Washington Wine Giant Ste. Michelle Wine Estates Sells for $1.2 Billion
Chateau Ste. Michell’s 2012 Eroica Single Berry Select Riesling, in partnership with Germany’s Dr. Loosen, earns perfect 100-point score from Wine & Spirits Magazine — highest rating ever for a Washington white wine.
David Dearie: President and Chief Executive Officer, Ste. Michelle Wine Estates.
By Charles Leininger, Publisher
On Friday, July 9, the Seattle Times, along with dozens of other newspapers nation-wide, reported that Washington wine giant Ste. Michelle Wine Estates, owned by tobacco company Altria Group, Inc., was sold to New York based private equity firm Sycamore Partners for $1.2 billion. The sale is expected to close in the second half of the year, subject to buyer Sycamore Partners obtaining the necessary financing and antitrust clearance.
Headquartered in Woodinville, WA., Ste. Michelle is the nation’s third-largest wine producer, accounting for approximately 60% of all Washington wine sales by volume. Ste. Michelle brands in Washington include Chateau Ste. Michelle (Woodinville), 14 Hands (Prosser, WA.), Columbia Crest (Paterson, WA.), Northstar (Walla Walla, WA.) and Col Solare (Benton City, WA.) in partnership with the Antinori family of Italy.
According to the Times, starting in 2016 Ste. Michelle’s growth slowed and Washington’s wine industry experienced an “inventory glut” with more grapes being grown than demand for wine. “Demand was stagnant and yet we kept planting new vineyards – we specifically and the industry as a whole,” Ste. Michelle spokesman Ryan Pennington told the Times.
According to the Times, Ste. Michelle’s sales slipped from $691 million in 2018 to $689 in 2019, with operating income turning from a $50 million profit to a $3 million loss. Then, during the pandemic shutdowns of 2020, Ste. Michelle sales fell to $614 million and the company reported a loss of $360 million. In 2020, Ste. Michell’s total wine shipment volume was approximately 7.3 million cases, a 12% drop from 2019.
“We believe the transaction is an important step in Altria’s value creation for shareholders and allows our management team greater focus on the pursuit of our vision to responsibly transition adult smokers to a non-combustible future,” said Billy Gifford, Altria’s Executive Officer. “Ste. Michelle and its talented employees have built an outstanding portfolio of wine brands and we wish them future success.”
According to the Oregonian, Oregon’s largest circulation newspaper, the purchase of Ste. Michelle Wine Estates is the first foray into the alcohol industry for Sycamore Partners. In recent years, Sycamore Partners has specialized in retail and consumer investments, spending billions of dollars acquiring such companies as Staples, Talbots and The Limited.
Pennington, Ste. Michelle’s senior director of communications and corporate affairs, told the Oregonian that the sale of Ste. Michelle Wine Estates to Sycamore Partners was motivated by a period of sluggish growth. “Through Covid and some issues before that, our business was not where we wanted it or needed it be,” Pennington told the Oregonian. “It became apparent that a change in ownership was going to be the best way to execute a new strategic plan.”
Pennington went on to tell the Oregonian that Ste. Michelle’s new president and chief executive officer David Dearie helped the company land on Sycamore Partners. “David has only been here since last October, but he’s righted the ship to where we need to go,” said Pennington. “We appreciate the fact that Sycamore Partners does not run their companies day-to-day. They look to their management teams to do that. They will, however, bring the financial resources we will need to be successful.”
After the announcement of the sale was made public, Dearie issued the following statement: “The Ste. Michelle leadership team and I look forward to working with the team at Sycamore Partners and believe we are well-positioned to help drive the next phase of growth. Their commitment to partnering with us is a tremendous vote of confidence in the team and our magnificent estates and brands.”
“Ste. Michelle is committed to leading the growth of the Washington wine category through investment in brand-building and by continuing to craft award-winning, wonderfully drinking wines,” Dearie added. “We are fortunate to have renowned estates and brands in Oregon, Napa, and Sonoma to complement our diverse portfolio in Washington.”
Eric McLaughlin, CEO of METIS, a company in Walla Walla, WA. that provides advisory services to the adult beverage and hospitality industries, said the sale of Ste. Michelle Wine Estates to Sycamore Partners is indicative of the surging confidence investors have in the Pacific Northwest wine region. “The sale is the largest indication yet of the rapidly growing interest we’ve seen from both strategic and financial investors in Pacific Northwest wine companies and assets,” said McLaughlin.
Wine sales for Ste. Michelle Wine Estates have already started to rebound in 2021. Compared to this time last year, net revenues are up 2.7%.
More Ste. Michelle News –
2012 Eroica Single Berry Select Riesling Earns
Perfect 100-Point Score From Wine & Spirits Magazine
Chateau Ste. Michelle & Dr. Loosen 2012 Eroica Single Berry Select Riesling earned a perfect 100-point score from Wine & Spirits in the magazine’s August issue, marking the highest rating ever for a Washington white wine. The remarkable 100-point score for the highly-prized Eroica Single Berry Select Riesling is the latest accolade in a long tradition of top honors for this ground-breaking partnership between two of the world’s leading Riesling producers, Chateau Ste. Michelle of Washington state and Ernst Loosen of Germany.
Eroica Single Berry Select Riesling is crafted in the traditional German Trockenbeerenauslese (TBA) style and is one of the few TBA-style wines in North America today. The dessert wine is ultra-rich and concentrated, yet elegant with intense aromas of orange blossom and flavors of ripe pineapple. The grapes for this wine were harvested from a particular parcel in eastern Washington’s Horse Heaven Hills known for the development of botrytis, which is essential to make a TBA-style wine. The concentrated, shriveled berries are individually hand-picked and hand-sorted.
The previous eight vintages of Single Berry Select Riesling have earned between 93-99 points in leading wine publications, making it one of the consistently highest-rated white wines in the world. The 2012 Chateau Ste. Michelle & Dr. Loosen Eroica Single Berry Select Riesling retails for $200 for a 375 ml bottle with a limited 850 bottles produced. A limited quantity of the wine will be available at Chateau Ste. Michelle’s Woodinville winery and via the winery’s online store at: www.ste.michelle.com.
The 100-point score is the latest in a long list of accolades for the portfolio of Eroica wines. Upon its release in 1999, the standard off-dry Eroica Riesling set the bar for American Riesling earning a place on Wine Spectator’s Top 100 list for its first five vintages. The standard Eroica Riesling has gone on to earn 90+ points from national wine publications for all 20 vintages. Mostly recently, the 2019 Eroica Riesling won “Wine of the Year” in the 2021 Sommelier Choice Awards.
Chateau Ste. Michelle has championed Riesling for more than 50 years and was among the first to plant Riesling in Washington state. Ste. Michelle catapulted into the national spotlight when its 1972 Johannisberg Riesling won the now-famous Riesling blind tasting event sponsored by the Los Angeles Times in 1974. Today, Chateau Ste. Michelle offers up to nine different Rieslings, each showcasing the versatility of Riesling and the regional styles within Washington’s Columbia Valley, which produces more Riesling than any other American wine region.
