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Napa Valley’s Silverado Positions For Post-Pandemic Growth

January 26, 2021

Like many upscale California wineries, Napa Valley-based Silverado Vineyards has been forced to surf the twin waves of the pandemic and wildfires over the past year. While the former decimated the key on-premise market, the latter has cut into the winery’s 2020 vintage, which will be down from its typical 75,000-case annual production. Still, Silverado president Russ Weis tells SND the company has been nimble in adapting to challenges—with its retail and direct-to-consumer channels flourishing—and remains bullish on 2021, marking the 40th anniversary of its founding by the Disney-Miller family.

Prior to the pandemic, the off-premise accounted for about 40% of Silverado’s revenue. Through November of last year, it stood at an 82% share. Weis credits the retail surge to the popularity of the winery’s core Cabernets and Sauvignon Blanc, as well as an increased focus on national chains. Independent retailers also remain key partners, especially in the winery’s home California market. “People don’t really think about California as an independent market, but independent grocery in California is phenomenal,” Weis notes. “Everybody knows about Safeway and the beautiful wine sections Phil Markert has put together, but they don’t often think about the Bristol Farms, the Andronico’s, the Jensen’s out near Palm Springs, and so on. They’re really tuned in to their consumers, so shifting our on-premise team to go after that opportunity was an easy thing to do.”

This spring, Silverado will look to leverage those retail ties with the launch of the Borreo brand, including a Sangiovese ($30), Zinfandel ($45), and Rosato ($27). The wines are sourced from the company’s Soda Creek Ranch vineyard, which has been renamed Borreo Ranch in a tribute to Napa Valley farmer and merchant Felix Borreo, who owned the estate back in the 1880s.

Silverado is also gearing up for what it believes will eventually be a robust on-premise recovery. “In terms of our three-tier business, we’re moving our high-end, super-luxury wines into 3-packs, and the rest of our wines into 6-packs, so that when it’s time to replenish the cellars and get a restaurant up and running, the rate doesn’t have to be too high,” Weis notes. “We owe our restaurant customers a way to get back in business more quickly, and we owe our wholesalers a little bit more margin. One of the under-reported things about the pandemic is just what our wholesalers are absorbing, in terms of receivables they just have to write off,” owing to on-premise closures, he explains.

While the pandemic has forced Silverado to reevaluate some of its planned anniversary festivities, Weis says it’s full speed ahead in terms of investing for the future, including $2 million in winery upgrades over the next three years for new tanks and micro-fermenters to bolster production of its high-end and specialty wines. Of the recovery, he says, “I know it’s going to be slow, and I know there’s a process,” but with the vaccine rolling out, “at least there’s light at the end of the tunnel.”—Daniel Marsteller

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