This past week I had the pleasure of a virtual chat with Kevin Pike, founder of Schatzi Wines, an importing company that has an absolutely incredible German portfolio (in addition to other European all stars). This q & a is in preparation for our virtual German tasting/class with Kevin on October 1 at Edmund's Oast Exchange (but via zoom). If you would like to join the tasting tour of Germany feel free to email me sarah@edmundsoast.com (on top of being a super nice person; Kevin is also an incredible teacher!)
Keep reading to learn how Kevin found himself in the wine business and his new venture running a farm in the Hudson River Valley (Branchwater) with his wife Robin Touchet. At Branchwater they are growing their own grains and fruits for a distillery and cidery.
Via Kevin's answers you will also feel the very real threat to his business and the hospitality industry as a whole brought about by the past year's series of gut punches -- first tariffs and then the pandemic. His response is heartbreaking but also heartwarming in its raw honesty.
How long have you been in the wine business?
I took a part-time job at a retail shop in 1995 after graduating college. I wanted to be a writer and had learned about wine from a professor I had at school and through some family friends. When I was of legal age, I would drive from Philadelphia where I was at Swarthmore, to NYC to purchase wines from the shops there, and then would bring them back home in Ohio. At the time, I was interested in Bordeaux. Hey, you have to start somewhere! But in those days, the great vintages of the 1980s were still readily available at reasonable prices. I purchased 1981s, 1982s, 1983s, ‘85s, ‘86s, ‘88s, ‘89s and 1990s. I never paid more than $40/bottle for wines like Gruaud-Larose, Lynch Bages, Pichon-Longueville, Beychevelle, Pichon-Baron, etc. Those days are long gone.
I left that job and moved to Memphis to write full-time where the story was set. I was there for about 6 months, then made plans to come back to Ohio and move to NYC to work in publishing. The publishing job offered me a $21,000 salary, but a gourmet food store with a well-known wine department in it heard I was back and asked me to interview for the buying position. They offered me more money than the publishing job, so I took it and delayed my move to New York.
Then in 2000, I was asked by Terry Theise to interview for the national sales position at Skurnik. They made me an offer and I moved to NY in January 2001 to take that job. I stayed there through March 2014 and then started my own company when it became clear that there wasn’t a possibility to continue to grow at Skurnik. That’s when I started Schatzi Wines.
So, 25 years total (in the wine business).
What initially drew you to this world? Happenstance? Or even a certain bottle?
My “aha bottle” was a bottle of 1984 Inglenook Charbono. It was served to me at a family friend’s house. My parents died in a car accident my senior year of high school, and these family friends became surrogate parents to me. The wine was unlike anything I had ever had. This is not the Inglenook of box wine fame. This wine came from their top Napa sights which were ultimately purchased by Francis Ford Coppola.
But, I’d say that I fell into the business, as it wasn’t my intent to go into wine. I wanted to be a fiction writer and took the part-time retail job to make ends meet. That job turned into a career.
How has it felt to be in the wine business during the COVID pandemic? Even as the world pauses, grapes keep growing so there will still be wine to sell but here in the United States the restaurant business has taken such a heavy hit...
We’re being hit from all sides right now. Tariffs were imposed in October that affected 80% of the wines I import, since French and German wines were on the tariff list. The result of this is that we were forced to raise prices, because we couldn’t absorb the tariffs. No one could. But if we passed on the complete impact of the tariffs, it would push wines to prices that the market could not sustain. So, we’ve had to cut our margins to levels that aren’t sustainable for the business long-term. The other result was the distributors stopped buying directly out of Europe because they didn’t want to pay the tariffs. I wasn’t about to change the core vision of Schatzi to bring on domestic wines or broaden the portfolio to wines unaffected by the tariffs.
Then Covid came 6 months later and everything shut down. We had always had a good retail presence with wines from Leitz wines, so we pivoted to do as much retail as we could. Restaurants in NYC are still closed to indoor dining and will only open up on the 30th to 25% capacity. We’ve had to write off some bad debt from restaurants who closed and didn’t pay their bills, and we’ve had to reduce everyone’s salary here. A PPP loan helped get us through June and July, but now we’re just trying to keep going. I haven’t laid off any employees and don’t plan to.
