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Napa Valley’s Hess Family Wine Estates Looks To The Future

December 21, 2017

Hess Family Wine Estates has been on a mission to revamp and premiumize its portfolio over the past few years, with fifth-generation family leader Timothy Persson driving change across the business.Led by the Hess Select tier ($15)—which is at over 500,000 cases—Hess’s lineup is on pace to grow 4% to just over 800,000 cases this year, with value growth expected to register 6%. SND recently met with Persson, COO John Grant and CMO Nicole Carter to get an update on progress.

SND: With your winery located on Mount Veeder, how were you affected by the recent wine country wildfires?

Persson: We had to close our Mount Veeder winery for about two weeks as the Partrick fire burned around our Veeder Crest and Summit Vineyards. While we only had about 25% of our estate fruit still on the vine, it’s reasonable to expect that some of our mountain fruit will be affected by smoke, and it’s something we’re monitoring closely. We won’t bottle anything below our quality standards, and we don’t see any longer-term implications beyond the 2017 vintage. I witnessed that times of adversity certainly seem to bring out the best in people. There’s been an incredible display of community, creativity, agility and determination to get Napa and Sonoma back on their feet.

SND: Which wines in the Hess range are driving growth?

Grant: Hess Select is the horse that pulls the cart. It’s at about half a million cases now. It’s predominantly a grocery item and has been growing above its segment. The Chardonnay is now number-five in IRI among Chardonnays at its price point, and the Cabernet is now number-four in its segment. Our Hess Napa series also continues to grow. Hess Allomi Cabernet is the star of the range. It’s now slightly over 50,000 cases and continues to climb despite taking price the past three years. It’s now at around $32 a bottle—an affordable entry to the Napa Cabernet segment—and growing at around 20%. Our advantage is that the Hess family secured its Pope Valley property in the mid-1990s, so there’s less pressure on us to realize higher price points. If we bought that property today it would be a totally different story. You can’t buy fruit to support a brand at that price within Napa anymore.

Carter: At the higher end, our first vintage of The Lion Tamer red blend ($45) sold out before the vintage turn, and we released The Lioness Napa Valley Chardonnay ($60) to the marketplace this August with great reception. We’re now on our second vintage of The Lion Cabernet Sauvignon ($175) with Celia Welch on the project. The upscale wines have been going great guns, and are helping to improve our mix.

SND: How is your on-premise business faring?

Grant: Our mix is around 70% off-premise, 30% on-premise. Our Shirtail line, which is an on-premise exclusive, is fueling growth in restaurants. Earlier this year we added a Sauvignon Blanc and a rosé to Shirtail, and this fall we launched a Pinot Noir that sells at around $15 a glass, depending on the market. Shirtail is now at around 50,000 cases. It’s up about 20,000 cases this year, including the new offerings.

SND: How are your Argentinian brands performing?

Grant: From a small base, Colomé and Amalaya are significantly outperforming Argentina overall from a category measure. Colomé is up over 10% year over year, and Amalaya is up 49%, with both selling at around $25 a bottle. We’re looking for consistent above-category growth across the portfolio, and we’ve been achieving that.

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