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Washington Vintners Look To Tap The Higher Pricing Tiers

November 11, 2019

A glance at trends for Washington state’s leading wine brands suggests trouble in the marketplace. Five of the top 10 declined last year, while the others showed only modest growth, according to Impact Databank. But that snapshot doesn’t tell the whole story. “We’re seeing a trend toward premiumization, especially at the above-$15 price point,” says Peter Ayling, vice president of business intelligence at Ste. Michelle Wine Estates, Washington’s dominant player.

The problem area for Washington wine is at the below-$12 tier, where a number of major brands have been losing volume. Ste. Michelle’s eponymous flagship label is the overwhelming category leader, having hit 3.28 million cases last year, but three of the company’s other brands struggled. “Our 14 Hands label ($12 a 750-ml.) rose to 2 million cases rather quickly, and as a result, saw more than its fair share of attention from competitors, especially in the red blend space,” Ayling says. The brand hit 2 million cases in 2016, but fell to 1.65 million cases by 2018. Columbia Crest ($6 a 750-ml.) and Two Vines ($6) both showed double-digit declines last year “in large part due to the price segments where they play,” Ayling says.

Ste. Michelle is reloading with four new launches slated for 2020. Altered Dimension, sporting a “visual perception-bending package,” will carry a suggested retail price of $15 for its Cabernet Sauvignon and $13 for its Sauvignon Blanc and rosé. Fruit & Flower Chardonnay will retail for $12 a 750-ml. and will also be available in cans. Liquid Light, a single-SKU Sauvignon Blanc, will sell for $13 a 750-ml. Finally, Ste. Michelle will extend Borne of Fire, initially a $25 Cabernet Sauvignon, to include a Chardonnay, priced at $17.

Doug Charles, co-owner and co-founder of retailer Compass Wines in Anacortes, Washington, says the popularity of individual brands drives enthusiasm in his store. “We get great traction from famous labels like Leonetti and Quilceda Creek, but folks also come looking for the tiny brands, which get almost no press but are stunning wines, like Sightglass, Lobo Hills, Hightower, and Two Vintners,” he says. “For volume, wines have always needed to hit the shelf at below $20, unless there’s some serious buzz or a great review. For more premium brands, the sky’s the limit. For the most part, even the most expensive cult wines in Washington are still far less expensive than similar wines from California.”

In recent years, Washington’s appellations have come into the spotlight, showcasing the diversity of the region’s vineyards. The Columbia Valley is by far the region’s largest AVA, and many of the state’s nearly 1,000 wineries are located within it. There are 13 other AVAs in the state, including Yakima Valley, Horse Heaven Hills, and Walla Walla Valley. These and others have turned out a broad range of super-premium wines in recent years.

Andrew Browne, CEO of Seattle-based Precept Wine, says the next few years hold great opportunity, with a talented new group of winemakers emerging throughout the state. “I’m more excited about the next five years than I’ve ever been,” Browne says. “Our quality is rising, and we’ve got a new generation of leaders in our industry. I think that will show over the next half-decade.” Market Watch has a full report on the Washington wine category on its website. —Carol Ward

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