Copyright Santa Rosa Press Democrat
Crimson Wine Group Ltd., maker of Pine Ridge Vineyards in Napa Valley and Seghesio Family Vineyards in Sonoma County, reported quarterly lower sales and profits, reflecting continued pressure across the luxury wine market as distributors and consumers pull back. The Napa-based company is focusing efforts on “direct-to-consumer growth and inventory management” as the industry adjusts to slower growth and shifting consumer tastes. Net sales for the quarter ended Sept. 30 fell to $13.3 million, down 21% from $16.9 million a year earlier. The company’s results show softness in nearly every channel — particularly, wholesale shipments and tasting-room sales — amid what industry analysts have described as an ongoing correction in consumer wine demand. By channel, wholesale revenue dropped 34% to $6.2 million, from $9.4 million a year earlier, as distributors trimmed orders, pressure to reduce prices increased and exports to Canada have suffered from international trade tensions. “The partial recovery of sales into Canadian markets along with negative consumer sentiments against U.S. alcoholic products resulted in a decrease in export wine sales during the current quarter as compared to the same quarter in 2024,” wrote Chief Financial Officer Adam Howell in the regulatory filing Nov. 6. Direct-to-consumer (DTC) revenue — which includes tasting rooms, wine clubs and online sales — slipped 4% to $6.2 million from a year earlier. Revenues from bulk wine, custom winemaking and events (classified as “other” sales) totaled $900,000, down from $1.1 million. Gross profit fell to $6.3 million, from $8.1 million, as higher inventory write-downs cut into margins. Howell said the company recorded $2.1 million in inventory write-downs for the first nine months of the year, compared with $500,000 a year ago, “reflecting inventory expected to be sold at a loss due to current market conditions.” Operating expenses totaled $7.5 million, about flat from the prior year, producing an operating loss of $1.2 million. Still, Crimson posted net income of $900,000, or 5 cents a share, aided by $2.5 million in other income, including insurance recoveries. For the first nine months of this year, net sales were $44.8 million, down from $50.1 million a year earlier. Wholesale sales fell 14% to $23.9 million, DTC declined 4% to $18.4 million, and revenues from bulk wine, custom winemaking and events dropped 20% to $2.4 million. The company noted that the DTC decline was “primarily driven by a decrease in sales from wine clubs and tasting rooms, partially offset by an increase in e-commerce,” Howell wrote. That shift reflects broader consumer behavior as online channels hold steady, while in-person and club sales lag. Founded in 1991, Crimson Wine Group has holdings along the West Coast. Other brands are Chamisal Vineyards and Malene in California’s Central Coast; Archery Summit in Oregon’s Willamette Valley; and Seven Hills Winery and Double Canyon in Washington’s Walla Walla Valley and Horse Heaven Hills, respectively. The slowdown echoes trends across the industry, where wineries are discounting to move stock and scaling back production. Analysts have pointed to rising inventories, cautious consumers and weaker restaurant demand as signs of a correction in the luxury segment. Crimson ended the quarter with $23.6 million in cash and $14.6 million in long-term debt. Traded on OTC Markets, Crimson’s shares (ticker: CWGL) closed Monday at $5.13, down 1 cent from Friday. Jeff Quackenbush joined North Bay Business Journal in May 1999. He covers primarily wine, construction and real estate. Reach him at jeff@nbbj.news or 707-521-4256.
