Trinchero Family Estates CEO: Wine-marketing shifts needed as grocery slows, boomers gray
Trinchero Family Estates grew over its seven decades in Napa Valley to become the fourth-largest wine producer in the U.S. via the sub-$10-a-bottle brand Sutter Home. But the company has been focusing in recent years on upscale brands.
The family bought Sutter Home Winery in 1947, and a fluke “stuck” fermentation of zinfandel led to a sweet rosé released as “white zinfandel” in 1975. That wine became a top-selling premium wine by 1989.
In the past two decades, the family has been moving brands upscale. The Ménage à Trois brand was released in 2004 with wines retailing for over $10, followed by the namesake Trinchero Napa Valley brand with the inaugural 2007 vintage. In 2016, the Trincheroes purchased luxury-tier brands Mason Cellars and Pomelo and partnered with Karen Cakebread's Ziata Wines. Last year, a partnership was forged with Neyer Vineyards in Napa Valley to make wines retailing for $25–$100.
The company imports Angove Wines from Australia, Doña Paula Wines from Argentina, Carmen and the Wave Wines from Chile.
Bob Torkelson last year was promoted to president and CEO of St. Helena-based Trinchero Family Estates, as Roger Trinchero retired. Including private-label wines, the company produces about four dozen brands, totaling the equivalent of 19.3 million cases last year.
Torkelson is set to be on a panel discussing “premiumization” at the Journal's Wine Industry Conference in Santa Rosa on April 26 (nbbj.news/wine18). That and “trading up” have been buzzwords in the wine business in the past several years, reflecting a trend in U.S. wine sales toward faster growth a higher price levels, particularly more than $10 a bottle.
In the following interview, Torkelson talked to the Business Journal about his company's strategy in coaxing millennials and Gen Xers to replace baby boomers as the primary buyers of upscale wines. Toward that goal, the company last year launched a millennial-oriented wine, Australian red blend Hopes End.
Does the premiumization trend in the wine business still have legs to it?
Although the numbers seem to be moderating a bit, I still think there is opportunity in terms of the way the consumer is reacting. There are challenges, but if the industry is intelligent in the way we are reacting then we can look at where the opportunities are going to be. If we have an approach to bringing younger consumers into higher-priced categories, we are going to be in really good shape.
Even as sales level off, it's a big opportunity for those of us who have portfolios that can still benefit from more diversification.
It will be important for us as an industry to figure out how we will bring younger consumers along with us. Think about who is still consuming premium wines today and who really drove the premiumization trend, it is generally baby boomers. It's for us to find a way to connect with younger consumers - whether we call them millennials or Gen X - and get their more engaged in premiumization. How do we get them to appreciate more quality-crafted wines?
Is the need to reach younger consumers playing into your creation of brands or selection of imports?
Absolutely. That is driving a lot of our strategy on what's in the portfolio - creating a way for consumers to enjoy an adventure around the world. Whether it's a malbec from Argentina or an Italian prosecco, those seem to be the categories that are driving the most interest from younger folks.
It's market by market. Along the East Coast, there is a sizable market for Old World wines, and we have items in our portfolio for that.
Having a diverse portfolio of authentic brands will be really important for all of us in the future.
Have recent deals you've done in co-branding or co-production of labels for celebrities played into this at all?
Some. We try to be thoughtful. Celebrity brands can be a double-edged sword. Our most enduring celebrity partnership has been with the Paul Newman Foundation, and though Paul is gone, they continue to do good work with the Newman's Own group for children. That for us was not so much a celebrity deal as it was to give back.
What have you noticed in movement of consumers between different price points?
We see people at the entry level who are moving into different package sizes. We see migration from large-sized glass (bottles) - 1.5-, 3-, 4-liter glass - into premium box wine. Portability and convenience are important for those folks.
As you start moving up the price ladder, you see more interest in the over-$10 category, where numbers are positive and are not growing as they once were but is still a lot of business there. As you go up the pyramid on price, you see a good amount of people trading up and good deal of life north of $15. Even though it's a smaller category, you are still seeing some positive trends.