Keeping pace with a changing wine mindset

An interview with Stephanie Gallo by Robert Joseph

Stephanie Gallo
Stephanie Gallo

Stephanie Gallo is a member of the third generation of the business founded by her grandfather Ernest and his brother Julio in the 1930s. After studying for an MBA at the Kellogg School of Management, she became senior director of marketing at E&J Gallo Winery in 1999, progressing to vice-president of Marketing in 2008. The 90-plus brands for which she is responsible include Barefoot — the most successful brand in the US — Gallo Family Vineyards, Dark Horse, Apothic and Carnivor, and widely distributed Italian imports La Marca, Bella Sera and Ecco Domani.

There are also premium and superpremium labels such as Louis M Martini, J Vineyards, Talbott Vineyards, William Hill Estate, MacMurray Estate and Columbia Winery. The company distributes Alamos from Argentina, Whitehaven from New Zealand, Martín Códax from Spain and Allegrini, Pieropan and Brancaia from Italy.
 

MEININGER’S: At the Wine Vision conference last year, you talked about your grandfather Ernest’s ambition to make wine more of a regular beverage in the US. 

GALLO: When people ask me, “What is the greatest trend in wine?” it’s pretty simple: there’s a shift in consumers’ attitude and usage across the world. Consumers are starting to view wine as a casual social beverage. At our winery, we strive to make wine a part of everyday life, with many options for everyone. As the category leader, we look to grow [it] through two primary strategies: how can we bring in new consumers and how can we expand the category? 

For example, we know that a primary reason why consumers do not engage in the category is that that they like the idea and the occasion for wine, but not necessarily the traditional dry taste. In response to this insight, we introduced Gallo Family Vineyards Sweets, which offer approachable flavours and an enticing point of entry for these consumers.

MEININGER’S: And how does packaging fit?

GALLO: The shift in usage and attitudes gives us the leeway to start innovating with packaging. Today’s consumers want to enjoy wine in more casual, social settings. Single-serve products such as Barefoot Refresh Spritzers in a can or Vin Vault Tetra packaging allow wine to go where glass cannot. This year, Dark Horse was the official wine sponsor at nine major music festivals across the US. There was a branded rosé lounge at each event where more than 40,000 consumers sampled the wines. 

MEININGER’S: Ernest Gallo was said to prefer creating brands to buying them. How has that attitude changed?

GALLO: Our company has always recognised the importance of building new brands that add value to the entire category. However, we also see tremendous opportunity in the fine wine and luxury segments. Strategic acquisitions, such as Orin Swift Cellars, allow us to offer one of the most diverse portfolios for today’s wine consumer so as to meet the needs of a changing mindset.

MEININGER’S: Is it fair to say that so-called wine brands are often little more than labels?

GALLO: We believe in the power of building brands in a category that’s traditionally product-focused versus brand-driven. We work to ensure our brands have a defined point of view that’s relevant to our consumers. We devote great energy into the development and research stage so that the resulting product stands out in a noisy category. If you apply the honest discipline of brand marketing and do that job well, there will be more to the brand than just an attractive label.

MEININGER’S: Do you think the same consumer drinks Apothic and Barefoot?

GALLO: We launch each brand with a target audience and consumer need in mind. Brands like Apothic, Dark Horse, Gallo Family Vineyards and Barefoot are all meeting specific desires or usage occasions in the marketplace. However, we sometimes discover that the audience we intended to reach is not the group that is actually buying our wine. It is a great reminder to stop and listen, and shift overall strategy if needed. We have a talented consumer product and insights team whom we utilise to learn and evolve with our consumers.

MEININGER’S: Can you track a consumer’s progression from one brand to another?

GALLO: We know when consumers switch from one brand or even varietal to another, but we haven’t done a study yet where we track migration from, let’s say, an entry level-price wine to a premium-price wine. There’s a word that’s only used in this industry, where we say consumers “graduate”. For me, it’s OK if they choose to drink what they want to drink — as long as they’re consuming wine. We’ve done some studies on Moscato consumers: they’re passionate about that one type. Who are we to judge them for wanting to drink something sweet? 

