E&J Gallo, the second largest wine company in the world, has unveiled a new strategy for driving growth in Europe in the midst of declining economic conditions.
Gallo’s new European marketing director, Iain Newell, speaking in London today (April 7), said that the Gallo Family Vineyard company had been restructured to “get its house in order and be fit for purpose”.
The 76-year-old still family-owned and managed company, boasts a 12 million nine-litre case international business, trading in 93 countries
The former Heineken marketer announced a number of measures including an improvement of wine quality from the 2007 vintage, new packaging for the major brands, re-launching its Turning Leaf premium Californian wine as a “stand alone brand” and rolling out its “red-centric” Redwood Creek brand this spring.
Newell, who is based in the UK, has been at Gallo for six months. He told Drinks International that plans would start in the UK and then be rolled out to its mainland European markets, the chief of which are Germany, the Netherlands and Poland, the latter he described as the most exciting and fastest growing wine market in Europe.
Gallo sales director Nick Elkin, said that every family in the UK were “£13 a week worse off” and £500 million of value had been lost in the drinks category in the past year. The wine category appeared to grow in the UK but that was predominately due to tax increases. He said loyalty was up and that was due to the popularity of white and rosé wine.
“Red has had a dip in loyalty. It needs a Pinot Grigio,” said Elkin. When asked later which varieties he thought could be the saviour of red, he suggested Zinfandel possibly but then said: “Merlot is one to watch”.
Newell said there had been “significant quality improvements” and he wanted to “move the centre of gravity to £5.99 and above to increase value to the consumer, customer and brand owner”. The category should not get “commoditised”, according to Newell, who spent 12 years fighting to maintain the Heineken’s premium status in a category that has all but become a commodity.
Redwood Creek is a 2m case brand in the US. Aimed at 35 to 65-year-old men and priced at £6.99 in the UK, it is positioned to celebrate the great outdoors.
Turning Leaf accounts for 50% of US premium wine sales in the UK and Newell has reversed the former strategy of umbrella brands under the Gallo name by dropping the Gallo Family Vineyards name on the label and highlighting the brand name and varietal. With improved quality he sees the “leaf” as a “key marketing vehicle”.
When asked if Gallo was prepared to lose volume to maintain premium pricing, Elkin said: “Yes is the straightforward answer… in certain areas.”