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Exclusive: On-Premise Efforts Fueling Double-Digit Growth For J. Lohr

November 7, 2013

Impact “Hot Brand” J. Lohr has averaged 11% annual volume growth over the past three years across its Paso Robles-, Monterey- and Napa-sourced portfolio, no small feat for a brand whose wines retail mostly at $15 and up. After rising 12% to 1.2 million cases in 2012, J. Lohr is expecting a similar increase this year, according to chairman and CEO Steve Lohr, who says his company’s heavy focus on growing its on-premise business is paying dividends.

J. Lohr’s stable is led by its Estates range—particularly its Seven Oaks Cabernet Sauvignon from Paso Robles, which retails around $18 a bottle, and its Riverstone Chardonnay from Monterey, around $15. Higher up the ladder it’s also seeing strong demand for its Vineyard Series, especially Hilltop Cabernet Sauvignon, which retails at $35, but is really geared for the high-end restaurant trade, where it sells at $60-$70 a bottle and $15-$16 by the glass. Overall, the off-premise still accounts for the majority of J. Lohr’s sales, but the company has been working hard to increase its on-premise share.

Lohr says the spread of national and regional chains is changing the on-premise business. “The chains are getting stronger, and becoming very important at all levels, from casual to white tablecloth,” he notes, citing partners like Morton’s, Outback, Carrabba’s, Maggiano’s and P.F. Chang’s. “In some markets, like Florida, that’s it. There really aren’t many independents.”

While demand is on the rise for the company’s wines, Lohr cautions that the on-premise wine segment continues to face its share of challenges. For one thing, “Restaurants have been pruning down their wine lists,” he observes, adding that while some parts of the country, mostly along the coasts, are seeing better economic conditions—with the white tablecloth segment in California again growing swiftly—others aren’t there yet, and the result has been a shift to more casual dining.

Looking longer-term, Lohr sees Paso Robles continuing to provide growth as a category. “There’s a lot of innovation going on, and the value equation is great,” he says. “It’s one of the few places that are good for both Bordeaux and Rhône varietals, and the mixing of both of those with Zinfandel is creating some exciting new blends.” The expectation of a very strong vintage for 2013 could also help raise Paso’s profile. “It’s looking to be an extraordinary year,” Lohr says. “In terms of color numbers, flavors and tannin balance in Paso Robles, at this point we’re about equal to or better than 1997, which was a legendary year in our region.”

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