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Annual Report 2015

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Annual Report 2015 Stags Leap Estate at Pine Ridge Vineyards 2015 ANNUAL REPORT 83876 Cover_Crimson AR 2015.indd 3 5/26/16 8:57 PM SEATTLE WASHINGTON Pioneer Square, Seattle WALLA WALLA Walla Walla Valley, Columbia Valley PORTLAND Horse Heaven Hills, Columbia Valley OREGON Dundee Hills, Willamette Valley PACIFIC OCEAN PACIFIC SACRAMENTO Alexander Valley, Sonoma County SAN FRANCISCO CALIFORNIA Stags Leap District, Napa Valley N SAN LUIS OBISPO Edna Valley, San Luis Obispo County LOS ANGELES 83876 Cover_Crimson AR 2015.indd 4 5/26/16 8:57 PM OUR MISSION Crimson Wine Group is a luxury wine company that owns some of the highest quality vineyard land and wine estates in the United States. With a focus on quality in everything we do, we promote the long term growth of those we serve, our customers, our people, our communities, the environment and our shareholders. QUALITY. FOCUS. GROWTH. CW3964_2015AnnReport_FlyLeafs_P1.indd 1 5/26/16 9:43 AM TO OUR SHAREHOLDERS DEAR SHAREHOLDERS, At Crimson we believe we own some of the finest vineyards and wineries in the country. In 2015 we enhanced each of our brands through investments in vineyard development, winemaking technology, new sales channels, and talented people. Quality, focus and growth will continue to be the driving force of our business and will make us even better in the years to come. QUALITY Quality starts in the vineyard. Every year brings new challenges in the quest for growing high quality wine grapes, and 2015 was no exception. In California we suffered another year of drought conditions, and the warm start to the year resulted in an early harvest for everyone. Mother Nature delivered yields that were lower than average, in some extreme cases 40–50% lower; however, overall we received the right quality and quantity of grapes. In Oregon, harvest was early, high quality and generous, certainly over the norm. Finally, in Washington we avoided the periodic winter freeze conditions and our harvest was just about right in both quality and quantity. Our ability to learn and adapt to the dynamic challenges of each growing season makes us stronger. Our Chief Winegrower and “defender of quality”, Craig Williams, bears the responsibility for our six winegrowing operations. Spread across 895 plantable acres in California, Oregon and Washington, our portfolio of operations includes a broad array of wonderful terroir. Craig and his team of winemakers farm our vineyards in a thoughtful and sustainable way, and will continue their focus on sustainability in 2016 and beyond. FOCUS In our pursuit of making wine of the highest quality, we are focused on developing our winegrowing operations to their fullest potential. We believe they are on their way to becoming some of the best in the world. PINE RIDGE VINEYARDS is based in the Stags Leap District and includes 160 acres across five Napa Valley appellations. Michael Beaulac and his winegrowing team lead Pine Ridge. Now in his 27th year of winemaking, Michael is further refining his focus on Cabernet Sauvignon and believes our Stags Leap District Cabernet Sauvignon, in particular, sets us apart as a leader. A pending score of 92–94/100 from the Robert Parker’s The Wine Advocate on the 2013 vintage of Stags Leap District Cabernet Sauvignon is positive; however, we believe there are even better accolades to come. SEGHESIO FAMILY VINEYARDS was established in 1895 as bonded winery #56. Located in Sonoma County, with over 318 acres across two Sonoma County appellations, Seghesio is known for its critically acclaimed Zinfandel. Led by our General Manager and Winegrower Ted Seghesio, Seghesio Family Vineyards received favorable accolades on many wines, but the standout was the 93/100 point score from Wine Spectator on the 2014 Sonoma County Zinfandel (116,000 cases, $26). This was the highest score from Wine Spectator for a wine from Sonoma County below $30 since the 2009 vintage. During 2015 we invested over $4 million in Seghesio winemaking facilities to ensure quality like this continues for generations. As a member of the fourth generation of Seghesio winegrowers, Ted is sharing his lifetime of knowledge to a talented winegrowing team. ARCHERY SUMMIT, established in 1993, was envisioned by Ian Cumming, one of our founders. The winery controls a total of 118 acres across six vineyards in two Willamette Valley appellations. With the goal of producing benchmark Dundee Hills vineyard designate Pinot Noir, Chris Mazepink and his team are excited about the 2014 vintage released this year. In addition, the winegrowing team has started working on small quantities of what they believe could be world class Chardonnay. Unfortunately, we have to wait awhile to taste these wines. CHAMISAL VINEYARDS started in 1973 as the first vineyard planted in the Edna Valley. With 98 planted acres, Chamisal is located in an ideal region