The other issue that affects our business is market uncertainty. The markets were already in flux with the pandemic and the US’s botched response to it. Some states opened too early only to close back down. We saw this in our sales in certain states.
More recently, the failure of the Senate to pass the House recovery bill has caused the dollar to lose 1% in value against the euro, which means prices for imported wines must go up. We are already running on razor thin margins due to the tariffs, so it’s impossible to absorb a currency float of 1%.
But the biggest issue is consumer confidence and this has been rattled and shaken since the deaths of George Floyd and Breonna Taylor and the ongoing protests for human rights and the governmental response to it. The United States seems exceptionally fragmented, with each of us dealing with varying threats from the pandemic and economic downturns, to essential issues of conscience identified in the Black Lives Matter movement, to existential questions about what our industry will look like on the other side of all this.
My focus is keeping bread and butter wines in stock at prices that will sell, so that I can retain my staff and keep my suppliers satisfied.
How does it feel?
It feels fucking scary. For the business, I know the boat floats, with the cost cutting measures I’ve implemented and our current sales, but how long can it float? I don’t know. Normally, I’d have $750K of Champagne on the water or just landing. I have one Champagne order in the works, but nothing else. I cannot predict how buying will go in Q4. Normally, for a company my size, we run a loss all year until September and then we start to be profitable in Q4. Q4 sales are typically equal to Q1 and Q2 combined, with higher-dollar items selling, like Champagne. But can we count on that this year? I don’t think so.
On a personal level, I need to focus on the kids and their remote schooling and being a good husband to my wife. But it’s hard to stay positive with so many challenges ahead of us and a caustic political climate that is pervasive.
What has been your own therapy during this crazy time -- Wine? Food? Exercise?
We’ve been finalizing the farm renovations for Branchwater (his farm/distillery), and this has taken a lot of time and effort. The barn is now complete and the pot stills arrived about a month ago. I assembled them and now we are in the final stages of plumbing and electric to become operational. We’ve been working on this project since we bought the farm in 2014, and it’s finally coming together. So that has been a source of happiness. I hope to be ready to start distilling gin in November and then bourbon and rye whiskey afterwards.
I’ve also been working in the fields, which is a good way to clear my head. We farm organically and regeneratively here, so no plowing. I planted rye last week for harvest in July 2021 and I need to get the wheat in the ground this weekend.
Unfortunately, we had early frosts last week and lost all our corn that was in the field. Nature gives and nature takes away.
Have there been any especially memorable bottles or meals during this time? I know I have certainly tried to find reasons to celebrate and open special bottles. There has also been that “smoke em if you got em” feeling to this whole thing!
For Robin’s (his wife's) birthday in May, we had some neighbors over and sat outside for a meal. I opened a 5L of Mouton-Rothschild 1973, Robin’s birth year. I bought this back in 1996 for about $100 and have kept it all this time. It had leaked a bit over the years the cork smelled of TCA, so I never thought I’d open it, but then said what the hell and did. It wasn’t, in fact, corked, and it was actually really compelling wine. Parker gave it a terrible score and it was a difficult vintage, but also the first vintage that Mouton was a 1st Growth.
How is 2020 harvest looking for your producers?
All reports so far have been that the quality looks very good. But the harvest is also very early. My Burgundy producer was complete in August! Germany is still going on.
On a personal level what lessons do you hope to take away from this tumultuous year and what is your vision for moving forward as a country and as a global citizen?
One lesson is that it’s best to remain small and nimble. We could adapt quickly and pivot when we needed to in order to adjust to the challenges. It remains to be seen if we pivoted enough, but I hope if signs point towards more adjustments that I can make them quickly.
I feel the country is in a desperate state right now. Faith in institutions, like government, have eroded which means citizens have little trust in elected officials. The caste system here keeps certain racial groups disenfranchised while propping up the wealthy class.
We are focusing on the environment with our farm and through the producers whom Schatzi represents. And we vote and try to get the vote out. It’s hard not to feel helpless, but we keep trying to affect positive change where we can.