At the conclusion of the State of the Industry session at the Unified Wine & Grape Symposium each January Nielsen’s Danny Brager announces his Bronze, Silver, and Gold medal wineries. The medals aren’t for the best wine or even for the most wine (Gallo would win that one every year). The prizes are for market success as measured by sales growth. Here are the 2019 winners.
GOLD – Delicato Family Wines, Riboli Family Wines, Precept Wine
SILVER – Deutsch Family Wines and Spirits, Jackson Family Wines
BRONZE – Duckhorn VIneyards, O’Neill Vintners and Distillers, Zonin USA, Delegat, Winery Exchange, Jam Cellars
Growth was difficult in the U.S.wine market in 2018, when many categories experienced falling volumes or stagnating revenues. To excel in this environment is noteworthy. The Gold medal is especially difficult to earn because Brager’s criteria require both high absolute growth in terms of thousands of cases and also high percentage growth rates year on year.
Gold medal producers have to have some secret sauce that powers them ahead. Delicato has Bota Box, for example. Riboli has hot-selling Stella Rosa.
Precept Wine‘s recipe for success is a bit different and so worth a deeper look. Precept, founded in 2003 by Andrew Browne and Dan Baty, is the largest private wine producer in the Pacific Northwest. Wine Business Monthly rates it as the 13th largest wine firm in the U.S. and, clearly one that is growing quickly.
I like to say that Precept has implemented the Willie Sutton recipe for growth. Sutton, a notorious criminal, was famously asked why he robbed banks. I rob banks, he said, because that’s where the money is. Pretty simple logic, don’t you think?
Precept Wine has grown so rapidly by moving decisively into the market segments where the growth is. This sounds simple, too, but it is not. Anticipating growth opportunities requires close analysis of changing market conditions. And then you must have the resources, flexibility, and determination to seize them. Not easy at all, but when you get it right the results can take your breath away,
If you made a list of growing wine market segments in 2018 it might look something like this.
- Sparkling wine
- Rosé wine
- Alternative packaging (especially cans)
- Private label wines
- Low calorie / low alcohol wines
- Super premium wines
- Direct-to-Consumer sales
Precept has made important investments in each of these categories starting with its acquisition of Gruet, the New Mexico-based sparkling wine producer, which has experienced dramatic growth during the recent Prosecco-fueled sparkling wine boom. Gruet sales increased by 25% by value in 2018. Amazing.
Rosé is the fastest growing wine category in the last year and Precept has taken advantage of this with pink wines throughout their portfolio and leveragde for even higher growth by combining pink with bubbles, putting pink in cans, and even putting sparkling pink wine in cans as shown in the image above.
Precept has made a very serious commitment to the canned wine space and I see their House Wine cans in nearly every supermarket. The House Wine cans and Ste Chapelle wine spritz are two of the three top brands in this category.
Private label wines are another area of growth. Many wineries make their own products and also private label brands for retailers. Precept took a major step into this arena last year by acquiring Truett-Hurst’s business. The plan is to ride the wave of private label growth so that it represents 50% of total sales by 2020.
The Truett-Hurst acquisition included a wine brand called Cense, which is endorsed by WW (formerly Weight Watchers). Low calorie, low carb, and low alcohol wines are still a small slice of the total market, but one that seems likely to grow rapidly as production technology and product quality improve.
The Cense line includes a Rosé (of course), a sparkler, and a Marlborough Sauvignon Blanc. Alcohol is around 9 percent. Look for Cense wine spitzer cans in time for summer. You have only to look at the investments that major brewers are putting into low/no alcohol beer to get a sense (or cense) of the potential for wine.
Precept is also experiencing impressive growth in the premium and super-premium wine categories with their lineup of brands that includes Browne Family Vineyards, Canoe Ridge Vineyard, Pendulum, and Waterbrook.
Can the fast growth be sustained? Prediction is difficult, especially about the future, but I would argue that the particular category growth waves that Precept is riding are trends and not fads, and unlikely to suddenly disappear. Times will continue to change, however, so Precept’s challenge (and a challenge for the rest of us, too) will be to remain nimble and entrepreneurial even as scale increases.