“A string of pearls,” is how Ted Baseler describes Ste. Michelle Wine Estates’ (SMWE) portfolio of wineries. Baseler, Wine Enthusiast’s Man of the Year, is the CEO and President of Ste. Michelle Wine Estates, headquartered in Woodinville, Washington. Recently acquired by Altria, the company’s portfolio includes Chateau Ste. Michelle, Domaine Ste. Michelle, Columbia Crest, Northstar, Snoqualmie, Spring Valley and Col Solare in Washington; Stag’s Leap, Conn Creek and Villa Mt. Eden in Napa; and Erath in Oregon. Partnerships with Ernst Loosen and the Antinori family have brought more wines into the fold.
What he means by the pearls analogy is that Ste. Michelle Wine Estates is simply the string, providing administrative and financial support for its expanding collection of exceptional wine properties. “I always talk about this string of pearls philosophy,” says Baseler; “it’s kind of a mantra. The pearls are the wineries, and each one is independent, with an estate vineyard, a winery, its own winemaking team and legacy. We work hard to keep them independent. We want to keep the integrity of these estates distinctive, not blended into a homogenized corporate entity.”
Building from the outside in
Baseler’s resume is right out of Mad Men—degrees in communications and advertising from Washington State University and Northwestern, followed by work at J. Walter Thompson in Chicago managing accounts for Gerber, Kraft, and Ford. A move to Cole and Weber in Seattle placed him in charge of the Ste. Michelle account, which was not much at the time. But it led to a sales and marketing position at the company in 1984, just as growth was accelerating. He became president and CEO in 2000, when Allen Shoup retired.
As Baseler looks back on his quarter century at the Chateau, he notes that “25 years ago it was an $18 million annual business losing $3 million a year—not thriving. It was more a vision than a profitable enterprise. Fifteen years ago we’d had great sales success, but profits had been declining. When I took over we had some work to do. We set out to focus on Washington and get our core business back on track.”
Baseler has barely paused to take a breath in the decade he’s been at the helm. Within two years he reinvigorated the growth of the core wineries, Chateau Ste. Michelle and Columbia Crest. He bought and built a dedicated winery for Northstar. Next, he decided “to actually enhance Washington by going outside. The goal was to go at the high end,” he explains. “The first thing we bought was Spring Valley; then Erath, which has been wildly successful.” The Col Solare partnership with the Antinori family was expanded, a winery and vineyard were constructed on Red Mountain, and a long-term, mutual import/export agreement was arranged.
The most recent addition, also in partnership with the Antinoris, was Stag’s Leap Wine Cellars, which was purchased from founder Warren Winiarski. “Our scope is more than just Washington,” says Baseler. “We’re adding high-end wines to our family so that next to Chateau Ste. Michelle is Tignanello and Solaia; Stag’s Leap and Erath. We are continuing to add the type of wines that our customers were asking for, but at the same time elevating Washington by having a portfolio with some of the most important labels in the world.”
By any measure, the strategy is working. Recent surveys place Ste. Michelle Wine Estates as the seventh largest wine producer in the U.S. in terms of size, and the fastest-growing among the leading producers. Chateau Ste. Michelle wines, which account for about a third of the company’s annual sales of six million cases, are up 18% this year, according to Nielsen. The company has posted record earnings and profits in seven of the eight years since Baseler took charge.
Giving up some control
Not surprisingly, given Baseler’s sales and marketing background, one of the great advantages the company exploits is its professional sales organization. “We have all the infrastructure in place: a well-trained sales force, distribution, warehousing, great customer relationships,” Baseler notes. “It’s been very beneficial inasmuch as we’ve taken a lot of great labels to our distributors and retail customers. It becomes more efficient for them to deal with a professional sales organization that has a full range of quality products. Time is money and everybody wants to be efficient.”
The well-chronicled challenges facing the entire wine industry in the past couple of years have not discouraged Baseler from taking a longterm approach to building the business. “We’re analyzing a little differently,” he admits. “We just took on marketing for Champagne Nicholas Feuillatte. They came to us and asked if we’d be interested. Champagne right now seems counter to the mood and the environment. But we’re looking at it for the long term.” Citing Stag’s Leap as a great recent acquisition, Baseler expresses an interest in examining other opportunities as they become available—“if the economics make sense and they are not duplicative of what we have. It’s important to design a portfolio with unique niches being covered rather than having 10 Chardonnays at $10. We want to expand by offering customers what we don’t already have for them.”
Though it is often downplayed by the company’s spokespeople, the value of an asset such as SMWE to the entire Washington wine industry cannot be overstated. Throughout its modern history, Ste. Michelle has marketed for Washington as much as for its own brands. The financial support given the Washington Wine Commission is one clear example: most of the money (in the form of assessments) to fund the Commission comes from SMWE and its growers. Yet unlike many large companies in such power positions, SMWE does not force decisions that are exclusively in accordance with its own interests.
“We think it’s more important to grow the awareness and image and reputation of Washington generically rather than to spend our money on our own brands,” says Baseler. “We’re willing to give up a little bit of the control.” He remains an unabashed cheerleader for the state, true to his Cougar roots. “This will be indisputably one of the top five regions of the world in which to grow grapes,” he says with absolute conviction. “There’s great land out there available. We’re still a relatively young region. Some of the best sites have not been discovered yet, and they’re out there waiting.”
For his vision, leadership, brand-building, team-building and regionbuilding accomplishments, Ted Baseler is Wine Enthusiast’s Man of the Year.