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58 W i n e s & V i n e s A U G U s T 2 0 1 4 W I N E M A K I N G C ameron Hughes' early jobs in the California wine industry were as a cellar rat at Corbett Canyon and in sales for The Wine Group. But the Modesto, Calif., native wanted to run his own show and came up with a brand called Cinergi: kitchen-sink blends made from bulk wines. The venture ultimately was unsuccessful, in large part because he was buying inventory before he could sell it. Hughes went back to the drawing board and came up with the Cameron Hughes Lot Series. The idea was to find good buys on the bulk market and present them to a retail partner (Costco) so he knew he had a buyer before he had to lay out any cash. The Lot Series was launched in 2004 with a 2002 Lodi Syrah. Ten years later, Cameron Hughes Wines is selling about 400,000 cases per year. Lot Series wines are being sourced globally, and retail channels have expanded. At the time of this writing the Lot numbers had reached the mid-400s, and other brands have been added, including the recently introduced CAM Collection. Wines & Vines: You started out buying bottle-ready bulk wines for the Cameron Hughes Lot Series wines, but your busi- ness model has evolved over the years. How has your business changed? Cameron Hughes: I started out buying ready-to-bottle bulk wines and bottling them for Costco. At the time, I outsourced the winemaking to someone who could assemble the blends and bottle the wines for me. This worked well for us for a couple of years, but we quickly learned we could man- age the evaluation and purchase of the bulk wine and blend it ourselves at dramatically lower cost. We had a steep learning curve and made a few mistakes along the way. For instance, in 2007 a large Russian River Val- ley producer, having over-contracted grapes, came to us with a grapes-to-wine production contract for 100,000 gallons of RRV Chard. We just trusted them to make us some great wine. Unfortunately, they picked early and made us a partial malo, 3.1 pH Chardonnay that took 15 months to settle into the bottle, it was so acidic. In not having a hand in the production processes we lost the style, direc- tion and overall quality of the wines and ended up with a cash-flow disaster. We learned from our mistakes, put vineyard protocols in place including clusters per shoot and pick decisions, fermentation and oak protocols. Over the years our model has changed to adjust to changing market conditions. We still buy ready-to-bottle bulk wine, but the majority of our wine is produced with grower and winery partners to our specifi- cations. In the past few years we have pur- chased grapes, but only for our high-end Napa projects. One thing that distinguishes Cameron Hughes wine is our willingness to tailor our deals to the needs of the producing vineyard or winery. Literally every deal is different in its structure. Sometimes the winery has vineyards and would rather put the grapes through their facility for the throughput aspect. Oftentimes we supply barrels (we have about 8,000 barrels), but when they have a formula where they are simply adding our production onto theirs, maybe they'll buy the barrels and build them into the price, and we take the fin- ished bulk wine and bottle it at a separate facility. Sometimes the winery contracts for the fruit, handles the fermentation through to finished wine and sells us bottled wine out the other end. Overseeing all of this is a team of two winemakers and a viticulturist. In 2012 we managed the crush of about 5,000 tons of fruit at seven different wineries on the West Coast. Managing wine through that number of facilities really stressed our organization, so we are consolidating into three facilities for 2014. We contracted in advance and managed the production of 75% to 80% of our production out of the '12 vintage but have backed off consider- ably for '13 and '14, expecting the bulk market and key winery partnerships to supply most of our needs. As well, our business model has moved beyond Costco. They are still an important partner, but in 2007 we realized we had all of our eggs in one basket and began a steady push toward diversifying our cus- tomer portfolio. We now sell our wines through multiple channels including national grocery and independent retailers in all major markets and all 50 states with major distributors partners such as South- ern Wine & Spirits, Glazers, Baystate in New England and Johnson Brothers. Our website, responsible for 35% of our bot- tom line, has grown by leaps and bounds and shows no signs of slowing down. W&V: You still depend some on the bulk wine market. What's happening with supplies and prices these days? Hughes: Bulk supply is rapidly expand- ing, and prices have definitely moderated from this time last year, but it varies greatly by appellation and variety. North Coast Bordelaise varietals are still holding fairly strong considering the size of the harvests, but that's due in large part to big strategic players making moves up there to lock up inventories and lock out other players. Large positions, such as a blanket offer for '13 Alexander Valley Cabernet at $25 a gallon, to the tune of Winemaker Interview Cameron HugHes The maverick vintner moves beyond his Lot Series By Laurie Daniel Cameron Hughes started buying ready-to- bottle bulk wines nearly 10 years ago. ron sellers