Rabble Wines, a Paso Robles brand that attracts younger drinkers with digital, interactive labels, has been sold to O’Neill Vintners and Distillers, which is becoming one of the largest wine companies in California. The deal includes the Rabble brand and inventory, but Rabble founder Rob Murray is retaining the tasting room for his other brands, including Tooth & Nail. A purchase price was not disclosed.
Jeff O’Neill, the O’Neill Vintners CEO, said his company’s research has shown that Rabble’s wines and packaging “really resonate with 21- to 35-year-olds,” a segment that the O’Neill portfolio has not yet captured.
He cited the “augmented reality” labels on Rabble wine bottles as a particularly strong asset: When a smartphone scans the Rabble labels, which depict woodblock carvings from a 15th century illustrated encyclopedia, the illustration becomes animated. A red blend’s label, for example, enacts a lightning siege on a city, complete with thunderous sound effects, while a rosé shows a siren-like mermaid causing pirates to shipwreck.
“We’ve got a number of brands like Line 39 and Robert Hall that skew toward Gen X,” said O’Neill, who now controls 15 wine labels in national distribution, “and we want to make sure that in the future we have products that are resonating with Millennials and Gen Z.”
The Rabble wines are mainly bold, fruity, high-octane reds like Cabernet Sauvignon, Zinfandel, Tempranillo and red blends, ranging in price from $16 to $25. They fit into an increasingly popular niche also occupied by California red blends like the Prisoner and Michael David’s Freakshow label: big fruit flavors and dark, moody, artsy-looking labels.
Rabble’s output is around 50,000 cases per year, and that will rise under the new ownership. “Since it’s largely only distributed in California today, we think the opportunity to grow the brand is quite large,” O’Neill said.
That opportunity is greater in Paso Robles than in Napa or Sonoma, where higher fruit costs drive up wine prices. “You can’t grow brands at that scale in Sonoma County or Napa any longer unless you’re willing to get into the $60, $70, $80 range,” O’Neill said.
The average price of Cabernet Sauvignon grapes in Napa County was $7,900 per ton in 2019, according to the U.S. Department of Agriculture, which would typically translate to a $79 bottle of wine. That same figure for the region that includes Paso Robles, meanwhile, was an estimated $1,700, resulting in a $17 bottle.
Murray, a longtime vineyard manager in Paso Robles, founded Rabble in 2010. His business has expanded significantly since then: Under his Tooth & Nail Wine Co. umbrella, he also makes the Amor Fati and Stasis brands. According to a Rabble analysis of Nielsen data, the sales of Rabble’s four highest-volume wines grew by 51% from 2019 levels by late November.
One impetus for selling Rabble, Murray said, was that he could no longer keep up with the growth without outside investment. “The bigger the winery, the bigger the problems,” he said.
In 2018, Murray introduced the augmented reality labels; he believes Rabble was the second wine company to use the technology, following Treasury Wine Co.’s use of augmented reality for its 19 Crimes wines.
That sort of interactive element has proven appeal with the younger drinkers that O’Neill Vintners hopes to attract, O’Neill said, adding that he sees a big future for technology like this now that the coronavirus pandemic has introduced virtual wine experiences to a larger audience.
California’s wine industry faces considerable hurdles when it comes to appealing to younger drinkers. Millennials (ages 24-39) make up 29% of the population, but they account for only 20% of all wine consumed, while Generation Z represents 9% of drinking-age adults but only 3% of the wine consumed, said Rob McMillan, executive vice president of Silicon Valley Bank’s wine division.
While the wine industry is still relying disproportionately on drinkers ages 40 to 74, it’s failing to win over these younger drinkers, who may favor hard seltzer, canned cocktails and craft beer over wine. The acquisition suggests that O’Neill understands the importance of a brand like Rabble in overcoming those challenges.
The entire history of O’Neill Vintners, in fact, suggests a deep understanding of the U.S. wine business. O’Neill started the company after selling his previous one, Golden State Vintners, to the Wine Group for $82 million in 2004. The new business was originally a bulk spirits producer, then it expanded into the bulk wine market and developed a strong business with private labels — essentially custom wine brands created for a client, usually using bulk wine. It still makes more than 5 million gallons of spirits annually and has a large winery in the Central Valley with the capacity to crush 155,000 tons of grapes.
Six years ago, O’Neill began working with premium wines. It acquired existing brands (like Robert Hall Winery in Paso Robles) and created others from scratch (like Intercept, a partnership with former NFL player Charles Woodson).
O’Neill Vintners now produces about 1.7 million cases of wine per year, said its CEO, and the 2019 Gomberg Fredrikson Report identifies it as one of the 15 largest U.S. wine companies by case sales. The business owns 870 acres of vineyard land throughout California, including 120 acres in Paso Robles.
“We have big ambitions,” said O’Neill, who runs his business from Marin County. “I don’t know if we can continue to grow at this 30% pace that we’ve been doing,” he added, but said more brand acquisitions are probably in store.
The guiding principle for the future, O’Neill continued, is to release wines that already have a proven audience and that can fill an existing need. It’s a practical, profit-oriented approach that marks a departure from the romantic tone many California wine companies have historically tried to strike.
“The days of making a wine and just slapping a label on it are gone,” O’Neill said. “Winemakers always have an idea of what they think the consumer wants. Our view is: Let’s see what the consumer wants and then make sure we have the right brands.”
Murray, meanwhile, said he would soon announce plans for his Tooth & Nail Wine Co. “To be honest, giving Rabble up was hard,” he said. But “it was also about my personal life,” he added. “My wife and I want to spend more time together.”
Esther Mobley is The San Francisco Chronicle’s wine critic. Email: firstname.lastname@example.org Twitter: @Esther_mobley