California: Rack & Riddle moves as Duckhorn expands

(NBBJ) - As St. Helena-based Duckhorn Wine Co. plans to shift full production of a rapidly growing brand to Mendocino County winery, Rack & Riddle Custom Wine Services is preparing to complete its relocation and expansion from that facility to Sonoma County’s Alexander Valley.

An affiliate of Duckhorn in August purchased the Hopland property from Kansas City-based Entertainment Properties Trust. Rack & Riddle has been leasing the facility since Rebecca Faust and Bruce Lundquist started the company in 2007. Duckhorn wanted its own production facility for the Decoy brand, and Rack & Riddle was running out of production and storage space as revenues have increased around 20 percent a year, according to company executives.

“Decoy has been a great success for us in the past three years,” said Zach Rasmuson, Duckhorn’s chief operating officer. “It eclipsed our imagination.”

The category of red wine blends had the most revenue growth for any wine category in U.S. food stores last year, according to Jon Fredrikson of Woodside-based industry analysis firm Gomberg, Fredrikson & Associates, citing Nielsen data. Though those red blends are dominated by brands in the $10- to $15-a-bottle category, the Decoy brand ranked No. 7 though retailing for more than $20 a bottle.

Duckhorn likes to maintain control over its production, but the growth of the Decoy brand forced the company to enter a “disproportionately large number of custom-crush arrangements” last year, Mr. Rasmuson said. The goal for the brand is production of 200,000 cases a year, he said.

One such custom-winemaking deal was with Rack & Riddle. Duckhorn had worked with Rack & Riddle on other brand programs in 2010, and Mr. Rasmuson had become familiar with the facility during his previous decade-long stint as winemaker for Duckhorn’s Goldeneye winery in Mendocino County’s Anderson Valley appellation. So, Duckhorn went for the opportunity to buy the Hopland winery at 14100 Mountain House Rd. as Entertainment Properties Trust was divesting of its VinREIT holdings.