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18 WINES&VINES October 2018 A background in marketing and a focus on respecting and investing in the potential of individual brands may be the biggest elements to the transformation wrought at Ste. Michelle Wine Estates under president and CEO Ted Baseler, who left the company at the end of September after 34 years. Baseler, who succeeded Allen Shoup as head of Washington's biggest vintner in 2001, was originally hired in 1984 as marketing di- rector. Prior to becoming president and CEO, he was COO. The roles provided him with the background and insight to see that volume alone wouldn't save wineries in an increasingly competitive marketplace. What was needed was the kind of value that comes from both quality and a compelling story. Baseler developed what he calls the "string of pearls" approach to guide Ste. Michelle's growth. The company defines this as an ap- proach as: "Winemakers have independent control over vineyard and winemaking deci- sions for their estate (or 'pearl'), while deci- sions for consolidated functions, such as marketing, sales or accounting, are managed corporately (the 'string')." The approach led to aggressive growth be- yond the state, including development of a national distribution business anchored by a major rail facility in eastern Washington, but it didn't come without cuts. "I would observe other high-end wineries acquiring businesses at high multiples and then they would get buyer's regret and strip them down," he said. "They would fire the winemaking team that got the winery famous, then they would eliminate the vineyards, and then they would go to a new AVA and lower prices to make up volume and never really regain the success and the reason that they were a trophy." Ste. Michelle first acquired Walla Walla's Spring Valley Vineyard in 2005, and Oregon's Erath Winery the following year, adding to its own stable of table and sparkling wine brands. Erath is now its fastest-growing brand, not- withstanding other high-profile ventures such as Col Solare on Red Mountain in partnership with the Antinori family, which also partnered with Ste. Michelle on the 2007 purchase of Stag's Leap Wine Cellars in Napa Valley. Today, sales are $698 million on a case vol- ume of 8.5 million, up from $188.9 million on 2.8 million cases in 2001. The same approach also informed Ste. Mi- chelle's relationship with the rest of the industry. While it has long been the state's largest vintner, its brands absorbing approximately two-thirds of Washington's wine grapes, it's made a point of not just growing its own sales but reinvesting in the industry as a whole. Baseler says all wineries are facing a com- petitive environment — a key factor Ste. Mi- chelle gave for the 8.6% decline in case sales it recorded last year — but the industry is larger than even the biggest winery. Seattle Business magazine dubbed Baseler "the man who saved Washington wine" for offering Ste. Michelle grapes to Walla Walla wineries hit by the hard fall frost of 2004, and more recently he led industry fundrais- ing for the wine science center at Washington State University in Richland with contribu- tions from Ste. Michelle's coffers totaling $1.5 million. The center bears the Ste. Michelle name, but Baseler said it benefits everyone. "Ted was instrumental to the long-term health and sustainability of the Washington wine industry in ways we will enjoy and ap- preciate for decades," said Washington Wine- growers executive director Vicky Scharlau. Those decades promise plenty of growth, with Baseler maintaining the industry has room to grow beyond its current acreage of 58,208 to as much as 200,000 acres within 30 years. "There's just really great land avail- able, and it's a lot more inexpensive than Napa or Sonoma," he said. But with his 65th birthday approaching next April, Baseler said he is happy to hand the reins to Jim Mortensen, currently senior vice-president, human resources, with Philip Morris International, another division of Ste. Michelle's parent company, Altria Group Inc. Mortensen joins Ste. Michelle at the be- ginning of September, allowing for a month's preparation before Baseler steps down Oct. 1. While a stranger to the wine business, his management experience with tobacco and beer (he was formerly senior vice-president, sales and distribution, with Miller Brewing Co., another Altria holding) should stand him in good stead. "I'm very impressed with him and I think he'll fit right into the culture," said Baseler, who first met Mortensen a month ago. Baseler, for his own part, will continue to consult for Ste. Michelle for "a couple of years." While he has ideas for new ventures in re- tirement, he plans to take time for himself before pursuing them. —Peter Mitham Ste. Michelle CEO retires after more than 30 years with company Ted Baselor joined Ste. Michelle Wine Estates in 1984 and became president and CEO in 2001. Winemakers have independent control over vineyard and wine- making decisions for their estate, while decisions for con- solidated functions, such as marketing, sales or accounting, are managed corporately. WINE INDUSTRY NEWS