Sparkling wine is trending at the moment and no brand best embodies the trend more than cult California sparkling wine producer Ultramarine. Michael Cruse, the founder of Ultramarine and Cruse Wine Co, explains how he developed a passion for sparkling wine that led to his accidental success. He covers how Ultramarine took off, techniques and production practices that have business implications he took from Champagne, pricing, and his view on sales channels. 

Detailed Show Notes: 

Ultramarine

• Started in 2008, 1st real vintage was 2010
• Sparkling wine in CA that focuses on coastal single vineyards, high acid, single vintage
• Precise production style - not copying Champagne, but taking some techniques and applying them to CA
• Harvest ~1,000 cases/year, ~500-750 cases make the cut for release
• Limited ability to grow (due to lack of suitable fruit sources), target ~1,200-1,500 case range

Cruse Wine Co

• Started in 2013, supposed to be a custom crush facility
• Initially not for sparkling wine, an interest in Valdiguie
• Later realized his passion was in sparkling wine - does pet nats, more experimental, more oxidative styles
• Focus on CA as a whole vs. coastal vineyards of Ultramarine
• ~7,000 cases/year (2018 was peak ~8,500 cases)

The capital intensity of producing sparkling

• Cruse Tradition takes ~40 months to make which means 3 vintages must be paid for before selling any wine (e.g. - fruit, glass ($2+/bottle), etc…) - this limits growth
• Ultramarine spends 38-48 months en tirage, found this to be its sweet spot

Sparkling wine equipment

• Bought own equipment vs. doing custom crush at Rack & Riddle - partially due to using a bottle that they would not take
• Follows many Champagne producers - they may use co-op press, but do own elevage and disgorgement
• Uses a gyropalette, which requires some bentonite (riddling aid)

Long term relationship with growers is important -> growing sparkling is different than still wine grapes

Varietal impact on winemaking

• Chardonnay - less fruit, more minerality - be more reductive to preserve fruit
• Pinot Noir - more fruit, less minerality - be more oxidative to get more minerality

Pricing

• Value spaces (~$20-25/bottle), e.g. - Gloria Ferrer, Roederer Estate, Cruse doesn’t have the scale or capital to compete here
• Doesn’t think he can sell 10,000 cases @ $70/bottle
• Believes he can sell 5-10,000 cases @ $45-55/bottle
• Unclear how Champagne price inflation will impact market opportunity for domestic sparkling
• Ultramarine secondary pricing - goes for 3x release price; believes it’s only ~30 bottles/year @ $200/bottle, could not sell entire production at that price point

Sales channels

• Cruse - ⅓ DTC, ⅓ domestic wholesale, ⅓ export (Asia - Japan, Singapore strong)
• Ultramarine - 90-95% DTC - believes sweet spot is ~80% DTC to get more into restaurants

Ultramarine mailing list

• Big supporters early on propelled the brand (e.g. - the NYC crew of Patrick Cappiello, Levi Dalton, and Pascaline Lepeltier)
• Instagram helped to fuel growth
• Took 3 releases (2012 release) to get a waiting list
• Wine Berserkers also helped

Cruse launch plan

• No real plan initially focused on friends & family
• Hardy Wallace helped get wines in front of distributors

Relationships with certain wine critics help

The website is unintentionally sparse but does longer allocation emails

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