MEININGER’S: Millennials are often said to be driving the industry. Is that true?

GALLO: Each new generation brings along a new outlook and values. While there will always be overlap among the groups, we are paying close attention to the differences. Millennials have grown up in wine-drinking households, seeing their parents enjoy wine on a regular basis. As we study this age group and Gen Z we are looking at their psychographics — instead of demographics — because they have an entirely new mindset when it comes to wine. They don’t view wine as an elitist beverage, but one they can consume during casual social occasions. They are more experiential and occasion-centric and they want to experience the wine, the story, and share it with their friends. It is our job to ensure that our brands provide an occasion to be enjoyed, as well as a quality product.

MEININGER’S: So do they need separate marketing strategies?

GALLO: While the basic human needs and values of millennials are not all that dissimilar from other generations, the methods in which we reach this group are different. In this digital era, it is critical that we are present where these consumers are already spending their time. With the speed at which they change from each technology platform, we must also be nimble and ready to adapt.

MEININGER’S: What has been your most successful use of social media? 

GALLO: Consumers have always enjoyed and shared their wine moments with family and friends, so it’s no surprise that social media now plays a significant role within the wine industry. We are tapping into that natural desire to share wine by creating brands with embedded social elements. We ensure our brands are posting fresh and topical content that resonates with their followers. If consumers care about the message, they’ll share it with their friends. We also want to connect with them on a personal level through digital media. For example, La Marca Prosecco launched a program where people can create a personalised label for any occasion. Dark Horse recently sponsored National Rosé Day on Snapchat with a custom, branded filter for users to share their favourite rosé moments.

MEININGER’S: Do you think 28-year-old millennials will behave more like baby boomers as they mature?

GALLO: Each generation contributes new perspectives, as their values and needs change over time. And while we still see commonalities at certain ages and life stages, new shifts are beginning to happen. People are renting rather than buying, taking time to finish school and waiting longer to get married and have kids. It will be interesting to watch and learn from this group as we prepare for the next generation of wine drinkers.

MEININGER’S: The idea of “marketing wine to women” is often criticised by feminists. Brands like Carnivor that seem to be more targeted at men seem to excite less comment. How do you feel about gender marketing?

GALLO: When people say, “Are you deliberately targeting brands towards women?” the answer is no. The majority of consumers today still happen to be women. With beer, the demographics are inversed. We tend to develop our brands from a psychographic standpoint versus a demographic standpoint. Carnivor is one that definitely has a unique point of view but, then again, Barefoot sales are evenly split between men and women.

MEININGER’S: How do you differentiate between the way you market lifestyle brands such as Apothic and estate brands like MacMurray? 

GALLO: Each of our brands has a distinct target audience as well as a consumer need that we are aiming to solve. MacMurray Estate Vineyards appeals to a more rational mindset because of its long-standing family history and reputation for making high-quality Pinot Noir from the Russian River Valley. Apothic’s brand personality and positioning to defy convention engages with curious consumers looking to discover something new and different. It connects with them on a more emotional level.

MEININGER’S: Today, the marketing mantra is “you have to have a story”. Isn’t there a limit to the number of authentic stories about wine?

GALLO: As long as creative, unique individuals are given the opportunity to explore their ideas, you can never assign a limit to the number of stories they may tell. We like to challenge our teams to ask the most junior member in the room to share their opinion first. This isn’t to intimidate them; it is to encourage them to share their ideas and feel empowered to think outside the norm. At our company, we recognise that the next big idea or story can come from anywhere or anyone. 

MEININGER’S: How do you launch brands?

GALLO: It may be different for each brand, but we use focus groups, specific retailer or channel tests, and other various research methods for brands and concepts throughout the country, so that we can make the necessary adjustments before we introduce them nationally. We want our partners to have confidence that we’ve done our homework. 

