decimus (Russ: mmhm, okay) and Decimius is the name because it is Latin for a tenth (Russ: okay), all right? We chose Decimus because we couldn't use Tithe (Russ: okay), you know, we had to come up with an answer (Russ: mmhm) and luckily my label designer hadn't out this on the label, you know, thank God (Russ: mmhm).
We've got people that know our company as Tithe Wines, which is the company (Russ: mmhm). We have people that know our wine is Decimus, which is the wine. If someone goes into the restaurant or looks at the bottle, it's going to say Decimus. I want them to know Decimus, but Tithe Wines is the company so, you know, yeah, we've this week's discussion (Allison: mmhm) has been should we be branding Decimus, should we be branding Tithe Wines and honestly I don't' have the great answer to it, I think that we need to make sure that people know Decimus is the name. Tithe Wines does a little bit better job of talking about the mission, so we don't know (Russ: all right), we don't know. We're learning (Russ: all right).
Allison: But we asked a marketing person to help us out and they said for sure you have to sell Decimus (Russ: right), you've gotta stop (Russ: right) talking about Tithe Wines, Tithe Wines, but we kind of were held to the Tithe Wines idea because that was our mission, that was our purpose.
Russ: Well it explains, yeah, it explains it.
Allison: It explains it but…
Steve: But I'm open to advice.
Russ: Okay, so marketeers out there (Allison: yes) (Steve: yeah, email me) out there, listen to this, that's right.
Steve: Yeah, you can email me at firstname.lastname@example.org or email@example.com.
Allison: Whichever one
Russ: Either one, either one.
Steve: But email me and tell me if you have an opinion on the way I should do it.
Russ: Really cool. Well I tell ya, I can feel the passion from both of you life might be boring right now if you hadn't taken (Steve: yeah, uh) on this mission.
Allison: Yeah, I'll tell you what, now we, uh, we take our family I was pregnant, we had our baby girl with us, we went to Napa, we rented a pickup truck, my parents drove into Napa from California - that's where they're from. They got in the backseat of this pickup truck and we drove through the vineyards in Napa (Russ: cool). Bouncing around, I was like six months pregnant with the little baby girl next to us so that's an adventure (Russ: cool), we're on an adventure.
Russ: Absolutely. And so we're approaching, you know, this next vintage or (Steve: yep) this next version pretty soon, right?
Steve: Yeah, well I was in Napa two weeks ago (Russ: okay) wasn't it (Allison: mmhm)? Two weeks ago, um, we just finished our Cabernet - our 2010 Cabernet (Russ: okay) - which will be coming out and which I was so happy, I couldn't tell you how happy I was.
Allison: And that's new (Russ: yeah). We've - not only have we stuck with our Pinot Noir and Chardonnay (Russ: right), now we're going to adding the Cabernet Sauvignon (Russ: all right, all right).
Steve: So we'll have three varietals.
Allison: Really pushing the envelope.
Steve: Well, and we'll have we'll have all that wine in Houston - for the most part I bring it all here because this is where most of our client's are right now bring it into Houston and, uh, we'll start selling it at the very end of the year, beginning of the year (Russ: cool). My expectation is - we've done the wines move fairly well right now. Thanksgiving, our 2010 vintage, I would expect most of it to go by Thanksgiving because most people at Thanksgiving but Chardonnay and Pinot Noir. These are the two wines that you want with Thanksgiving dinner (Russ: okay). So, our expectation is we'll probably clear out most of our 2010 at that point and then it's on to 2011 and - and 2012, which is what we'll crush in September, is a really good vintage. They can already tell the grapes are good, the great grape weather all year long, um, it's gonna end up being a really good Napa Valley for 2012.
Russ: All right, cool. And one more thing before I let you go, it seems like, I mean with what you just said, you - you've got good customer base already cooking out there, right?
Steve: Yeah, no, it is but you're always you're always looking for new people to try it (Russ: right), you know I did a study on the typical owner or buyer of Decimus Wine (Russ: right), um, they have, uh, above average intelligence, above average financial ability (Allison: really, do they, right, what else) (Russ: better looking, more attractive), they're - they're typically better looking people, um, so..
Russ: Those that weren't get better looking once they (Steve: yeah, no).
Allison: I'm interested on where you did this research and what your sources are.
Steve: Look, you know, you want to know the control group and the size (Allison: right) (Russ: right) of data, you know
Allison: Just facts, Russ and I are a little bit interested in those.
Steve: So for those people that for some reason fit that category, they feel they fit that category, it's probably a good wine for them to - to try.
Russ: Really cool. So let's say somebody doesn't know how to spell Decimus (Steve: yeah_, how do you spell it?
Steve: It's D-e-c-i-m-u-s.
Russ: Okay, and your website address today?
Steve: Right - right now the main site is at tithewines with an s (Russ: right), t-i-t-h-e-w-i-n-e-s.com.
Russ: Really cool. Well Steve, Allison, I really appreciate you coming in and sharing your story. Want to stay in touch (Steve: yeah), maybe we'll have you back on the next time that, uh, we've got a new bottle of Decimus coming out.
Steve: That sounds fine and if you feel like we need to do this from Napa some point we can just (Russ: whew that's a great idea) - we just do the interview from there.
Russ: That's a great idea, all right. I thank you both so much for coming in and sharing your cause with us, I think it's real exciting.
Steve: Thanks Russ, thanks for having us.
Russ: You bet. And that wraps up our interview with Steve and Allison Lewis. This is The BusinessMakers Show, heard on the radio and seen online at TheBusinessMakers.com.