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  • The Chocolate Wine Phenomenon

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    Interview with Andrew Browne of Precept Wine

    Dear Client:

    Americans seem to be more in favor of “sweet” things these days. We’re seeing this trend with dessert flavored vodkas, for example, and also chocolate flavored wine. Although it is still a relatively small, niche category, it is growing fast and resonating particularly well with consumers who do not typically drink wine. So we caught up with Andrew Browne, CEO of Precept Wine, to talk about its Chocolate Shop red wine. They rolled out the brand in February 2011.

    Fast forward to January 2012 and they are just north of 50,000 cases, making it the top selling chocolate red wine brand available and the second largest chocolate wine overall, based on recent trends from both Nielsen and SymphonyIRI. (Cream-based ChocoVine remains the largest chocolate wine). Precept has seven chocolate wines in total, but Chocolate Shop red wine is the most successful so far.

    Precept Wine, you’ll recall, is the largest privately owned wine company in the Northwest and primarily sells wines from Oregon, Washington and Idaho. Its brands include Washington Hills, Waterbrook, House Wine, Sagelands, Canoe Ridge and Alder Ridge, and it expects to reach the 1 million case mark in 2011. Here’s what else Andrew had to say about Chocolate Shop and the chocolate trend as you, dear reader, are a fly on the wall.

    WSD: Where did this chocolate wine trend start?

    ANDREW BROWNE: There are two different pieces to it. There’s a cream-based category that has been around for a long time. It includes Harvey’s Bristol Creme or O’Mara’s that are not spirits based, so that they can be sold in more retail outlets. Then there’s a wine-based, cream liqueur style and over the last couple of years it took on a life of its own. I think ChocoVine is an example of the cream-based, chocolate wine that became more mainstream. Where we have really seen this thing take off is by putting natural chocolate flavors in red wine and marrying those two. It tastes like red wine and look like red wine.

    WSD: How did you come up with the idea?

    ANDREW: We sat down with our winemaking team probably about two years ago and we were in a creative mode. We were throwing around ideas of what we could do different with wine that wasn’t being done. Chocolate red wine was one of the things on the list and so we put it out to the wine team. We said, ‘Everyone has always joked about how red wine and chocolate goes so well together, but has anyone ever taken the concept and made it into a liquid beverage?’ When we first started out we weren’t marrying the two very well, but we just kept at it. We’re getting a customer base and we’re seeing it via Twitter and Facebook that consumers really like this. It’s not, ‘Hey, I liked your package and it was an interesting concept, but I tried it once and I’m not going to try it again.’

    WSD: So is it the same consumers that are buying cream-based wine?

    ANDREW: Actually, in our Chocolate Shop brand we have a cream-based wine, but 90+ percent of our volume is in the red wine-based product. Being red wine-based and not cream-based is much more mainstream. There are a lot of red wine drinkers, but when you get into the cream side of it, one asks, is it a wine or is it a dessert style product? This is much more a red wine. It tastes like red wine and it’s got a nice touch of sweetness. It has these chocolate flavors that hit you from the very beginning in the nose and in the mid palate; then it finishes with red wine and chocolate flavors.

    WSD: What kind of consumers are you going after?

    ANDREW: When we started, we expected it to be a female consumer. We were looking at someone who would probably shop at grocery stores, but also at specialty stores. We viewed it more as a specialty item sold at retailers that would promote things more out of the box. But the thing that’s really become interesting is that you can’t pin it down to one consumer group. I would say that a year ago we would have bet on the female consumer. But it’s not a female consumer. It transcends to men and women, younger and older people.

    WSD: Yeah, but primarily red wine drinkers, right?

    ANDREW: Well, because of the nuances with the chocolate and not being on the dry style, I think that it’s actually grabbing people who wouldn’t necessarily consider themselves big wine consumers in the past. It has actually engaged them in a nice red wine they feel they can consume and embrace.

    WSD: Is on-premise or off-premise stronger for your sales?

    ANDREW: The primary push in this last year was the off-trade. Probably in the last 60 days we’ve been starting to talk about the on-trade. We’ve been getting some great responses. We’ve been testing with some small regional restaurant groups. In restaurants it tends to be more on the dessert menu list, like where you would see port. We’ve also seen a lot of application as it relates to the bar side. This is just a fun drink. It didn’t take a mixologist to put it together, and people really like it so they’re ordering it by the glass. We’re so new into this brand. How much play does that get into the on-premise? It’s way too early to see, but positive so far.

    WSD: How is your relationship with distributors?

    ANDREW: They’ve been fantastic. We’re a wine company and we’re really excited about the wines that our winemakers put out. We’re always challenging our winemakers to do a better job in our vineyards and to do the right thing in the winery, so we’re making world-class wines. Then you have this thing over here, this chocolate program. You go to your distributors and you’re asking them to sell really good Chardonnays and Cabernets and Merlot, suddenly you say, ‘we really want you to think about a chocolate wine.’ And they’ve embraced it. Our network has been fantastic. I was surprised because I thought we were going to get more pushback initially.

    WSD: Who are your distributors?

    ANDREW: In the Midwest we’re with Glazer’s pretty much everywhere. Outside of the Midwest we do a lot of business with Southern. We do business with Wirtz. We do business with Johnson Brothers. We also have a whole niche group of distributors throughout who are on the smaller scale, maybe a one-market distributor that is very focused, probably not spirit-based but very much wine-based. We work with them, too. Because of our diversity in a lot of places, we’ll work with more than one distributor, so we might have two distributors in a market (one big, one small).

