Cameron Hughes Winery Saved From Oblivion

Posted: Jan 11, 2017

The owner of Clos Pegase buys up a name more familiar to Costco customers.

One of the best-known names in current American wine, Cameron Hughes, was sold this week by a bankruptcy court receiver to the highest bidder.

The buyer is Vintage Wine Estates, which, like Hughes, is a wine company that has grown big very fast. Terms of the sale were not immediately available.

Cameron Hughes is different, though, and not just because Hughes, like Cohn, is also a person. Most of the brands in Vintage's portfolio produce wine. That has never been Hughes' main business. Instead, he specialized in buying quality wine that wineries could not sell, and selling it under his own label.

Hughes was quickly successful more than a decade ago when premium wineries found themselves with a glut of wine grapes. He established a strong relationship with Costco, one of the largest wine retailers in the country, that enabled him to maintain a lean operation while offering low prices for wines from prestigious regions. Labeled by lot numbers, such as Cameron Hughes Lot 47 Diamond Mountain Cabernet Sauvignon, his wines became familiar to Costco shoppers.

But Hughes ran into financial problems when he tried to expand his brand into the more traditional three-tier system, selling bottles of California Cabernet made from bulk wine in supermarkets. Hughes' business was placed into receivership in 2015 because of $15.3 million in bank debt and, with his access to capital limited, he was never able to pay it off.

On Monday afternoon, the day that the bankruptcy sale was finalized, Hughes was at work at his desk in San Francisco with his dogs napping near his feet. He told Wine-Searcher he could not comment on the sale, or on whether he or his employees will be retained by Vintage.

"No matter what happens, I'm still going to be doing what I do," Hughes told Wine-Searcher. "And that is searching out fantastic deals for my customers."

Depending on how negotiations go with Vintage, he might be doing so using a name other than his own.

The sale of people's names in the California wine industry is a long-established business. The Charles Shaw brand was also sold out of bankruptcy and is now one of the largest wine brands in the country, while the actual Shaw has nothing to do with it. Ironically, the owner of Charles Shaw's name, Fred Franzia, saw his own last name Franzia sold to Coca-Cola in the 1970s; Franzia wines are now made by The Wine Group.

Cameron Hughes might be different because of his personal association with the brand. Hughes' company has a popular direct-to-consumer wine sales business for which Hughes himself records tasting-notes videos for each wine. He is a tireless promoter of the brand and has launched several marketing innovations, such as after-hours wine parties at furniture stores.

But, at the end of the day, Cameron Hughes is also a brand of wine with a great relationship with a powerful retailer, Costco, and customers who are accustomed to seeing something different in the bottle every time they visit the store.

And while Vintage Wine Estates does own some well-known wineries, it owns even more brands unassociated with any place or person, including Wine Sisterhood, Purple Cowboy and Lady LaFemme. For married drinkers alone, it offers Promis-Q-ous brand wines or Monogamy brand wines, depending on your mood.

In 2014, Vintage president Pat Roney told Shanken News Daily: "While retailers are constantly dealing with a flood of new products, we think it's often a safer bet to come to them with brands and products they know, the kind we've added through these deals."

Vintage Wine Estates, which outbid four other companies for the Cameron Hughes brand, did not respond to a request for information on what it plans to do with it. One would think Costco figures prominently in its plans.

Source: Wine Searcher
By W. Blake Gray
Tuesday, 10-Jan-2017

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