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Interview, Part 2: Hess Family Wine Estates

December 22, 2017

In the second part of our interview with Napa’s Hess Family Wine Estates, chairman and CEO Timothy Persson, COO John Grant and CMO Nicole Carter discuss growth trends in the direct-to-consumer segment as well as plans to add agency brands to the portfolio.

SND: How big is the direct-to-consumer segment as a part of your business?

Persson: It’s only a couple of percentage points of our top line, but it accounts for 8% from a profitability perspective. So it’s actually a significant driver to our bottom line. We’re recognizing that there’s enormous potential for growth there.

Carter: We have a range of wines called the Small Block Series, which are all direct-to-consumer only. The e-commerce segment is a big piece of that direct-to-consumer business, and it’s growing rapidly.

SND: How many visitors come to the winery each year?

Carter: We’re seeing about 30,000 to 40,000 visitors annually. It’s important to remember that Hess is a visit of intention because of where we’re located, 1,200 feet up on Mount Veeder. We’re well off the beaten path.

Persson: We’ve been developing new tasting rooms and improving our suite of experiences, looking at elaborating food and wine pairings and vineyard tours, all of which are designed to enable people to stay longer and engage with the brands in a more comprehensive way. Increasingly, you see that approach within Napa, and it just intuitively feels right. That way it’s more of a relaxed, luxury experience, and less of a pub crawl.

SND: What other initiatives are on the horizon?

Grant: We’re looking at adding some agency brands on a limited basis. We’re already handling Colomé and Amalaya from Argentina, of course, and we don’t have any problem representing complementary brands from the U.S. as long as they don’t compete with the rest of our portfolio. That opens the door for Sonoma, Washington, Oregon and a variety of price points. Sparkling wine, for example, is something we don’t have. When I look upwards and outwards, I see a lot of market share that we still should be eyeing up.

Persson: We’ve done significant investments in our estate-based vineyards in Napa, and we’re seeing a nice uplift in the quality of the fruit. We’ve probably tripled the amount of blocks that we have up on Mount Veeder to get more nuanced in our farming. We’ve also put an enormous amount of effort into upgrading our facilities, and we’ll soon be opening some new cellars where we can really focus on our higher-end wines. At the same time, we’re working to become more dynamic and agile so that we can respond quickly to consumer interests at the more accessible price points.

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