May 2014 Issue of Wines & Vines

Winemaker Interview: Hugh Reimers

Jackson Family Wines executive says company is in acquisition mode

by Laurie Daniel
Hugh Reimers
Hugh Reimers joined Jackson Family Wines in 2009.

It’s probably not surprising that Hugh Reimers, executive vice president and chief operating officer of Jackson Family Wines, found a career in the wine industry. He grew up in the Barossa Valley of South Australia, and his father was a professor at Australia’s most famous winemaking school: the Roseworthy campus of the University of Adelaide. Reimers went on to get his bachelor’s degree from that university in 1991.

In his native country, Reimers worked as winemaker for Orlando-Wyndham and as senior red winemaker for Yalumba. He came to California in 2002 to work with Pacific Wine Partners, which began as a joint venture between Constellation Brands and BRL Hardy of Australia and later became a division of Constellation. Reimers spent a year as chief winemaker for Constellation Wines before joining Jackson Family Wines in 2009. He was vice president of production services, then president of California production, and was named to his current post in 2011. As chief operating officer, he oversees a diverse portfolio that includes brands such as Kendall-Jackson, La Crema, Cambria, Stonestreet, Cardinale, Lokoya and several international wineries.

Wines & Vines: California’s ongoing drought is a big concern in the wine industry. What has Jackson Family Wines done to reduce water use, and what other steps might you take?

Hugh Reimers: We recognize that water scarcity is a huge issue for California, and long-term sustainability is crucial to managing our resources wisely—including how we use water. As stewards of our vineyards across California (all of which are both SIP and CCSW certified), we implement practices that help us minimize our impact on the environment through water management, best practices in low-impact farming and innovative energy conservation. Some ongoing examples of responsible water management include drip irrigation, so we can control the amount of available water to the vines, delivering just the right amount with pinpoint accuracy; using different moisture-monitoring devices (such as soil probes and leaf porometers) to help us use water more efficiently; and increasing the use of wind machines, which circulate air instead of water to protect our vines from damage during frost events. We are also keeping a watchful eye on the drought—although with some recent rains, we are feeling more optimistic about the situation—but that doesn’t change our longstanding water-conservation practices.

We are also proud to support the new Jess Stonestreet Jackson Sustainable Winery Building at the University of California, Davis, which opened in May 2013 and was funded with a multimillion-dollar gift from the Jackson family. It is a hub for experimentation and research, and tests new technologies for making wineries more sustainable through innovations like carbon dioxide sequestration, wastewater capture and reclamation, clean-in-place systems and advanced energy-efficiency systems—ultimately helping to advance the whole industry.

W&V: Where do you think California stands in regards to a grape shortage or oversupply? How is the company preparing for a possible return to shortages?

    Varietal mix evolves


     With its wide range of brands, Jackson Family Wines works with a lot of grape varieties. Executive vice president and chief operating officer Hugh Reimers says the varietal mix is changing some, but not much.

    “We have experienced strong growth in Pinot Noir and Cabernet Sauvignon and continue to see Chardonnay perform well,” Reimers says. “We are also bullish on high-end Sauvignon Blanc.”

    He adds that the success of Cabernet Sauvignon has led the company to be interested in additional investment in California vineyards with red Bordeaux varieties. Reimers also thinks that Merlot is bouncing back. The company has jumped on the Pinot Gris/Grigio bandwagon with its bottling under the La Crema label, which Reimers says has been well-received. He says no grape varieties are being reduced or phased out.

Reimers: Following record 2012 and 2013 harvests (2013 representing the largest harvest on record), California wine supply is back in balance. Vineyard yields can go up or down by 15% any given year. If we have another short harvest, we could potentially be back in a shortfall position—it always depends on Mother Nature.

As the popularity of California wine continues to increase, it is likely that demand will continue to outpace supply, particularly in the premium and luxury wine segments. In addition to grape supply concerns across the industry, there is also a shortage of wine production capacity in the North Coast of California. For example, the crush across the state increased to 4.25 million tons—or about 300 million cases—but the same growth doesn’t exist in capacity at winery facilities; this is a potential issue for the industry.

For Jackson Family Wines, part of our acquisition strategy includes strategic vineyard acquisition—focused in the cool-climate and higher elevation vineyards—as well as either buying or constructing new wineries. That balance is really key, and we’ll keep our eyes open for new acquisition opportunities.

