Interview, Part 2: J. Lohr Vineyards & Wines CEO Steve Lohr

In the second part of our interview, J. Lohr Vineyards & Wines CEO Steve Lohr discusses the state of play in California red wines, growth in the non-alcohol segment, the DTC market, and the competitive landscape confronting the 1.5-million-case Central Coast producer.

SND: What’s the latest on Seven Oaks and your other red wines?

Lohr: We continue to see the expansion of Pure Paso, which has shown growth both last year and this year. I’d say where it’s hardest right now is quite frankly Seven Oaks, because everybody wants to produce a Paso Cabernet and they’re all gunning for us.

We realized that something like this might happen, with the Paso region coming into its own. But 15 years ago, I don’t think any of us in the industry saw declining consumption ahead. We saw maybe a leveling off, as over the decades there’s always been a gradual trend of 2% or 3% growth, and then you level off, then go back up.

Three years in a row down? No, I’ve never seen that in 51 years of winegrowing. On the one hand, we believe in growing the market, the pie. We always knew that our stance over the last 30, 40 years is that a rising tide lifts all boats. We believe in that, and we’ve invited others to come in. Some of them have come in stronger than we would’ve thought.

SND: How has the increased competition reshaped the market?

Lohr: The question is, where do you get high quality, but still at a fair price? Paso Robles offers both, and that’s the reason the region continues to grow in the market. But we are also seeing some producers cut corners and lean on additives.

I think the Tequila industry is doing a nice job of calling that out. The wine industry, as a collective, we’re not calling it out as much. I think those who are using additives are going largely unchecked. Unfortunately, some of those brands are starting to train America that this is how a Cabernet or Pinot Noir should taste.

From our perspective, we believe part of the beauty of wine is the diversity. Not everybody should be making wine that tastes like what’s being made everywhere else.

SND: How is progress on Ariel, your non-alcoholic wine?

Lohr: It’s a growing market. We created Ariel 40 years ago, and at the time it was only the second non-alcoholic wine of any significance on the market. We got to well over a hundred thousand cases in the nineties. And then from about 2005 there was a general decline. But as low-and-no started picking up 10 years ago, we’ve seen gradual increases. Now of course it’s gained popularity and more and more people have entered in the category.

SND: Finally, how is your DTC business faring?

Lohr: It’s up, which is nice. We’re increasingly looking at wines that we can just produce DTC. It’s a small percentage of our business, just a few percent really. But it’s important because it is getting your brand out there, elevating it, and connecting directly with consumers.

Tagged : J. Lohr

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