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V2 Wine Group Adds Cameron Hughes, Weighs Plans For Further Expansion

April 29, 2014

Editor’s Note: V2 Wine Group, the wine production, sales and marketing company founded in 2010 by industry veterans Dan and Katy Leese and entrepreneur Pete Kight, has agreed to handle sales and marketing for the portfolio of California-based négoçiant Cameron Hughes Wines (CHW). Under the agreement, V2 will represent the Cameron Hughes Lot Series, CAM Collection, Zin Your Face and New Zealand Sauvignon Blanc label Greenlip. The deal follows V2’s recent sales and marketing accord with Washington winemaker Hedges Family Estate announced earlier this month.

In addition to Cameron Hughes and Hedges, the V2 portfolio includes Bouchaine, Dry Creek, La Follette, Lake Sonoma, Lucinda & Millie, Quivira, Steelhead, Toad Hollow, Torbreck, Valley of the Moon and Vindicated. V2 president Dan Leese recently spoke to SND executive editor David Fleming about these new deals and prospects for future growth.

SND: What are V2’s current annual volume and revenue totals, with the addition of Cameron Hughes and Hedges?

Leese: With the new additions, our total annual volume is now at around 700,000 cases, and revenues are at nearly $70 million. We see our business expanding well beyond $100 million over the next two years, through organic expansion and some brand additions. The portfolio is loaded with growth brands, each fitting a specific segment of the market.

SND: What do Cameron Hughes and Hedges do for V2 from a strategic viewpoint?

Leese: Cameron Hughes, which does annual volume of just over 225,000 cases, is positioned quite differently from the rest of the V2 portfolio. They are gifted negoçiants with an amazing ability to bring exceptional wine to market at real world prices. With Hedges, which is now at around 80,000 cases, we sought a Washington winery interested in growth and committed to a unique location—in this case Washington’s Red Mountain AVA. The market is ripe for a quality Washington wine that can become a national powerhouse.

SND: What was the vision for V2 when you founded the company in April 2010, and how has it evolved?

Leese: When we launched V2, our vision was exactly what it is today—to help family wineries drive their business through a challenging three-tier system. We started with Steelhead Vineyards, a brand owned by myself, my wife and business partner Katy and Pete Kight. In that first year, we did just $600,000 in business.

SND: Have you been surprised by the pace of expansion since then?

Leese: I didn’t anticipate such a tremendous need for our services. I think it’s due to the speed of consolidation. The past five years have seen more changes than the previous 25. Not all that long ago, distributors were excited to be going statewide, and most were happy to offer regional or multi-state solutions. Now, it’s a race for a national footprint. Recent moves by Kroger, Safeway and others, as well as the growth of on-premise national accounts, show similar consolidation at the retail tier. That has created an opportunity for us to build a portfolio of high-quality, family-owned brands and bring them to market professionally. Additionally, the wine business is undergoing generational change, with many family wineries wanting to remain independent and continue what they do very well—grow grapes, run a winery, and grow their direct-to-consumer business. We can manage the three-tier side of their business.

SND: Will you remain a California/West Coast specialist, or are you open to marketing wines from around the world?

Leese: Our team has successfully sold imports in the past and has great knowledge of that market. We think our culture translates nicely to an import portfolio. The plan is to develop a V2 import company which will debut in 2015. It will eventually become a key strategic unit—and will be very different from the models that exist today.

SND: What’s the breakdown by share of V2’s owned brands versus third-party brands? Do you expect that to change?

Leese: Our partner, Pete Kight, owns Quivira, La Follette and Torbreck, and together with Katy and me owns Steelhead and Lucinda & Millie Organic Wines. Those wineries represent about 15% of our revenue. The remaining 85% includes Bouchaine Vineyards, Dry Creek Vineyard, Lake Sonoma Winery, Toad Hollow Vineyards and Valley of the Moon, all owned by the families with whom we partner. I think the breakdown will remain roughly unchanged, with our owned brands probably comprising no more than 15-20% of the total, provided we grow as planned.

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