How Don Zacharia turned a mom-and-pop liquor store into a wine-retailing juggernaut -- and a family business that works.

How Don Zacharia turned a mom-and-pop liquor store into a wine-retailing juggernaut -- and a family business that works.

John Anderson

"So, what's on your mind? What are you pissed off about?" asks Don Zacharia.

Twice a year, the 73-year-old patriarch of Zachys, the retail wine giant based in Scarsdale, N.Y., holes up in his 200-year-old weekend home on Long Island with his chief lieutenants -- son Jeff, 44, and son-in-law Andrew McMurray, 37 -- and asks a bunch of questions. The questions get personal. Sometimes they get very personal.

The purpose of these gripe sessions: to hash out the future of the family company. Jeff is the president of Zachys and Andrew the executive vice president, but Dad is still CEO -- and don't you forget it.

Virtually the whole of Don Zacharia's adult life -- "a half century of working my butt off" -- has been devoted to changing the way Americans think about wine. What they drink, whether French or Italian, American or Australian, red or white, dry or sweet. What they're willing to pay for a glass of Bacchus' gold. And, most fundamentally, how they buy their wine, whether off the shelf or at auction, over the phone or over the Internet -- a retailing revolution that Zachys has helped ignite, even at the cost of being charged with a felony by out-of-state liquor-control agents.

In the process, Don Zacharia has transformed what was a sleepy liquor store in the suburbs north of New York City into a $50 million-a-year monster. Not Costco, the No. 1 wine retailer in the U.S., mind you, but a damn big business. Zachys is today the largest wine retailer east of the Mississippi and one of the largest in the U.S. Zacharia is now focused on making sure that the business he created remains a family business. The gripe sessions are part of that effort. He doesn't want his son or his son-in-law, who is married to his daughter Jennifer, to take their complaints home. "You can't have bad feelings trapped inside. You've got to get them out in the open," he says.

After the personal issues are dealt with, Don and the boys, as he calls them, review the business. They compare numbers from the current quarter against those of the previous two quarters and then the preceding two years. Revenue up, revenue down. What were our margins? The numbers speak. And each man critiques his own management performance. "I don't see the big picture," was one of McMurray's recent self-criticisms. "I get caught up in the minutiae," Jeff Zacharia admitted. Don's contribution: "I have a very hard time adjusting to the corporate structure." "We never thought we were big enough to have to worry about unions," says Don. "Well, surprise, we were."

And that, the Zacharias all recognize, is the new challenge. Last summer, some of the warehouse staff successfully petitioned the National Labor Relations Board to hold a unionization vote. "We never thought we were big enough to have to worry about unions," says Don Zacharia. "Well, surprise, we were." The unionization drive ultimately failed -- by a vote of 43 to 5 -- but it taught the family an important lesson. As Don says, "We know we can't run Zachys like a mom-and-pop store anymore."

Don Zacharia had big dreams as a teenager, but they didn't involve running a liquor store. A bright, well-read boy, he was going to be a novelist like his hero Ernest Hemingway, or a screenwriter in Hollywood like F. Scott Fitzgerald.

A child of the Depression, he watched as his father struggled to make a living running a newsstand in Bronxville, another New York City suburb, and beginning in 1944, a liquor store in Scarsdale. The store made just enough money to support the family. "It wasn't even a mom-and-pop store," recalls Zacharia. "It wasn't a wine store, either. It was just a liquor store." And not a high-end one at that.

When Don graduated from college in 1953, he enlisted in the Army. "I had a …