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Interview, Part 2: Ste. Michelle Wine Estates President And CEO Jim Mortensen

May 6, 2020

In the second part of our interview, St. Michelle Wine Estates president and CEO Jim Mortensen discusses the company’s core Washington portfolio and related brands, as well as its overseas partnerships and activities in California and Oregon.

SND: What’s the status of the company’s core brands in terms of premiumization and innovation, starting with Chateau Ste. Michelle (CSM)?

Mortensen: Given its scale, the CSM franchise deserves the most attention, and we devote a disproportionate share of resources to it. The brand needs a bit of modernity, and we’re tending to that—moving to more modern characteristics without disenfranchising customers who are tied to its tradition. But my concern is that CSM is an aging franchise. It’s going to run into a wall, and I can’t let that happen. So we’re pulling some levers to appeal to a younger age group. For example, we now have a Chateau Ste. Michelle aluminum bottle whose packaging is incredibly modern and beautifully contoured, featuring a whimsical interpretation of the chateau. It’s playful, fun, and convenient—the ultimate in time and place convenience. It’s likely to be our product of the year. CSM needs treatments like that, and that’s the plan. You’ll also be seeing more on the traditional 750-ml. bottle.

SND: How is progress with 14 Hands, as well as Columbia Crest?

Mortensen: 14 Hands has been declining for some time, and also has an aging franchise. The issue is that we discounted it so often that retailers put it on the bottom shelf. We’re now trying to reverse that. We have plans for 14 Hands across all aspects of the brand—the packaging, the wine, and our presence in stores, wine clubs, online, and at events. We’re going all out. In spending terms, CSM is number one and 14 Hands is number two. We’ve also got 14 Hands in cans—with a bubbly rosé that was wildly successful when it launched in March of last year. It became the top-selling canned wine at 7-Eleven, the country’s biggest national c-store chain—not a bad result for our first year up. We need 14 Hands to attract a younger, more fluent audience, and that’s exactly what was accomplished with cans. As for Columbia Crest, it has a great brand name and is a good play in a recessionary context, with a varied portfolio. It too will get an upgrade, though not to the extent of CSM and 14 Hands.

SND: You’ve had some key rollouts in recent years, most notably Intrinsic and Borne of Fire. How are those labels faring?

Mortensen: We’ve got an expansion planned for Intrinsic, which will probably be put on the back burner amid Covid-19. But we’re looking at urban areas across the U.S., such as Houston, where we see opportunity. We have a line extension for Borne of Fire. It’s a brand with strong name recall and a good story about its AVA, so we’re in it for the long haul.

SND: What about some of Ste. Michelle’s other innovations, like Drumheller, Merf, and Tenet, to name a few?

Mortensen: I’m confident about Drumheller. It’s a very reasonable play in a recessionary context. Merf has some interesting geographic behavior. It’s a regional play, strong in the Southeast, and will likely remain so, which is fine. On Tenet, I have faith and confidence. We plan to grow Tenet in contiguous geographic fashion, to see what can we build. It will require a bit more patience, but is very interesting. People are drawn to the label.

SND: What’s the latest on your activities outside Washington, including your overseas partnerships?

Mortensen: The particular highlight of my career is working with Piero Antinori and Renzo Cotarella of Marchesi Antinori, because of their credentials and their history. They’re demanding, and I’m fine with that, because they give back so much in terms of expertise. They’re very involved in the wines we make for Stag’s Leap and Red Mountain, and we’re proud of our ratings on both. Col Solare is a personal project for Renzo, whose goal is to establish it as the Stag’s Leap of Washington State. We’ve already made noteworthy changes to its style, with more to come. In Napa, we sell all the Stag’s Leap we can make, and last year we acquired another vineyard for Artemis to add to that space. On Patz & Hall as well as Artemis, we see a big upside in the international market, including strong demand in Japan and South

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