Sonoma’s V2 Wine Group Aims To Double Business Within Five Years

Launched in 2010 by industry veterans Dan and Katy Leese and entrepreneur Pete Kight as a wine production, sales and marketing company, Sonoma’s V2 Wine Group has reached an annual volume of about 600,000 cases and revenues of just under $65 million. Dan Leese, who serves as president, has set the goal of doubling sales in the next five years. In the first part of this exclusive interview with SND senior editor Daniel Marsteller, Leese discusses growth prospects across V2’s expanding portfolio.

SND: Which brands in the V2 lineup are driving growth?

Leese: We have a premium portfolio, mainly in the $13-$50 range. That position, coupled with excellent winery leadership, is allowing us to take advantage of the general market trade-up. Dry Creek Vineyard (+7%) and Toad Hollow (+12%) are really growing nicely—they’re the two winery partners we’ve been with the longest. Dry Creek has made a 10-year investment in their vineyards, and their wines are getting better and better. Quality has also continued to improve at Toad Hollow, and they did an excellent packaging upgrade recently that seems to have helped. Bouchaine, Quivira, La Follette and Australian icon Torbreck are all doing well. Valley of the Moon and Lake Sonoma, which were acquired by the Stewart family from Gary Heck in 2012, have been repositioned with higher prices and more focus on very specific appellations. It’s a lot of work, and a long-term play. Their prices have moved up on the shelf as much as 30%-40%. Those brands took short-term volume hits over a two-year period, but halfway through 2016 we’re now growing at single-digit rates. On Cameron Hughes, we’re focused on building the Cam Collection Chardonnay and Pinot Noir from Monterey and Cabernet from Lake County.

SND: In February, you aligned with the Schlatter family’s Merryvale and Starmont brands from Napa Valley. How is the outlook there?

Leese: Strategically, it was important for V2 to fill out our Napa opportunity. After talking to several Napa properties, this was the right one. We’ve hit the ground running. Merryvale is growing at 35%, and Starmont—which has its own separate Carneros winery—is up 9%. They have the vineyards and the sourcing to grow those brands, and we expect nice growth for several years.

SND: How about the Steelhead and Lucinda & Millie labels, which you own together with Pete Kight?

Leese: For Steelhead, the growth has come from its Sonoma County Pinot Noir ($15). Lucinda & Millie is our organic project, with a Mendocino County Cab and Chardonnay. We launched it in Whole Foods five years ago and have since taken it into the rest of the market. It’s been seeing double-digit growth from a small base—it will be a 20,000-case brand this year—and has a pretty nice by-the-glass business.

SND: How is the portfolio faring in the on-premise?

Leese: The industry is still around 20% on-premise. Our portfolio in total is about 35% on-premise, and some of our brands—like Torbreck, La Follette, Quivira and Bouchaine—skew as high as 50% on-premise. The problem is that the on-premise overall has been stagnant, so we’ve had to expand distribution in order to get growth. Fortunately, we’ve been able to do that.

News Briefs:

•Australia’s Casella Family Brands has made another acquisition play, purchasing countrymate Morris Wines from Pernod Ricard for an undisclosed sum. Based in Rutherglen, Victoria, Morris is known for its fortified wines, which Casella says it sees opportunity to expand. The deal includes the Morris of Rutherglen brand, winery, cellar door and 80 hectares (198 acres) of vineyards. Pernod Ricard had announced last month that it intended to shutter the winery. This is the third domestic Australian acquisition for Casella in less than a year. The family-owned winemaker purchased Brand’s Laira last December and Howcroft Estate Vineyards in January.

•Napa-based Quintessential Wines is expanding its Portugal offering with the addition of Casa Agricola Alexandre Relvas. Quintessential will initially import a range of Alexandre Relvas wines from the Herdade de Sao Miguel, Sul, Art Terra and Herdade da Pimenta brands, ranging in price from $12 to $80 a bottle. Relvas, which has two wineries in Portugal’s southern Alentejo region, farms 240 acres of estate vineyards.

•Luxco is extending its Ezra Brooks brand with a seasonal Bourbon Cream offering this fall. Ezra Brooks Bourbon Cream is at 25 proof and will retail at $13-$15 a 750-ml. bottle. Meanwhile, Luxco is introducing new packaging across the Ezra Brooks brand, which also includes a Kentucky Straight Bourbon Whiskey, Blended Whiskey and Seven-Year Kentucky Straight Bourbon Whiskey. Luxco’s Bourbon portfolio also includes the Rebel Yell and Blood Oath labels. The company expects to finish work on a new 18,000-square-foot distillery along the Kentucky Bourbon Trail by late 2017.

•Winebow has appointed Arjun Dewan as senior vice president and general manager of Winebow Northeast, overseeing distribution operations in New York, New Jersey and Pennsylvania. Dewan most recently led corporate wine sales for Allied Beverage Group as vice president of wines. Prior to that he served as director of sales for Terlato Wines International. Dewan will report to Scott Ades, COO of The Winebow Group.

Craft Brewing And Distilling News:

•Cooperstown, New York’s Brewery Ommegang will launch a new beer in its Game of Thrones series on October 10. The new entry, Valar Dohaeris Tripel Ale, is brewed with pilsner and wheat malts as well as oats and flaked barley and is at 9% abv. It will be offered in 750-ml. bottles retailing at around $10, and paired alongside sister brew Valar Morghulis Dubbel Ale (8% abv) in a commemorative gift pack positioned at $23. Brewery Ommegang, which is part of Duvel USA, has a footprint of 46 states.

•Chester County, Pennsylvania’s Brandywine Branch Distillers is releasing The Revivalist, a collection of four small-batch gins—Equinox, Summertide, Harvest and Solstice. Each of the Revivalist gins is made from a base of selected barley and wheat grains, along with juniper, angelica and coriander. Each of the expressions also showcases other botanicals specific to the season for which it’s named. The Revivalist Gins retail at $40-$50 a bottle. Brandywine is also planning a future line of brandies and apple-based spirits.

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