Sutter Home Winery Inc.
Address:
P.O. Box 248
St. Helena, California 94574
U.S.A.
Telephone: (707) 963-3104
Fax: (707) 963-2381
Statistics:
Private Company
Incorporated: 1874
Employees: 335
Sales: $140 million (1995 est.)
SICs: 2084 Wines Brandy & Brandy Spirits; 0172 Grapes
Company Perspectives:
Success comes from giving consumers what they want, accompanied by consistent quality and a fair price. And that, in a nutshell, is the Sutter Home credo.
Company History:
Sutter Home Winery Inc. is one of the leading producers of premium varietal wines in the United States. The company is perhaps best known for originating a light, slightly sweet, lower-alcohol type of wine known as white Zinfandel, which became the nation's most popular premium wine in the 1980s and spawned an entire new market of emulative "blush" wines. The owner of more than 3,500 vineyard acres in California, Sutter Home manufactures a wide range of red wines under the brand names California Zinfandel, Amador County Reserve Zinfandel, Cabernet Sauvignon, and Soleo. Its white wines include Chenin Blanc, Sauvignon Blanc, Chardonnay, and Muscat Alexandria.
Early History
The founder of the company was a Swiss-German immigrant named John Thomann, who established a small winery and distillery in California's Napa Valley in 1874. After Thomann died in 1900, his heirs sold the winery and the Victorian home he had built to another Swiss family, the Leuenbergers. The new owners rechristened the estate Sutter Home, in honor of Lina Leuenberger's father, John Sutter. For the next half century, the Leuenberger family maintained control of the modest winery.
In 1947, John and Mario Trinchero, two Italian immigrant brothers whose family had been involved in the wine business in Italy for six generations, purchased the dilapidated winery. When the Trincheros took over, the Napa Valley region was a long way from becoming the thriving tourist attraction it is today: prunes, tomatoes, and walnuts were, in fact, more plentiful than wine grapes. Having emigrated to the United States in the 1920s, the aspiring winemakers moved their families from New York City to test their fortunes in a California rural area that seemed to be populated by as many cattle as people.
During the early years, the fledgling winery operated strictly as a "mom-and-pop" operation. Almost two-thirds of the wine sold was purchased at the front door. As Mario Trinchero's son Bob, who was only 12 years old when the family settled in St. Helena, recalled, "If you could carry or roll a container through the door, we'd fill it for you." In those days, during the 1950s, the company struggled to break even, and as the elder Trinchero neared retirement, the future of the wine business did not look favorable. Despite the tireless efforts of the Trincheros, their operation failed to turn a profit, and by 1960 they were in desperate need of a loan to keep the winery afloat.
When Mario Trinchero retired that same year, he managed to convince his son Bob--who had left at 18 for a four-year stint in the Air Force, vowing never to return to the Napa Valley region again&mdashø carry on the family business and buy out his uncle's half share. However, before Bob could comply he first had to acquire the capital needed to rebuild the company. Bank of America, the only bank in town at the time, turned the company down for a loan, and the Trincheros were forced to put the winery on the market. To their good fortune, they found no takers at their asking price, and a new bank moved into town that was willing to loan them the money they needed. With their bills now paid and $5,000 in fresh capital, the Trincheros were ready to rebuild their winery and their product.
First Signs of Success in the 1960s
Although Bob learned the art of winemaking from the ground up, handling such duties as barrel washing and pomace shoveling during his teenage years, he had no formal training. His efforts to improve the quality of the wine would be a matter of trial and error. While he was working on upgrading his product--he later told Robyn Bullard of The Wine Spectator that the wine was "actually drinkable by the late 1960s"--he made a discovery that would give him a secure foothold in the industry. In 1968, he paid a visit to Sacramento retailer Darrell Corti, who insisted that he try a homemade Zinfandel produced from grapes grown in the Sierra foothills' Amador County, an historic grape-growing region that had lain dormant since Prohibition. Immediately taken by the wine's intensity of flavor, Trinchero, who owned no fields of his own, contacted the grower and immediately contracted to purchase grapes from him the following year. Not only would the change enable him to avoid the high cost of Napa Valley grapes, but he would finally get an opportunity to make his mark on the industry.
Trinchero's first experience with the Amador County grapes suggested that he had made a wise decision and that his winemaking skills were improving. The 1968 vintage of Amador County Zinfandel, produced from the century-old vines grown at the Deaver Ranch Vineyard in Amador's Shenandoah Valley, earned Sutter Home its first accolades and paved the way for future recognition.
