HEALDSBURG -- Since its inception six years ago, Truett-Hurst, LLC, has established itself as a fast-growing wine company focusing on the $7 to $14 per bottle (superpremium) and over-$14 (ultrapremium) per bottle categories.
Based in the Dry Creek and Russian River Valleys of Sonoma County, with company headquarters at the VML Winery at 4035 Westside Road, the company has seen sales increase from 2,616 cases in 2008 (the first full year of operations representing $466,000 in sales), to more than 160,000 cases in 2012 totaling more than $12.7 million in sales.
In the past three years revenues have increased from $5 million in 2011 to an estimated $16 to $17 million this year. The company’s private label business accounts for more than 70 percent of annual revenues.
[caption id="attachment_76705" align="alignleft" width="302"] Truett-Hurst CEO Phil Hurst is shown holding the firm's two new innovations -- a paper wine bottle and a square glass wine bottle. (image credit: Gary Quackenbush)[/caption]
In an effort that was widely followed as a signal of support in the capital markets for the wine industry, the owners of Truett-Hurst, Inc. took the company public on June 25 offering 2.7 million shares of its Class A common stock at a price of $6 per share. The company received net proceeds of approximately $14.1 million. The shares are listed on the Nasdaq Capital Market under the symbol "THST."
Truett-Hurst credits its rapid growth to a combination of direct-to-consumer sales through tasting rooms and wine clubs, as well as through its 50 percent controlling stake in The Wine Spies, LLC, an Internet wine retailer specializing in short-lived “flash sales.” U.S. Internet wine retailing saw double-digit growth in 2011 alone.
The firm’s tasting rooms and wine clubs produced revenues of $2 million in fiscal 2012 and $1.4 million in fiscal 2011, showing a significant increase of 43 percent. Is this from the S-1? If so, same comments as above.
Truett-Hurst also engages in traditional brand sales for its wine under its four fully owned labels, including: Truett-Hurst, VML, Healdsburg Ranches and Bradford Mountain.
In addition, the company has “custom label” partnerships with major retailers, such as Trader Joes and Safeway, and also leverages the three-tier distribution channel model.
Truett-Hurst’s product line includes a wide spectrum of varietals, including Pinot Noir, Chardonnay, Sauvignon Blanc, Merlot, Cabernet Sauvignon and Zinfandel. The firm has 24 employees.
Established in 2007 by Paul and Health Dolan and Phil and Sylvia Hurst, these two families have come together with a deep understanding of the wine industry.
Paul Dolan is a fourth generation master winemaker and a leader of the organic and biodynamic farming movement, practices that have become the hallmark of Truett-Hurst operations. Phil Hurst, CEO of the company, is an experienced operator, wine entrepreneur and sales executive.
Paul and Phil worked together at Fetzer vineyard from the mid-1980’s to the mid-1990’s. They share a passion for winemaking and a common vision to build a creative, innovative and fun wine company.
Truett-Hurst is planning to launch two innovative, world-class packaging and label designs -- created by Designer Kevin Shaw -- to rise above the noise in wine displays and make their products stand out from the competition.
The company has already developed, produced and sold new “wine-wrap” packaging concepts to Safeway. The new wraps cover the entire bottle up to the neck and display colorful artistic treatments, information and unique one-of-a-kind graphics designed to attract shoppers.
Truett-Hurst is also gearing up to market what it believes to be the first-ever paper wine bottle. Using recycled cardboard that is sanitized, shredded, reduced to a liquid slurry and compressed into molds for hardening, the new paper bottles are significantly lighter than their glass counterparts -- reducing shipping costs, minimizing breakage while also being environmentally friendly.
The company is in discussions with several of the top U.S. retailers and distributions to sell this product.
In addition, the firm has designed an eco-friendly, innovative, square-shaped glass bottle and created a brand that will “own” this concept and has applied for a trademark on the brand and a patent on the design.
Truett-Hurst is also partnering with a major U.S. retailer to produce and sell three varieties with significant volumes beginning in the fall of 2013
The founders believe their growth strategy is working based on several market factors, such as steady growth in the wine industry, large retailer strength and consumer demand for new, innovative wines and packaging
While still in its infancy, food and grocery retailers have turned to private label programs as a way to gain margin, customer loyalty, category growth and differentiation. They can also capitalize on the fact that they control shelf space and product placements.
At the same time, brand loyalty is declining with the proliferation of new brands. In 2010, the U.S. approved 120,000 new brands. Consumers have shown an increasing appetite to sample new labels and varietals that can be promoted cost-effectively on an in-store basis.
Consequently, more and more retailers are focusing on innovation, due to increased competition and the need to grow consumer traffic and increase same store sales year over year, according to the Truett-Hurst management team. For example new brands like Cupcake, Menage a Trois and Gallo’s Apothic grew by 55, 18 and 258 percent respectively in 2011.
For more information about Truett-Hurst, go to: www.truetthurst.com.
