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Interview, Part 1: Ste. Michelle Wine Estates President And CEO Ted Baseler

January 9, 2017

Ste. Michelle Wine Estates (SMWE) has long reigned as the U.S. market’s leading Washington wine player, led by its flagship Chateau Ste. Michelle brand, which sells more than 3 million cases annually. The company’s stable also comprises Washington state standouts including 14 Hands (about 2 million cases), Columbia Crest (1.1 million cases, excluding Two Vines), Col Solare, Snoqualmie, Northstar and Stimson Estate Cellars, among others, as well as a variety of California and Oregon offerings. A subsidiary of Altria Group, SMWE achieved 8% revenue growth to nearly $500 million for the first nine months of 2016, on volume growth of 6% to 6.2 million cases. With the Washington category heating up, SND senior editor Christina Jelski recently spoke with SMWE president and CEO Ted Baseler to discuss the outlook for the coming year.

SND: How are SMWE’s flagship brands—Chateau Ste. Michelle, Columbia Crest and 14 Hands—performing lately?

Baseler: 14 Hands has actually leapfrogged Columbia Crest in terms of volume. We’re very pleased to have three high-powered brands. If you look at a lot of competitive portfolios, companies might have one or two, but in our case we have three going very nicely. Chateau Ste. Michelle is number-two in dollar sales among all premium domestic wine brands. Kendall-Jackson is number-one, and we’re number-two. That’s pretty incredible for a Washington brand, since most of the top wine brands are from California.

SND: What specific labels or tiers are driving the most significant growth?

Baseler: What we’re seeing within the industry is premiumization, and we’re having success under Chateau Ste. Michelle with its Indian Wells tier, which is more premium than the Columbia Valley line. In Columbia Crest, we’re getting tremendous growth from the Horse Heaven Hills range, or what we call the H3 tier. With 14 Hands, we have a new red blend called Stampede, which has seen great success. We’ve also launched a Pinot Gris and a Sauvignon Blanc under 14 Hands.

SND: Beyond those three key brands, which other SMWE wines are making gains?

Baseler: One of our most successful recent innovations is Intrinsic, which is primarily Cabernet Sauvignon and made Wine Spectator’s Top 100 list at number 32. It’s a unique wine that has an extended maceration and is partially fermented in concrete tanks. It scored a 92 from Wine Spectator, and it’s basically sold out. Intrinsic is in the $20-$22 range, and we consider it an extendable brand. We’ve also launched a new restaurant-focused wine, Drumheller. The story behind it is that during the Ice Age there were epic floods in eastern Washington. Fifty-foot-high waves came through, which created the Drumheller Channels, so we named the wines for the landscape and geography of eastern Washington, as they really represent a sense of place. Drumheller includes Cabernet, Merlot and Chardonnay, and is positioned at $8-$9 by the glass. 14 Hands also started as a restaurant-only wine. Another one of our on-premise brands, Seven Falls, will expand to retail this year or next.

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