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Rodney Strong Showing Robust Growth, With Focus On Luxury End

August 22, 2016

With annual volume of more than 930,000 cases, Healdsburg-based Rodney Strong Wine Estates ranks as one of California’s top players in the above-$15 tier. The company, which includes the Rodney Strong Vineyards and Davis Bynum Winery brands, owns about 1,400 acres of estate vineyards and produces wines from across Sonoma’s Alexander Valley, Russian River Valley, Dry Creek Valley, Knights Valley, Chalk Hill and Sonoma Coast appellations. In part one of this two-part interview, SND assistant editor Kimberly Tharel speaks with Rodney Strong president Carmen Castaldi about how the portfolio is performing.

SND: Your portfolio is on pace for 6% growth this year. Where is growth coming from within the Rodney Strong brand?

Castaldi: Rodney Strong has three tiers: Sonoma County ($17-$20), which is the entry level; Estate ($17-$35), where we’re seeing growth at about 12%-15% annually; and our Reserve ($35-$55) and Single Vineyard ($75) wines, which are also up strongly. Our strategy is to focus on the luxury end of the portfolio—the Estate and Reserve tiers. The Reserve wines are up 25%, led by our Bordeaux blend Symmetry and our Reserve Cabernet. Our Reserve wines are sold about 60% on-premise, and the Estate wines are about 40% on-premise. The Sonoma County tier is more closely focused on traditional grocery and does about 20% of its sales in the on-premise. By varietal, there’s no doubt that Cabernet is king for us. But Pinot Noir is also a high-growth item, and Sauvignon Blanc has been our hottest wine this year, up about 15%. Chardonnay is very crowded, and there’s a big supply out there, so it’s been a tougher category.

SND: What other key challenges are you facing?

Castaldi: The really challenging wine in our portfolio is Merlot, as it’s declining as a category. With the advent of red blends as a huge growth segment, Merlot has suffered, and we’re having a tough time with it ourselves. But we’re combating that by reinvesting in quality. We’re doubling down on Merlot, which may seem crazy. But we’re going to see how the consumer responds if we put it in French oak barrels and use some of our better vineyards for Merlot. There are also ways to make it more of a fun wine through our marketing programs, so we’re working on that aspect as well.

SND: Davis Bynum is Russian River Valley-focused. How has that brand performed?

Castaldi: Davis Bynum is still a fairly new brand for us. We purchased it eight years ago. It’s at about 20,000 cases and should be able to expand significantly over the next several years. Both the Chardonnay and Pinot Noir are each growing at about 25%. As a brand, Davis Bynum is focused nearly all on-premise, at about 90%.

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