for world class Chardonnay, and we believe the best is yet to come from this winery. Fintan du Fresne is leading the winegrowing team on this quest, in addition to overseeing his already popular Stainless Chardonnay. The Chardonnay focus is complemented by several estate wines, most notably our opulent Pinot Noir, with the distinct Chamisal spice. In addition, Fin has helped lead a new special project we will discuss more in 2016. Please contact any of the following to place your Seghesio Family Vineyards Tony Sciullo special shareholder discount order today 707.433.3579 x146 | [email protected] Pine Ridge Vineyards Rebbecca Ingalls Archery Summit Karina Gordon 707.260.0546 | [email protected] 503.864.4781 | [email protected] CW3964_2015AnnReport_FlyLeafs_P1.indd 2 5/26/16 9:43 AM DOUBLE CANYON is located in the Horse Heaven Hills of Eastern Washington and has a focus on growing the finest Cabernet Sauvignon grapes in the region. Double Canyon wines have evolved significantly under the guidance of Craig Williams, Winegrower Will Beightol and Enologist Stephanie Pao. The winery was founded in 2007 when we planted 88 out of 184 plantable acres. The now sold-out 2013 Double Canyon Horse Heaven Hills Cabernet Sauvignon received a 91/100 point score and “best value” from Wine Spectator. We believe the 2014 vintage, which was just nationally released, is even better. In the name of quality, we are embarking on a new project to provide Double Canyon its own winemaking home. SEVEN HILLS WINERY was started in 1988 by Winemaker Casey McClellan and his wife Vicky. We were delighted to learn in 2015 that Casey and Vicky were interested in joining Crimson Wine Group and even more pleased to make if official in January 2016. Located in the Walla Walla Valley, Seven Hills Winery is a benchmark Washington winery that has played an important role in defining the Walla Walla Valley wine industry. Over its 28-year history, Seven Hills Winery has established a storied wine program with a strong history of accolades for both Merlot and Bordeaux-style red wines. Most recently, these accolades include a 92/100 point score from Wine Spectator on the 2012 Pentad, a Walla Walla Bordeaux-style red blend. With over 100 years of family farming history in Eastern Washington, we believe Casey will be teaching us a thing or two in the years to come. GROWTH In addition to our talented group of winegrowers, our team of sales, marketing and administrative staff are working hard to deliver wines from our estates to consumers. In 2015 we shipped 349,000 cases of wine and generated $61 million in revenue, which were both new high marks for us. Working through our network of 49 independent distributor partners, our domestic wholesale team grew our accounts sold base to approximately 23,000 accounts in the U.S. Our direct to consumer team opened The Estates Wine Room in Seattle, Washington, creating a new sales channel for Double Canyon, Seven Hills Winery and Archery Summit, while providing opportunities for other brands in the future. Our export team works with independent importers and brokers to serve customers in 40 countries and opened new distribution for several estates this year (e.g. Pine Ridge into Australia). Finally, as noted above, in January of 2016 we were delighted that Seven Hills Winery joined the Crimson Wine Group. We are highly selective about any additions to our portfolio, and Seven Hills Winery was a great strategic match for us and aligned with our mission, strategy and “three pillars.” We believe that these efforts and others will provide continuing growth into the future. We are very excited about the future growth of our company. In the wine business, growth comes from continuous improvement in everything we do, including producing the highest quality wines, selling and marketing with selective distribution expansion and providing best in class hospitality and customer service for our consumers. None of this happens without the collective effort of all the great people at Crimson Wine Group and I appreciate all of their hard work. We take seriously the trust placed in us by the Crimson shareholders. We look forward to toasting with you with one our fine wines at our annual meeting at Pine Ridge Vineyards in the Napa Valley on July 22, 2016. CHEERS, PATRICK DELONG PRESIDENT & CHIEF EXECUTIVE OFFICER Chamisal Vineyards Christine Noonan Seven Hills Winery Julie Titus 805.541.9463 [email protected] 509.529.7198 | [email protected] Double Canyon Russell Sheldrake The Estates Wine Room Russell Sheldrake 206.623.5835 | [email protected] 206.623.5835 | [email protected] CW3964_2015AnnReport_FlyLeafs_P1.indd 3 5/26/16 9:43 AM Classically balanced Cabernet Sauvignon capturing fi ve renowned Napa Valley appellations STAGS LEAP DISTRICT, CALIFORNIA PINERIDGEVINEYARDS.COM Since 1991, Crimson Wine Group has carefully assembled a portfolio of strong, highly diff erentiated luxury wine estates.
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