Gallo taps into the premiumisation trend, with top wines now accounting for almost a third of turnover

Californian wine giant E&J Gallo’s premium wines now account for nearly a third – 30% - of the business’ overall turnover, up from a mere 1% in 1994, underlining the company’s commitment to the sector and its efforts to change public perception of the brand.  

“My biggest aim is to change people’s perceptions of Gallo,” said Edouard Baijot MW, E & J Gallo’s regional fine wine manager, speaking to Drinks Business, adding that  that he is aiming for 20% of turnover in Europe to come from the premium sector by 2020, up from its current 12%.  

Gallo has invested in over 8,500 acres of premium vineyards in the past five years, and has ploughed more than US$1 billion in its premium wine business. It defines premium wines as those retailing at over US$10 a bottle, while super premium commands a price of more than US$15, and ultra premium costs between £20 - £30. Luxury wine is that which is priced at over the £30 price point.

“Most people have no idea about our super-premium business – 70% of our revenue comes from brands that didn’t exist in our portfolio 15 years ago,” Baijot said. “It is increasingly challenging to make money in wine at the entry level, so we need to secure more premium vineyards as sourcing is the biggest challenge.  

Gallo was using an increasing number of grapes from the company’s own vineyards in the blends, said Baijot, with over half of grapes that go into making the super premium wines their own.  

“We are investing for the future of the company and for the next generation of drinkers, as growth is going to be in the premium segment,” he added.   However, he admitted that the ongoing premiumisation of a wine brand that has been more closely associated with entry level wines has not been without its challenges at times.   “We tried to build the quality pyramid with the Gallo name in 2006 but it didn’t work, as people think of big brands when they think of Gallo. The Gallo family didn’t mind doing it differently.  

“The name Gallo does not appear on most of our premium wine labels and some of the premium team don’t even have the name Gallo on their business cards. “It can be difficult out in the field and can take us longer to get an appointment with some people purely because we’re Gallo, as some people think that Gallo doesn’t know anything about premium wines, which is ridiculous to me,” he said.  

“We plan to introduce new premium wine brands to the market this year and have created a new business unit in the UK dedicated to it,” he added.  

E & J Gallo is responsible for 40% of all wine production in California and owns . 24,000 acres of land and over 100 different wine brands.