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Interview, Part 1: Hess Family Wine Estates Managing Director Timothy Persson

May 18, 2015

Hess Family Wine Estates, part of The Hess Group of Switzerland, has undergone a strategic overhaul recently, offloading Australia’s Peter Lehmann Wines to Casella for $49.5 million last November, and making major investments in its flagship Hess Collection range, which includes Mount Veeder, Napa Valley and Select tiers. The company—whose other brands include MacPhail, Sequana and Artezin among others—has also revamped its leadership team, with Hess family member Timothy Persson named managing director in 2012, and John Grant—formerly managing director for Treasury’s Beringer brand—joining as COO last August. SND associate editor Christina Jelski recently met with Persson to discuss the company’s U.S. outlook.

SND: What major challenges has the Hess wine business been facing in the U.S., and how are you approaching them?

Persson: The past 12 months has been an extremely busy and exciting period. We’re in the process of a rejuvenation, which started almost three years ago. Our family wasn’t very happy, to be frank, with how our business was progressing in North America—there was a palpable sense of stagnation. We decided it was time for the family to be directly engaged in the business again. After engaging with our key business partners, customers and other stakeholders, we created a new business plan, which went into effect about 18 months ago. First, we significantly improved the quality of our estate vineyard fruit. We removed about a quarter of our Mount Veeder vineyards—about 70 acres—from production, which was a substantial financial commitment. We also redeveloped our best Mount Veeder Cabernet vineyards. The second aspect of the plan was to improve our capabilities in terms of talent, bringing on people like John Grant, who has retooled our route to market. And finally, the third piece was a revised portfolio strategy. We wanted to simplify things and focus on what matters. We had a core business, but also a long tail that was distracting us. We’ve had the courage to reduce the tail, with the disposal of Peter Lehmann, for example, which is a wonderful winery but not the right fit for us.

SND: What’s the status of the Hess Collection? How much of your total business does it account for?

Persson: In the U.S., the Hess Collection (700,000 cases produced annually) accounts for roughly 80% of our business. We recently unveiled new packaging which better speaks to the quality of the fruit, and also clarifies the difference between our Napa Valley tier and our Mount Veeder tier. On the Select tier, we’ve raised the price by about a dollar (to $13 for whites and $17 for reds), both because fruit prices have been rising consistently, and because we see the most opportunity in those segments of the market. Taking price on something like Select is never easy, but we look at it like hill sprints for brand equity. You don’t enjoy doing it, but you know it’s good for your long-term health. I’m pleased to say we’ve cycled through that now, and the brand is in growth mode.

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