As western Sonoma County sparkling and table wine producer Iron Horse Vineyards finishes its fourth decade in business, Joy Sterling reflects on the rapid shift the company has made to direct-to-consumer sales in the aftermath of the Great Recession and the importance of history in communicating the brand.
Iron Horse may be a smaller-sized winery by North Coast standards, but it has a prominent place in the world of wine with its high-profile placements at celebrity events, including key pourings at White House occasions. Annual case production for the estate-bottled brands ranges between 20,000–30,000, depending on the quality yield from the 160 planted acres on the estate. Annual revenue is about $7 million, depending on the vintage, rebounding back to the prerecession levels, according to Sterling, 61.
She reflected on the direction for the winery from co-founder Audrey Sterling, 84.
“Her vision is very clear: to be the most expensive wine on the wine list,” Joy Sterling said.
Retail prices range from $40–$100 for sparkling wines, $50–$90 for pinot noir table wine and $30–$50 for chardonnay.
Sterling is set to be on the “How to Stand Out in a Crowded Market” panel at the Business Journal’s Wine Industry Conference on April 24. She spoke with the Journal about how the winery shifted focus when two-thirds of its market disappear as the global economy melted.
How has the market for sparkling wine been changing?: It’s been growing by leaps and bounds — double-digit figures. Our sparkling wine sales increased 20 percent in the first quarter of this year from a year before. Sales have been very good in the last few years. Yes, generally speaking, I think it’s because people drink more bubbly on a regular basis.
What sales channels does your company use?: We use three-tier wholesale and direct to consumer. This year, I think we’ll finish at 68 percent direct to consumer. We use the tasting room, wine club, Internet and telemarketing.
All that started changing in 2008. Necessity being the mother of invention, we started our wine club in 2008. Our sales mix was two-thirds wholesale before.
How has Iron Horse changed its approach to wholesale?: Those partners are still absolutely vital for us, particularly on premise because that is so much a part of PR. The wine list is a form of endorsement or third-party advertising. We’ve been with Young’s [Market Co.] since 1990.
I find that even though Young’s and Charmer and Glazer are large companies are still family business and we have special relationships with them
How has wine marketing changed?: Certainly, social media is a whole new world and one I absolutely adore. It’s hard to pull me away from my computer. What I find amazing about [social media] is when I do see the wonderful sommeliers and country club managers are supporters, i know what they have been up to.
It’s the responsibility of the industry to communicate about wine, keep up with our ratings and how our wines been featured. We saw Iron Horse at the climbing of El Capitan, and there’s our big Earth Day is on [April 19]. On April 20, will take a red-eye to D.C. for a State Department event serving our wine.
This is such an unbelievable ongoing river of excitement, and I love to have a medium where I can communicate it all
We’ve been using telesales for a while — VinoPro for that. Every year, they’ve given us double-digit growth.
We don’t have any secrets, I’m sorry to say. We’re going to the same “stadiums” as everyone else. We just play our hardest.
We went from $3,000 year in sales on the Internet to $250,000 a year. If every channel would do 5 percent growth like that a year, that would be good.
It’s not growing in quantity — we’re estate-bottled, so production is limited by the crop — so it is about quality. Primarily, that quality growth is in making investments in the vineyard and winery. We’re not interested in consistency. Every vintage, we’re interested in how do we take it up a notch.
This year is the first year we have not pulled out vines and replanted. It was a breathtaking experience replanting almost all the vines at Iron Horse. We’re focusing on single vineyards in the estate and single clones in the estate. My brother gets all the credit for that.
How has access to store shelves and wine lists changed?: The wine world grows ever more competitive. Nothing can be taken for granted, not the relationships or the placements.
It’s not just California wines that have that issue. The governor of New York last year made a priority of having local places support local wines, and rightfully so. On the other hand, there are fabulous wine buyers who also love wines from all other places. There’s an environment of experimentation and discovering.
I’m 5 foot, 4 and a half inches tall, and that’s a lot like Iron Horse’s stature in the industry. We’re like the mouse that roared. We don’t tire, and we don’t quit. We’re driven by passion and pride. We feel this is a unique place to grow wine and is able to yield unbelievably distinct flavor.
How are marketplace changes affecting wine packaging?: There again, you have to stay on top of your game. We are tweaking and upgrading our labels, but you will not see it until the 2014 vintage. We plan to bottle that in June, which is a little early because we anticipate an early harvest. The last time we changed our labels was vintage 2005, so it’s time.
You want people to be excited to pick up your bottle, whether it’s on the shelf or the sommelier picks it up from the table or you present it to guests. We are very conscious environmentally, so we’ve stayed away from heavy glass [for the table wines]. We want a feeling of richness and quality, but we’re not reliant on the weight of bottles for our pinot [noir] wine. It’s so energy-inefficient.
What cues are tweaked on the new package?: The new bottle is wider around the middle, so you can see more of our shield logo, instead of it wrapping around. The paper has more texture, so it will look like stationery. We increased the size of the horse and moved it around, so the label is less cluttered. We upgraded the font. It’s not a revolution of the label but an evolution.
How crowded is the market?: It’s very competitive and getting more so. It means you have to be very good at what you do.