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Sonoma County winery’s foray into hard cider is case study in category expansion

Vine Notes

Steven Knudsen (Steven.Knudsen@raboag.com) is vice president and relationship manager for Rabo AgriFinance in Sonoma and Napa counties.

The content, views and opinions in this article are based, in part, on research produced by RaboResearch Food & Agribusiness, a unit of Rabobank Group. The information contained herein is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.

Read previous Vine Notes columns.

As we approach year-end and the typical season of reflection and planning, wine businesses might benefit from giving some serious thought to the idea of testing new or different product offerings.

Brand extensions in new categories are trending across the broader beverage sector, where even giants Pepsi and Coca-Cola recently announced that, after years of eschewing the idea, they are launching new alcoholic offerings.

I recently sat down with Joe Dutton and his daughter Kylie of Dutton Estate Winery in Sebastopol to discuss their journey into hard cider through their well-established family brand.

The Duttons have created a fruit-forward cider with a balance of acid and sweetness. Tasting the cider is reminiscent of biting into a fresh apple. They started small and in glass bottles, and then increased their production and put the hard cider in a can for portability. They expect that 2022 will be their largest production run yet.

Four key takeaways came to mind during our conversation about how this new beverage category was a success for the Duttons.

Find inspiration in a family legacy

Joe and his wife, Tracy, founded the winery in 1995. They currently offer 12 wines at their tasting room, online and through various retailers. While exploring the introduction of a sparkling varietal, Joe decided to take inspiration from wine production and use apples grown on their family estate, which were planted by his father Warren Dutton.

Joe and his brother Steve are committed to the farming legacy started by their parents, Warren and Gail. Today, they grow 200 acres of certified organic apples, focusing on Gravenstein, Johnathan and Golden Delicious, with a few small blocks of other varieties. While the majority of the crop is sold to make apple cider vinegar, juice and apple sauce, a small amount make it to the fresh market at the Gravenstein Apple Fair every August. Joe thought to continue the family’s legacy by adding the carbonated hard apple cider to the wine portfolio.

Leverage existing infrastructure

The Duttons will be the first to admit that they had many of the needed “tools” to produce their new offering right at their fingertips. Using the grape press to press the apples, the stainless-steel tanks to hold the juice and the wine barrels to ferment the juice into hard cider, Joe and Tracy crafted their first hard cider.

While the process has certainly been a learning curve and fine-tuning has continually occurred since the first production in 2015, the cider has sold out each year and even while continuously increasing production size.

There seems to be a valuable lesson in this about thinking creatively about new ways to use existing resources to create new revenue streams. This can include raw materials, machinery and production equipment, as well as the knowledge-base and interests of your employees. For example, Dutton Estate’s winemaker had never produced a cider before – and the process is different – but the family had an interest in trying and learning.

Cross-promote existing brands

While developing products in categories beyond wine may seem like it could create competition for wine brands, the cider brand is actually complementary, and is attracting a different set of consumers to Dutton’s wine brands. Dutton Estate took advantage of its established social media presence and email marketing list to introduce its new cider to its existing customers. The buzz and excitement around something new served to increase foot traffic, and subsequently sales, for the winery.

Moreover, Sebastopol has become somewhat of a destination for hard cider tasting with the arrival of Golden State Cider’s taproom, among others. Dutton Estate was able to tack on to this “cider trail” trend, attracting new customers who they could also introduce to their wines.

Another avenue that the company found for promoting both its cider and wine has been through farmers’ markets. When the winery was closed at the start of the pandemic, employees discovered an opportunity to pour and sell the cider at Santa Rosa’s Luther Burbank Center Farmers Market. The stand turned out to be so popular that the market invited the company to also bring in its wine.

Bring in the next generation

Many family wine businesses were started with generational planning in mind and parents wanting to provide a way to involve and sustain the family for generations to come. Launching a new category can offer another way to include younger generations and create new roles that might be of interest to them. This younger generation also tends to be more social media savvy, possessing certain skillsets that can prove invaluable when entering into a new market.

Kylie Dutton, assistant winemaker, plays an integral role in the company’s winemaking operations and also has her hand in the cider’s production and success. She has her pulse on social media trends and has helped bring to fruition innovative ideas for marketing the cider, including creating a cocktail recipe using the cider last holiday season that was shared with followers.

The hard apple cider adds a strong layer to the Dutton’s story, as there is nothing more “Sonoma County” than the Gravenstein apple and its legacy growing these apples. The cider brand complements the Dutton’s existing family brand and has clearly been well-received by consumers.

The current cider vintage is sold out; however, Joe and Kylie promise to release their next vintage very soon and in a new 12 oz. can. When it is available, it will be found at the tasting room and local grocery stores, as well as distributed in the keg to restaurants throughout the region.

While the recipe for success for one company when launching into a new category won’t be the same for all, the key takeaway is to take a look at your existing resources and not be afraid to get creative.

From easy-to-transport wine in cans to completely new beverage categories such as a hard cider or seltzer, you might be surprised that an idea you haven’t yet explored actually fits within your existing story.

Vine Notes

Steven Knudsen (Steven.Knudsen@raboag.com) is vice president and relationship manager for Rabo AgriFinance in Sonoma and Napa counties.

The content, views and opinions in this article are based, in part, on research produced by RaboResearch Food & Agribusiness, a unit of Rabobank Group. The information contained herein is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.

Read previous Vine Notes columns.

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