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Sonoma’s V2 Wine Group Aims To Double Business Within Five Years

July 25, 2016

Launched in 2010 by industry veterans Dan and Katy Leese and entrepreneur Pete Kight as a wine production, sales and marketing company, Sonoma’s V2 Wine Group has reached an annual volume of about 600,000 cases and revenues of just under $65 million. Dan Leese, who serves as president, has set the goal of doubling sales in the next five years. In the first part of this exclusive interview with SND senior editor Daniel Marsteller, Leese discusses growth prospects across V2’s expanding portfolio.

SND: Which brands in the V2 lineup are driving growth?

Leese: We have a premium portfolio, mainly in the $13-$50 range. That position, coupled with excellent winery leadership, is allowing us to take advantage of the general market trade-up. Dry Creek Vineyard (+7%) and Toad Hollow (+12%) are really growing nicely—they’re the two winery partners we’ve been with the longest. Dry Creek has made a 10-year investment in their vineyards, and their wines are getting better and better. Quality has also continued to improve at Toad Hollow, and they did an excellent packaging upgrade recently that seems to have helped. Bouchaine, Quivira, La Follette and Australian icon Torbreck are all doing well. Valley of the Moon and Lake Sonoma, which were acquired by the Stewart family from Gary Heck in 2012, have been repositioned with higher prices and more focus on very specific appellations. It’s a lot of work, and a long-term play. Their prices have moved up on the shelf as much as 30%-40%. Those brands took short-term volume hits over a two-year period, but halfway through 2016 we’re now growing at single-digit rates. On Cameron Hughes, we’re focused on building the Cam Collection Chardonnay and Pinot Noir from Monterey and Cabernet from Lake County.

SND: In February, you aligned with the Schlatter family’s Merryvale and Starmont brands from Napa Valley. How is the outlook there?

Leese: Strategically, it was important for V2 to fill out our Napa opportunity. After talking to several Napa properties, this was the right one. We’ve hit the ground running. Merryvale is growing at 35%, and Starmont—which has its own separate Carneros winery—is up 9%. They have the vineyards and the sourcing to grow those brands, and we expect nice growth for several years.

SND: How about the Steelhead and Lucinda & Millie labels, which you own together with Pete Kight?

Leese: For Steelhead, the growth has come from its Sonoma County Pinot Noir ($15). Lucinda & Millie is our organic project, with a Mendocino County Cab and Chardonnay. We launched it in Whole Foods five years ago and have since taken it into the rest of the market. It’s been seeing double-digit growth from a small base—it will be a 20,000-case brand this year—and has a pretty nice by-the-glass business.

SND: How is the portfolio faring in the on-premise?

Leese: The industry is still around 20% on-premise. Our portfolio in total is about 35% on-premise, and some of our brands—like Torbreck, La Follette, Quivira and Bouchaine—skew as high as 50% on-premise. The problem is that the on-premise overall has been stagnant, so we’ve had to expand distribution in order to get growth. Fortunately, we’ve been able to do that.

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