Good Fruit Grower

February 1

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GOOD POINT Ted Baseler, Ste. Michelle Wine Estates Best wines are yet to come Washington wines are a success story. he U.S. wine industry has never been more fiercely competitive than it is today. At a time when consumers have many more wine brands to choose from, they also have grown more discerning about their preferences as they seek greater authenticity from the wines that they purchase. So, how do wineries build loyalty for their brands? They do so by connecting with consumers through meaningful stories about what is inside the bottle. For Chateau Ste. Michelle, this means relaying the unique visions of our winemakers who work with our viticulture team to transform an actual vineyard site into a wine experience. Yes, Ste. Michelle is known widely as being the "big wine company." However, our "String of Pearls" management philosophy—where each winemaker has complete and independent control over their estate—allows us to distinguish Chateau Ste. Michelle from Col Solare, as an example, yet still remain focused on innovations that lead to wine quality enhancements. Applied research Those innovations come from more than 35 years of research dedicated to such matters as water and pest management, planting systems, mechanization, trellising and training systems, cover crops, pruning, and cold hardiness. The research trials have taken place on our own or our growers' estates and in cooperation with Washington State University. Ongoing, shared research is among the achievements that have supported our industry's rapid growth – from some 85 wineries and 62,000 tons harvested in 1994 to more than 800 wine brands and approximately 217,000 tons harvested in 2013. As we look to the future, our industry's advantage is that we have an improved understanding of how to match a vineyard site with the correct variety and best growing practices. Quality initiatives that are maintained from planting through harvest offer the greatest return for us and our customers. This is another reason why the Washington State University Wine Science Center is so important to the ongoing evolution of our industry. Here, world-class researchers and students will focus their efforts entirely on the challenges and opportunities faced by Pacific Northwest grape growers and winemakers. All of this will strengthen our focus on exceptional wine quality. Washington outperforms Today's wine consumer is accustomed to enjoying exceptional quality from wines produced in Washington State, quality that routinely exceeds that of wines produced elsewhere but retailing at higher price points. In fact, Washington wine continues to outperform the industry. According to AC Nielsen's year-to-date statistics for December 7, 2013, the overall wine industry is up 1.2 percent in volume, yet Washington wines have increased more than twice that rate by 5.2 percent while California wines are up 1.4 percent. Washington wines also enjoy a premium of 45 percent above the industry average price. Washington Cabernets, in particular, are up 13.3 percent over same time last year. The success of certain new brands appearing at retail can obscure the fact that the majority of growth in the marketplace comes from strong, established performers. Chateau Ste. Michelle, for example, is the second largest premium domestic wine brand in the country and grew by 6.6 percent, three times the market growth. In contrast, some standard-bearers like Mondavi, Blackstone, Beringer, Sterling, and BV have declined. These market shifts and the failure of edgy, new brand entries to succeed has led marketers to research whether the Internet generation is embracing old-style or flash-in-the-pan brands. Wine consumption up The good news is that wine consumption is increasing by 1.1 percent annually while per-capita consumption also is on the rise. A majority of Millennials are now of drinking age and at a population mass where they can influence what is happening in the wine world. As boomers continue to age and consume less, savvy wineries are considering how to establish brand loyalty with a new consumer base. Millennials are looking for a genuine story to facilitate decision making. Wine consumers are more sophisticated today due to their at-shelf smartphone access to a winery's story. Brand engagement and informed decision making are taking place well before the bottle of wine is opened. This is a story that is being told particularly well by our own local wine writers, led by Andy Perdue and Sean Sullivan, among others, who continue to elevate the region and find those stories that resonate with consumers and build regard for our industry. All of this adds up to an outstanding proposition for the Washington wine industry: quality wines in demand and poised to attract a loyal following from the next generation of consumers. The category's success and unprecedented acclaim has created a gold-rush mentality for out-of-state wine companies to explore Washington. Our industry is hot! National wine magazines—Wine Spectator, Wine Advocate, Wine Enthusiast, and Wine & Spirits—are naming more Washington wines to their annual "best of" rankings. Recently, Wine Spectator updated its vintage chart to give Washington Cabernet Sauvignon, Merlot, and Syrah produced in 2012 a rating of 94-97 points, noted as "powerful wines with elegance." All of our important audiences—the trade, critics, and consumers—are accustomed to having a wine from Washington State overdeliver on quality. This is why it's even more critical that we maintain our quality position and the industry's premium status. Across the board, Washington offers wines of distinction from distinguished sites. The phrase is overused but still true today: the best is yet to come. • 36 FEBRUARY 1, 2014 GOOD FRUIT GROWER

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