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Ste. Michelle Dominates $8-$10.99 Wine Sales

Washington winery group has No. 1 and three other contenders in premium category

by Jim Gordon
symphony iri sig wine
San Rafael, Calif.—Wines from Washington state make up less than 10% of U.S. wine production, but in at least one price segment they dominate sales: wines from $8 to $10.99 retail, also known as “premium” by some marketers.

Washington’s Chateau Ste. Michelle brand leads this category in sales at major U. S. food and drug stores with $94 million in the 52 weeks ending July 8, according to the Symphony IRI Group (SIG.) Parent company Ste. Michelle Wine Estates claims three additional spots in the top 20 table wine brands at this price: 14 Hands, Columbia Crest Grand Estates and Red Diamond.

Chateau Ste. Michelle, based in Woodinville, Wash., has long been the dominant U.S. wine brand in the Northwest, and in this category it stands as an equal with California marketing giants Constellation Brands, E. & J. Gallo and The Wine Group. Chateau Ste. Michelle’s popularity in the category is based on Riesling, Chardonnay, Cabernet Sauvignon and Merlot, in descending order of sales.

14 Hands hottest
In terms of pure sales growth, Ste. Michelle’s 14 Hands brand was the hottest among the Top 20, expanding by 182% to $29 million. A red blend wine and a Cabernet Sauvignon are the brand’s best-selling items in this price range. Red Diamond was the only Ste. Michelle Wine Estates brand in the Top 20 to lose sales.

While Chateau Ste. Michelle grew in sales by 6% over 52 weeks, its nearest competitor, Cupcake Vineyards, closed the gap fast with 67% growth and $87 million in sales. Cupcake’s parent company is The Wine Group.

“Everything Cupcake is selling is on fire,” said Curtis Mann, director of client insights for SIG, a Chicago-based market research firm. “They are growing faster than practically anything I’ve ever seen.”

Cupcake Chardonnay
Cupcake’s best-selling varietals are Chardonnay, Sauvignon Blanc, a red blend and Cabernet Sauvignon, according to the data from checkstand scans that SIG analyzes. Its sales of the red blend grew by 222% in the past year, and its Sauvignon Blanc grew by 59%.

Gallo’s Apothic brand was the company’s fastest growing of five brands among the top 20. Based largely on a red blend, the young $10 brand grew by 129%. Gallo imports, Alamos from Argentina and Ecco Domani from Italy, along with traditional California brand Mirassou, also made the top 20.

The $8-$10.99 price category is the second-largest in terms of sales after the category just below it, $5-$7.99. Mann observed that many consumers enter the wine market in this lower range, then some of them move up to $8 and above in a search for higher quality, while others shift down to even less expensive purchases.

Domestic sales up 7%
Domestic table wines in general had another good month, growing 7% in dollars during the four weeks ending July 8. This rate appears locked in this year, since the 52-week growth rate is the same. Off-premise import wine sales stayed flat during the four-week and 52-week periods.

Washington table wines beat the average U.S. growth with 8%, and Oregon grew by 9% in 52 weeks. Australia, the No. 1 import country according to SIG’s data, saw sales shrink by 5%, while Argentina and New Zealand enjoyed growth in the double-digits.

Domestic table wines priced at $20 and up continued their growth pattern with 14% greater sales in four weeks, which was slower than their 52-week average of 25%.

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Wine Industry Metrics
Off-Premise Sales » Month   12 Months  
August 2015 $608 million
$8,178 million
August 2014 $568 million $7,729 million
Direct-to-Consumer Shipments » Month   12 Months  
August 2015 $80 million
$1,908 million
August 2014 $78 million $1,686 million
Winery Job Index » Month   12 Months  
August 2015 261
August 2014 218 224
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