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Interview: Vintage Wine Estates President Pat Roney Discusses Ambitious Growth Plans

August 7, 2014

It’s been said that you can’t be everything to everyone, but, when it comes to U.S. wine consumers, California’s Vintage Wine Estates (VWE) appears to be putting that age-old phrase to the test. While many wine marketers focus on a particular brand or even a single varietal, VWE has rapidly built its business across three distinct segments: branded (including several brands that are co-owned with Deutsch Family Wine & Spirits), private label and direct-to-consumer.

While VWE was formed just five years ago, it has quickly evolved into a major player via a mix of organic growth and an aggressive acquisition strategy. Since 2011, VWE has purchased a host of California wineries, including Cosentino, Cartlidge and Browne, Viansa and Clos Pegase. Earlier this year, VWE took a big step forward in its branded business with the acquisition of Canopy Management, a 300,000-case company led by the fast-rising Middle Sister brand.

Peter Zwiebach, managing editor of Shanken News Daily, recently sat down with Pat Roney, VWE’s president and managing partner, at the company’s headquarters in Santa Rosa, to discuss VWE’s growth strategy and future plans.

SND: How’s your business doing this year?

Roney: So far, 2014 is looking good. Things are going well on the direct-to-consumer side, with our tasting rooms and wine clubs. On the branded side, there’s still some pressure on the higher end, but our wines in the $10-$20 segment are enjoying robust growth.

SND: Why have you undertaken such an aggressive acquisition strategy?

Roney: While we’re growing all segments of our business, we’re paying particular attention to the branded side, which is smaller than our direct business. Direct accounts for 42% of our sales, branded (through the three-tier system) is 34% and private label is 22%. The remaining 2% is exports. So these acquisitions—such as Canopy—are really helping us build the branded business. Also, while retailers are constantly dealing with a flood of new products, we think it’s often a safer bet to come to them with brands and products they know, the kind we’ve added through these deals.

SND: What does the addition of Canopy do for you?

Roney: Canopy essentially adds a lifestyle division to our company. Its brands are very well-positioned in the $10-$15 tier, which we feel is the market’s sweet spot. Canopy had a lot of great relationships with key retailers, like Kroger and Target, that we think we can leverage both for our luxury and lifestyle brands. Plus, Canopy has been very effective at social media, and its addition has taken our social media efforts to a new level. We see social media as key to establishing brand credentials in today’s market—especially with female consumers, who are responsible for the majority of wine purchases yet aren’t a demographic easily reached by traditional means.

SND: How is your private label business doing?

Roney: It’s been strong for us. We work with retailers like Costco and Trader Joe’s, and as they and others continue to face margin pressure on many of the wine brands they carry, they’ve been able to offset that somewhat by relying more on private label.

SND: Just a few years ago, VWE was a 500,000-case company, and this year it looks as though you’ll sell well over a million cases. How do you see the next few years shaping up?

Roney: I fully expect we’ll reach 2 million cases in the next five years. We see huge growth opportunities across all our businesses. We’re going to stay focused on that $10-$15 segment, and work on developing brands—both on our own and with partners like Deutsch, who we’ve collaborated with on Cigar Zin and other brands—and we’ll also continue to seek out acquisitions that make sense for us.

 

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