The 1970s: A New Product for the American Palate
Encouraged by the critical success of his Amador Zinfandel, Trinchero looked for ways to make the wine more robust and more appealing to a wider market. In 1972, while experimenting with his Zinfandel, he made a serendipitous discovery that would one day make him a multimillionaire and change the face of the American wine industry at the same time. Immediately after crushing a batch of Zinfandel grapes, he drained some free-run juice from the must (the juice pressed from grapes before it has been fermented) in an attempt to increase the ratio of skins, which impart most of a red wine's color and body. Modeling his creation after the French roses he greatly admired, Trinchero then fermented the drawn-off juice like a dry white wine. Just for fun, he bottled 220 cases of the pale pink elixir after a period of barrel-aging and offered the novel "blanc de noir" table wine to his tasting room clientele as a curiosity item.
The wine was originally called "Oel de Pedrix" (eye of the partridge), but the Bureau of Alcohol, Tobacco and Firearms insisted that there be an English translation on the label. Trinchero reluctantly complied with the government's request and provided his customers with an easier name to remember, white Zinfandel. As Trinchero told The Wine Spectator, "It was white, and it was Zinfandel, and if anyone wants to know where the name came from, it was from the BATF forcing me to do it."
Although Trinchero's novelty item created some interest in his tasting room, enough for him to increase production the following year, its popularity was not widespread. It would take another "accidental" adjustment to the recipe for that to occur. In 1975, while working on a batch of 1,000 gallons, he discovered that the wine had stopped fermenting--a phenomenon known in the industry as a "stuck fermentation." Not knowing what else to do and busy with other more pressing concerns, Trinchero simply topped the tank and put his new concoction aside for a few weeks. When he returned to the tank to sample what he had produced, he noticed that the wine was a bit pink, taking on a kind of blush hue. The critical difference, Trinchero would later discover, lay in the two percent residual sugar the wine contained, which gave it a slightly sweeter flavor.
At this point, Trinchero's white Zinfandel was a long way from becoming America's most popular wine. For a few years, the wine remained little more than a novelty item; most of it was sold in the Sutter Home tasting room on Napa Valley's Highway 29. What is more, he had plans to convert the entire 7,000-case production into his more established product, red Zinfandel. Fortunately, the process that may have brought an end to the promising new wine was not occurring rapidly.
By the late 1970s, Trinchero, along with his younger brother, Roger, realized that a new marketing strategy was needed. Despite their efforts, the company was struggling to survive while the rest of the industry seemed to be booming. After one particularly difficult day, the two sat down to discuss their predicament over a couple of glasses of wine. The conclusion they reached, as Bob later told Bullard, was a simple one: "It seemed the consumer wanted something besides what we were giving them." Searching for a way to rectify this problem, the two took an inventory of all the wines they were making and discovered that the experimental wine they called white Zinfandel was the only wine in short supply.
The 1980s: A New Strategy VaultsSutter Home to the Top
Going against the rest of the industry, which was dominated by jug wines, the Trinchero's channelled their efforts and resources on the product that seemed most in line with their customers' taste preferences. They doubled the production of their white Zinfandel, hoping that the strawberry fruitiness of the product would appeal to the American masses. Their gamble paid off: they were forced to double production the following year, and again the next. By 1981, the Trincheros, while fine-tuning their white Zinfandel over several vintages, had escalated production to 25,000 cases a year. Four years later, that number would jump to 850,000.
The explosive growth in white Zinfandel production and the expansion of the California wine industry made the task of maintaining an adequate supply of grapes a major concern for the first time, and the company's longheld dependence on outside vineyards in the Napa Valley region no longer viable. In 1984, having strengthened its financial base through white Zinfandel sales, the company made its first purchase: a 300-acre vineyard in Lake County, located to the northeast of Napa Valley. Although the Trincheros initially planned to graft the vineyard entirely to Zinfandel, they decided to retain the existing varieties--Sauvignon Blanc, Chenin Blanc, and Cabernet Sauvignon--after discovering their high quality. This decision would provide Sutter Home with a base for future expansion of its line of premium varietal wines. Other purchases in the Sacramento Valley and the Sacramento Delta added another 2,500 acres by the end of the decade, bolstering the production capability for white Zinfandel and other premium wines.
Sutter Home's decision to focus its energies on varietal wines helped to both redefine the American wine industry and prosper during the remainder of the decade. As late as 1980, the market was dominated by what was known in the industry as "The Gang of Five"--Gallo, Almaden, Masson, Inglenook, and Taylor, all of whom sold primarily generic wines simply by color and in 4-liter jugs. But Sutter Home's introduction and successful marketing of white Zinfandel--and the host of other wineries who later came up with their own&mdash+ayed a significant role in changing the dynamics of the industry. While jug wine sales dropped from $930 million in 1980 to $840 million in 1990, varietal wine revenue skyrocketed from $22.4 million to $1.4 billion over the same period.
