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Charles Krug Aims To Grow High-End With Direct-To-Consumer Focus

May 26, 2015

Napa Valley’s Charles Krug Winery is looking to drive value growth with an increased emphasis on direct-to-consumer sales. Currently accounting for around 20% of the group’s total revenues, Charles Krug’s direct-to-consumer business—driven primarily by its upscale Family Reserve and limited release tiers—has been rising by around 25% recently, compared with a 10% gain in the winery’s total case sales. Charles Krug co-proprietor Peter Mondavi Jr. says the goal is for direct-to-consumer to ultimately account for 40% of total revenue.

“We’re not forgetting about our core wholesale distribution—that’s still a huge factor for us. But as we grow, we want to grow the direct-to-consumer business faster, which from a dollar sales standpoint, is much higher-priced,” says Mondavi Jr.

Charles Krug’s portfolio is led by its flagship Cabernet Sauvignon ($30), which accounts for roughly 50%—or 40,000 cases—of the group’s total U.S. volume. Also in the core lineup are a Sauvignon Blanc, Chardonnay, Pinot Noir and Merlot, all priced between $18-$28 a bottle. Higher up the ladder, Charles Krug’s Family Reserve range currently includes three entries, including its Family Reserve Generations red blend ($60), Family Reserve Cabernet Sauvignon-Howell Mountain ($75) and Vintage Selection Cabernet Sauvignon (around $100). The winery’s current limited releases, meanwhile, retail at between $35-$125.

In line with the higher-end focus, Charles Krug has quietly culled its core portfolio over the past few years, most recently phasing out the brand’s Zinfandel offering. The winemaker is now exploring additions to its limited release range, with potential vineyard designated and single varietal wines in the pipeline.

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