Interview: Jim Mortensen, President and CEO, Ste. Michelle Wine Estates

In October of last year, consumer goods veteran Jim Mortensen took the helm at Ste. Michelle Wine Estates, replacing longtime president and CEO Ted Baseler.

Mortensen has more than 25 years of experience in consumer packaged goods, including a variety of global positions at Philip Morris International and a stint at Miller Brewing Co. as senior vice president, sales and distribution. SND’s editorial director David Fleming spoke with Mortensen yesterday about Ste. Michelle’s 2018 performance and the road ahead for the company.

SND: Your financial results for 2018, which were just announced by parent company Altria, showed declines in sales, operating profit, and shipments, with particularly sharp drops in the fourth quarter. What’s your take on those results, and the state of play at Ste. Michelle?

Mortensen: The shipments decline was largely driven by our decision to reduce distributor inventories. We’ve corrected that situation to a great extent, and inventories are now at their lowest level in three or four years. As for operating profit, we’ve been facing higher costs—mainly due to investments in marketing and sales infrastructure. We have a trade marketing group and a category management group, both of which kicked into high gear in the fourth quarter. We’ve also made substantial investments in consumer engagement, and digital in particular. But there are things we need to do better. One of them is innovation. We need to become more agile at reading the market, and we need to sharpen our packaging. I’m emphasizing consumer engagement, particularly in the digital space. In one example, we’ve just formed a multi-year partnership with Allrecipes.com, the market’s largest food-focused social network. They’re featuring us exclusively in food and wine pairings.

SND: You’d like to see improvements on the innovation front. Among the recent brand launches—Intrinsic, Borne of Fire, The Pundit, and Merf—where do you see the biggest successes?

Mortensen: Intrinsic certainly falls into that category. I think there’s more to do there, but we’re excited about it. We’ve purchased some great outdoor exposure in Times Square—the first time we’d ever done that—and also featured it on a banner ad at Sherry-Lehmann. Intrinsic has an urban, gritty feel, which is an interesting, promising place to be. The others have had more limited geographic distribution. But we do have some great things coming out this year—including 14 Hands in cans.

SND: You’ve taken a very marketing-oriented approach. How do you feel about Ste. Michelle’s performance on the distribution front?

Mortensen: I’m very involved on the distribution side as well. That was my role at Miller, and I have something of a passion for it. Our efforts at better managing inventories have been met with applause by distributors. We’ve also brought in people and built a small team that’s focused on distribution. We’re trying to be more analytical about what’s moving and what isn’t, and how orders and inventories are shaping up. We also need to manage our SKUs better and work hard at pruning the portfolio. That’s an objective this year.

SND: Ste. Michelle does indeed have a lot of brands. What do you foresee happening on that issue?

Mortensen: Some of our lowest performers have limited distribution and a low likelihood of expanding it. We need to admit that those SKUs just don’t have the potential, aren’t earning their keep, and that it’s time for them to go. There’s an opportunity to use that money, space, and attention on more promising brands.

Tagged : Ste. Michelle Wine Estates

GET YOUR FIRST LOOK AT 2025 ESTIMATES AND 2030 PROJECTIONS FOR THE WINE AND SPIRITS INDUSTRIES. ORDER YOUR 2025 IMPACT DATABANK REPORTS. CLICK HERE.