A number of factors were responsible for this dramatic shift in the industry and for Sutter Home's tremendous success in the 1980s. First, according to Bob Trinchero, the enormous popularity of his white Zinfandel lay in its ability to break down the "wall of intimidation" that kept many Americans from drinking wine. Realizing that many people were apprehensive about ordering sophisticated, hard-to-pronounce wines in restaurant, the Trincheros attempted to develop a product that appealed to the majority of wine-drinking Americans who are not connoisseurs. Accordingly, instead of tailoring their wines to fit their own tastes, they asked their customers for their advice. "If you think all you've got to do is make a good wine to have people line up at the door," Roger, who takes care of sales and marketing, told Bullard, "you're kidding yourself."
White Zinfandel, an affordable varietal wine characterized by its light, slightly sweet taste and visually attractive pink hue proved to be a perfect match. By 1989, it had become, on sales of 2.9 million cases, the most popular wine in the United States.
The 1990s and Beyond
As Sutter Home entered the 1990s, it found itself in the face of increasingly strong competition. Its unprecedented success with white Zinfandel had spawned a host of emulative "blush" wines, many of which helped to turn around the struggling wineries that produced them. An extremely cost-effective product, white Zinfandel is easy to manufacture and requires very little aging, enabling wineries to generate revenue just a few months after the harvest. While Sutter Home remained at the top, it needed to diversify its marketing strategy for growth to continue into the new decade.
Again, Sutter Home focused its attention on the majority of American wine drinkers rather than on the exclusive tastes of the elite. This time, however, the innovation came in the form of a package instead of a new wine. In April 1989, the company introduced the "Classic Single," a 187 ml single service wine packaged in a bordeaux-style bottle. The brainchild of Roger Trinchero, the Classic Single package was designed to take advantage of a "less but better" market trend, the result of the country's growing health consciousness and its emphasis on moderation. The smaller-portion size was also targeted to the increasing population of Americans who live alone, or with a companion whose beverage preferences differ. Sales of over a million cases of Classic Single bottles of white Zinfandel, Cabernet Sauvignon, Sauvignon Blanc, and Chardonnay in 1990 and two million the following year suggested that the company had again correctly read the preferences of the American wine consumer.
In 1992 Sutter Home again led the industry on sales of 5.2 million cases, or $145 million. The company and the entire premium wine industry benefitted from several reports from the medical community, publicized most notably on a "60 Minutes" special, that praised the possible health benefits of drinking red wine in moderation. That same year the company tried to further capitalize on the good news for the wine industry by introducing a new chillable premium red wine, Soleo, a proprietary blend combining Zinfandel, Barbera, Pinot Noir and Napa Gamay. The light, fruity, easy-drinking wine was designed for white-wine drinkers seeking the lower cholesterol levels promised by red wines.
That same year, Sutter Home made its boldest attempt yet to lead the industry in meeting the needs of the health-conscious consumer. Going against the conventional wisdom of the industry, the Trincheros became the first major winery to introduce a non-alcoholic wine. The innovative product, called Fre, was developed primarily by Bob Trinchero's daughter Gina and received accolades for its resemblance in taste to wine rather than grape juice. Produced using an Australian-developed de-alcoholizing process that retains more of the wine's essence instead of adding water, Fre proved to be another successful innovation for the company. In 1993, for instance, sales jumped to 200,000 cases, a fourfold increase from the year of its release.
As Sutter Home entered the second half of the decade, it remained in 100 percent control by the innovative Trinchero family, who built the company into a $140 million operation. It looked to maintain its position of leadership in the industry by continuing to increase its diverse complement of wines. Increased competition in the premium wine market has made the company more dependent on its non-alcoholic wines, competitive pricing, and aggressive advertising in supermarkets. Vowing to "never stop experimenting," the Trincheros hoped to fuel future growth with the same type of innovative products and marketing strategies that allowed for their expansion during the past four decades.
Further Reading:
A Brief History of Sutter Home Winery, St. Helena, Calif.: Sutter Home Winery, Inc., 1995.
Bird, Laura, "Scanner Data Sauvignon: The American Palate is Changing," Adweek's Marketing Week, August 19, 1991, pp. 18-19.
Bullard, Robyn, "The House That White Zinfandel Built," The Wine Spectator, May 15, 1994, pp. 52-60.
Campanelli, Melissa, "Going for the Gold," Sales and Marketing Management, June 1992, pp. 160-61.
Graenbner, Lynn, "Sutter Home Buys 400 Acres," The Business Journal Serving Greater Sacramento, October 23, 1995, p. 4.
Vizard, Frank, "Grapes Without Wrath," Popular Mechanics, March 1993, pp. 29-32.
Source: International Directory of Company Histories, Vol. 16. St. James Press, 1997.
