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Interview, Part 1: Hess Family Wine Estates

March 23, 2016

Napa-based Hess Family Wine Estates has been revamping its operations recently with a focus on premium and luxury wines. As part of the push, Hess named fifth-generation family member Tim Persson as president and CEO, and has added a number of veteran wine executives, including John Grant (COO), Nicole Carter (CMO) and most recently Matthew Wood (VP, operations), all three formerly of Treasury Wine Estates. SND senior editor Daniel Marsteller met with Grant and Carter to get an update on progress.

SND: What is Hess Family’s total production currently, and which wines are faring best in the market?

Grant: We’re at about 780,000 cases total, but I would stress that it’s less about size and more about shape. We’re focusing the business as a premium and luxury wine player. There’s no doubt we’re getting momentum restored. Year-to-date we’re up a little over 12%. The epicenter of our business is $10-$20, where the Hess Select and Artezin offerings reside, and that’s up about 10% over the past 52 weeks. More exciting to us is that we’re up 51% in the above-$20 category. That’s by design, and we’re getting good traction in that high-growth area. Hess Collection Allomi, our Napa Valley Cabernet Sauvignon, is now over 50,000 cases, and it’s up 65%. Also, our Hess Collection Napa Valley Chardonnay is getting more focus. It too is starting to respond, up around 10% and accelerating.

SND: What new initiatives are in order for the Hess Collection?

Carter: We’re about to re-release The Lion, our icon Cabernet, which has been out of production since 2008. We’ve recrafted the wine and it will launch in September. Consumers have a lot of choices in Napa Cabernet at around $170, so the quality had better be there, and this will be the best Cabernet we can make. The Lion will be paired with a new Chardonnay from our Su’skol Vineyard called The Lioness, which we’ll release in April of 2017 at around $50. Hess Chardonnays tend to be highly aromatic and less oaky, but The Lioness will be a fuller style. If you look at Rombauer, for example—$35-$40 Chardonnay at 100,000 cases—there’s a drinker out there who likes that wine, and we haven’t been talking to them

Grant: We’ll produce 500 to 1,000 cases each of The Lion and The Lioness, creating a luxury halo. This September we’ll also release a new luxury red blend called The Lion Tamer ($40).

Carter: Red blends lend themselves to being edgier, and The Lion Tamer will push that theme a bit in its packaging and flavor profile, and bring some new consumers into the Hess brand. It will be rooted in Malbec, Cabernet, Syrah and other Napa varieties.

SND: What developments are you monitoring in the wholesale and retail tiers?

Grant: In retail, the chains are growing all over the country, so we’ve introduced a team of chain specialists. I was in Massachusetts recently, and all the talk is about how the number of licenses permitted has expanded from five to seven and in four years it will go to nine. If you can have nine stores across a state the size of Massachusetts you’ll have a significant footprint. All the major chains are moving in. Previously we didn’t have the muscle or capability to work with chains. Now we have a dedicated unit. Regarding distribution, whether by great management or by luck, we’ve found ourselves aligned with Breakthru, RNDC and Young’s. Given all the changes (at the middle tier), it’s important now as a medium-sized company that you pick a lane. And the lane we’re picking is the aforementioned trio.

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