    January 25, 2012

    Part 2 with Chocolate Shop

    Dear Client: Yesterday we gave you Part 1 of our interview with Precept Wine CEO Andrew Browne regarding its chocolate wine brand, Chocolate Shop. Its red wine offering is the most successful chocolate red so far, but Chocolate Shop also offers Crème de Cocoa and Strawberry red wine. That’s in addition to Precept’s other wine brands, including Waterbrook, Washington Hills and House Wine, among others. Here’s what else he had to say about Chocolate Shop and the company at large:

    WINE & SPIRITS DAILY: Do you think Chocolate Shop is a seasonal brand?

    ANDREW BROWNE: One of the things we’ve learned from the on-trade in the last 60 days is that offering it in a chilled bottle is fitting extremely well with restaurants. I think if we go down that path with the off-trade then we probably won’t get a ton of seasonality.

    However, chocolate has inherent seasonality itself. It starts right around that mid-October time period when Halloween kicks in and it kind of flows through Mother’s Day. We’re not trying to change anyone’s mindset or anything. We’re just trying to be present when those chocolate holidays are occurring.

    WSD: What varietals go into the blend and how do you source them?

    ANDREW: We continue to develop Chocolate Shop and we’re still in our infancy of the flavor profiles. What can we put in from a blending standpoint, and can we get into white chocolates and darker chocolates, for example? Then it depends from a mix standpoint of the red varietals that we put into it. We really tend to focus on the Bordeaux varietals and Syrah. I would say the first blend we ever put together was a Merlot, Cabernet, and Syrah style blend. As we continue to develop down the path I think we’ll tend to go with different varietals.

    So far we’ve sourced from the West Coast. Obviously we’re based here and we have vineyards in Washington State, so we’re using our local product here in Washington. And we’ve also used California.

    WSD: Are your other chocolate wines in the portfolio doing well?

    ANDREW: We’re having great success with an item called Red Decadence, which is primarily sold through Total Wine and More. We launched that in the spring and we’ve had great success with them in just the past six or seven months.

    We’ve got a really exciting one called Chocolate Cellar. We’re putting in a darker chocolate and the wines over all are a little more robust, making it be more of a dark chocolate style. We’ve taken this to trade shows in the last 90 days and everywhere we put it is going nuts.

    While Chocolate Shop transcends age and gender, Chocolate Cellar does not do that. Red Decadence is a lot like Chocolate Shop where we’re seeing consumers both male and female in different age groups buy the product. In terms of Chocolate Cellar it is primarily a female driven customer base. A younger demographic has been purchasing it as well. We’ve actually done a couple tastings and it’s done really well in the gay community, which has been really cool.

    WSD: Who are your biggest competitors?

    ANDREW: I think the biggest thing right now is really probably getting the gatekeepers to understand what we have. We’ve done a really good job educating and embracing our distributor network. It’s such a new category that we’re not necessarily sensing a lot of competition within that category. We’ve had great success at Total Wines, Cost Plus and Fresh & Easy on the West Coast. We just started doing business with HEB and they’ve been a great supporter of this. It’s very much the gatekeeper that ends up being our greatest challenge. But it has exceeded everyone’s expectations.

    WSD: Do you think the dessert flavored vodka trend has been beneficial for chocolate wine?

    ANDREW: The great thing about our industry is that we have so many diverse products. If you link the two of them together it kind of makes sense that if someone really enjoys Chocolate Shop then maybe they’re going to enjoy one of those flavored vodkas and vice versa. I don’t think it hurts. I think the positivity in both those categories is that the consumer is embracing it and they really like it.

    WSD: Can you tell me about sales projections?

    ANDREW: With Chocolate Shop it will at least double. On the conservative side we’ll double our business this year as we keep embracing our distributors and they keep embracing the gatekeepers out there. I think once the gatekeepers are engaged then the consumers get engaged quickly. It’s something that is new and consumers want to try new things.

    WSD: On another note, does Precept Wines have anything else on the horizon?

    ANDREW: We’ve been consistent. Every year, for the last six years, we’ve made an acquisition. Do we have anything in the pipeline right now? Not as you and I speak, but does it mean that we’re not going to be opportunistic? Our acquisitions have been Northwest based. We’re based in Seattle and we’re in all three of the major areas of the Northwest. We know this area very well, so when those opportunities do arise we’ve been pretty proactive on them. If a good deal came along would we do it? Probably.

    In terms of organic growth, we have great brands, and from the acquisitions we’ve done and things we’ve created in house, we’re seeing real positive trend lines. We’re really bullish on what’s happening in the domestic market in terms of what we’re able to put out there and what our network is able to help execute.

    WSD: What is your top selling wine over all?

    ANDREW: Our top selling wine is a stand-alone wine called House Wine and it’s a red blend from the Columbia Valley. It’s got a fun black and white label that says House Wine on it, and it comes in a black and white package. That’s our number one selling item. I would say that we have the potential by the end of 2012 to have Chocolate Shop ascend to be our top selling single item. We kind of just shake our heads at how much the consumer has embraced it.

    WSD: Thank you for your time.

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