Some have failed. You don’t know how something is going to respond when it’s out in the wild. When we acquired Barefoot, it didn’t do well in traditional consumer research. It was polarising; the name was too casual. However, we saw that in the market, with limited distribution, Barefoot was outperforming some very well established brands. And that’s something that has always stuck with me. We develop brands and we put them in markets to see how they do. If something’s successful we’ll definitely bring it to the network. If it’s not working, we’ll move on. Our company was started by two entrepreneurs and I like to think that we’re continuing the entrepreneurial spirit. 

MEININGER’S: How are you marketing your import brands?

GALLO: Beginning with Ecco Domani more than 20 years ago, we have continued to build strong relationships and to learn from our import partners. Ecco Domani may have been our first import, but we are finding new ways to engage consumers with this brand — such as our partnership with fashion designer, Christian Siriano. His exclusive label design has been a huge success with our customers. Each international exploration offers a chance to learn new things and build an even stronger portfolio. 

MEININGER’S: Most of your brands still seem to be quite US-focused. What are the challenges in breaking into overseas markets?

GALLO: Barefoot has always encouraged consumers to “get Barefoot and have a good time”. This tag line has helped to expand Barefoot across many countries. While we recognise international markets offer many unknowns, we do know per capita wine consumption over indexes in countries across Europe and Australia. We are continuing to develop brands such as Dark Horse and Louis M. Martini in those regions and create compelling programming that resonates globally.

MEININGER’S: Across the world, retailer private labels are making life increasingly difficult for brands. How do you handle that challenge?

GALLO: Consumers want quality products at an affordable price and will take their business to those retailers who can consistently deliver on their wants and needs. The marketplace changes rapidly, and I think everyone — consumers, retailers, and suppliers — are still discovering the private label landscape and which brands will work the hardest to meet consumers’ ever-changing desires.

MEININGER’S: You use competition medals to promote Barefoot. How important do you think these are to consumers?

GALLO: We appreciate the value of awards and accolades within the beverage alcohol industry and the impact they can have on our success. The competitions we most often enter are typically blind tastings with panels comprising both experts and consumers. We are also able to direct focus by submitting the right brands at certain price points for well-suited competitions. 

MEININGER’S: Moving on to distribution, there was a lot of publicity recently about your new brand Proverb being the first Amazon exclusive wine.

GALLO: The relationship with Amazon is new. I look at it as having to respond to the changing needs of consumers. The reality is we want to be present where our consumers are and they are shopping at Amazon. We sell a lot of other brands on Amazon, and for whatever reason, it didn’t make news. So Proverb starts as being exclusive to Amazon, but the plan is to sell it to on-premise channels as well. 

MEININGER’S: Wine will increasingly be bought through smartphones and devices like Amazon’s Echo, using AI services. How is Gallo approaching the marketing challenges this may bring?

GALLO: We are eager to continue learning about these new digital platforms and how they are resonating with our consumers. It is an exciting time for innovative projects in the digital marketplace to test new ideas and see what connects. In September, Apothic became the first wine brand to work with Google Home and Assistant devices. This activation allowed consumers to walk through a guided wine tasting of the entire Apothic portfolio to discover tasting information about each wine and learn more about what makes Apothic defy convention in a very traditional category. We look forward to applying the insights [from this campaign] towards future digital endeavours. 

MEININGER’S: How are you reacting to the US boom in direct-to-consumer sales?

GALLO: Direct-to-consumer marketing is widely appealing and already an integral part of our winery’s DNA. Many of our wineries have wine clubs and tasting rooms throughout California and in Washington. Additionally, Barefoot was one of the first wine brands to create an ambassador programme that assembles representatives across the world that spread the brand message, and creates new ways to make wine more fun. Participants at these events and in our various wine clubs develop a closer connection to the brands. Any opportunity that allows us to build on that loyalty and create brand advocates is appealing. 

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