Washington Wine, Part 1: Industry Resets After Turbulent 2020May 5, 2021
By the numbers, 2020 was not a particularly good year for Washington State wines. Shipments tumbled to 12.1 million cases, from 12.6 million cases in 2019—and far from the peak of 13.4 million cases reached in 2016. But the top-line numbers don’t tell the full story. While Washington wine consumption was down considerably last year, the bulk of the decline came from Ste. Michelle Wine Estates, which dominates the market and saw its eponymous flagship brand slip 4% to 3.28 million cases, according to Impact Databank.
Ste. Michelle’s direct-to-consumer (DTC) and restaurant sales took a hit last year. “Not having customers walking into our shops, not being able to do concerts and tastings definitely impacted the sales in the DTC channel,” says vice president of strategy, analytics, and insights Jen Bell. “Same thing in on-premise with restaurants being down—and we do over-index in on-premise versus the rest of the industry.” She adds that the company saw “exceptional growth” in grocery retail but “it just wasn’t enough to make up that loss in on-premise.” While last year was challenging, Ste. Michelle rebounded in the first quarter of this year, with net revenues rising 2.7% to $150 million on volume up 1.7% to 1.7 million cases.
For some, growth in retail and direct-to-consumer sales did make up for the hit taken in the on-premise last year. “As a company, we did extremely well off-premise, specifically in grocery and club channels,” says Anna Mosier, president of House of Smith, the newly named home for wines from Charles Smith, who also partners with Charles Bieler on the Charles & Charles brand. “We also saw tremendous growth in e-commerce. These two channels combined more than offset losses in our on-premise and tasting room businesses.”
Precept Wine also had a strong year, with its House Wine, Radius, and Waterbrook labels all up by double-digits. House Wine won an Impact “Hot Brand” award after jumping 31% to just under 600,000 cases last year. Still, CEO Andrew Browne acknowledges that the combination of on-premise closures and consumer retrenchment into more well-known brands hit some Washington players hard.
“If you look at the places where Washington wines tend to sell—Washington, Oregon, California—those are the places that were more aggressive with closures, while in other places like Florida, Texas, and Arizona, restaurants were allowed to function,” Browne notes.
Others, like the iconic Quilceda Creek brand, continued to see demand exceed supply despite the disruption in the on-premise, with both its membership list and retail placements providing momentum. “With restaurants being shuttered or closing, we saw a lot of requests for wine in the retail arena, where we really weren’t present before,” says general manager Scott Lloyd. “We simply shifted wine that was in restaurants into retail. We were pretty fortunate in how we were able to navigate. People went with brands they trust, and our customers have been with us for a very long time.”—Carol WardSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.