In terms of managing potential future shortages, Jackson Family Wines is in a strong position, and we control more of our supply than many wine companies. The Jackson family owns 13,000 planted acres along the cool coastal ridges of California. The majority of our annual fruit requirements are sourced from our estate vineyards: Two-thirds of our fruit is sourced from the family’s vineyards.

W&V: Are imports a real threat for Jackson Family Wines or for the California wine industry in general?

Reimers: We do not see imports as a threat for Jackson Family Wines. In fact, we welcome the influx of imports into the domestic market given the demand reality. Much of the import growth targets the under-$10 category. As a luxury wine company, we are focused above $15 per bottle in wine regions that produce the world’s best wines.

Beyond our wineries and vineyards across California, the Jackson family has spent the past 30 years carefully assembling an exceptional international portfolio of estates: Chateau Lassegue in the St. Emilion region of Bordeaux, Villa Arceno in the Chianti Classico region of Tuscany, Yangarra Estate Vineyard and the recently purchased Hickinbotham Estate, both in McLaren Vale, South Australia, and Vina Calina in the Maule region of Chile. Regardless of locale, we are searching for those rare sites that can grow exceptional quality.

W&V: Last year, Jackson Family Wines bought a winery and 1,365 acres of vineyards in Oregon. Why is the company making such a big investment there?

Reimers: There are few places in the world that can grow world-class Pinot Noir, and the Willamette Valley is one of those places. The Willamette Valley is the next frontier for cool-climate winegrowing, so investing in Oregon is a natural fit for Jackson Family Wines, especially given our focus on luxury Pinot Noir. In the weeks ahead, we’ll be sharing more details about our plans there, including some specific winery and brand details.

W&V: Are there other areas you’re looking at?

Reimers: Our company is always looking to explore new opportunities. We’re only interested in those precious few regions that have potential to grow world-class quality—whether it is an existing vineyard or a site that has potential in 10 or 20 years. While Oregon Pinot Noir is exciting for us, we won’t likely make a move into Washington, although it will be interesting to see how their industry continues to develop on the higher end in terms of quality and price. We continue to invest heavily in hillside and mountain vineyards in Sonoma and Napa—most recently the Yverdon Vineyard and Winery in the Spring Mountain District.

While we have exceptional Pinot Noir vineyards in the best cool-climate regions, including Anderson Valley, Sonoma Coast, Russian River, Carneros, Arroyo Seco and Santa Maria Valley. We also recognize that Santa Rita Hills is growing superlative Pinot Noir. This is a region we may explore further.

W&V: Is the direction of the company changing under the leadership of Barbara Banke?

Reimers: As our chairman, Barbara has an incredible passion for producing world-class wines and is taking the company to new, unprecedented heights. She is building on Jess’ legacy with a keen focus on luxury wines from great vineyards. We have acquired more than 16 new properties and thousands of acres across California, internationally and now in Oregon. She has tremendous gut instinct—not to mention an extensive background as a land-use attorney—that allows her to see the potential of a vineyard or parcel of land to become a world-class site.

Barbara is also focused on building relationships with key influencers and investing in education—both for the trade and our consumers across the globe.

W&V: Jackson Family Wines’ brands include high-end wines like Lokoya, Cardinale and Verité, as well as more affordable brands like Kendall-Jackson and La Crema. Where is the growth in the company occurring and why?

Reimers: We pride ourselves—and the trade and consumers truly value—that we have such great balance in the portfolio. The family’s collection of wineries is a terrific mix of beloved “household names” like Kendall-Jackson in the premium category, all the way up to incredibly rare, high-end wines like Lokoya; it is rare for a company to do both so well. With that said, we see growth across the collection but primarily with wines positioned above $30. We’re more interested in growing quality and profit versus volume. Because we’re a family-owned company, we can make long-term decisions with that focus, and take the risks required to grow and maintain the highest standards, whether on a $30 bottle or a $300 bottle of wine.

A resident of the Santa Cruz Mountains, Laurie Daniel has been a journalist for more than 25 years. She has been writing about wine for publications for nearly 15 years and has been a Wines & Vines contributor since 2006.

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