Just the Answer - Jeff Bland, E&J Gallo
As a privately-held company, Ernest & Julio Gallo has traditionally played its cards close to its chest. But the last few years has seen the giant thaw somewhat and last month Olly Wehring met with the company's international vice-president and general manager, Jeff Bland.
Last year, it was felt that the Californian wine industry was about to enter a period of consolidation. Is Gallo looking forward to 2005 and rubbing its hands together?
There is certainly some opportunity for consolidation (within the industry). Other companies might be seeking to consolidate in order to create scale of distribution, production and portfolio. We've been able to develop those capabilities over the last 75 years so we feel no compelling reason to seek consolidation. Most of our focus has been on organic growth and brand development. We have done some strategic alliances recently to diversify our portfolio, notably with the McWilliams family in Australia. For us the wine industry is still a people business.
Californian wine companies have a rather poor reputation on the export front. How do you see Gallo's position abroad?
Our track record over the last three decades has, I think, been very consistent. We have continued to expand markets, to grow categories - for us it's not about gaining share, it's more about category growth - and added value for consumers, retailers and restaurateurs. Being privately-owned and committed to the wine category has given us sustained power to continually develop international markets and brands over the last 30 years.
The last few years has seen a grape glut hit the state's wine industry. How was Gallo affected, and what position is the company in now?
There are always supply and demand cycles. Things are coming into balance now, but the glut gave us the opportunity to invest in quality. Given that there was an availability of high-quality grapes, we were able to invest in improving quality and add more value for the consumer. We intend to continue with that commitment.
We take a very long-term view in brand- market- and organisational-building. A two- to three- year oversupply doesn't fundamentally change our core strategy or approach to the market place.
It's only in the last 18 months or so that Gallo has started opening up a little to the media. Why was the company so slow in coming forward, and what brought on the change of tack?
I think the Gallo family are very humble and believe in letting their products speak for themselves. I think it's more a sign of their humility as a family. Certainly, there is a sense of privacy.
From an industry perspective, I think most folks would say that they've been very open in sharing ideas, best practices and innovation.
As a company we're moving into the realm of being a global company. We were a US-focused company for the first four years of our existence, then in the 1970's we started to export around the world. In the 1980's and 1990's we made a very serious commitment to developing our international business. We're learning from the markets that we participate in around the world. Becoming a global business, I think, has an implication in terms of openness to ideas and innovation from markets around the world and also sharing ideas with industry leaders in other markets. It's just the evolution of the company.
The perception of the US has been largely negative in the last year or so. How do you think Gallo could be hit by these perceptions?
We choose not to be involved in a political perspective. I would hope folks would recognise that we've been a consistent player in terms of focussing on quality and promoting wine category growth through responsible consumption. That has been very consistent and hasn't changed as administrations have. Being a family-owned company resonates with consumers, I think, regardless of their opinion of the issue of the day.
Both Two Buck Chuck and Yellow Tail have split wine companies in California. Do you see them as being good or bad for the industry as a whole?
Both have been very good for the category in bringing in new consumers. We're always interested in introducing consumers to wine, and these two have helped to usher in a new generation of consumers.
The wine industry is hugely fragmented. Anything that brings interest to the category we view as being very healthy.
2005 threatens to be the year when regulatory pressures may start to make their presence felt on the entire drinks industry. Is this a concern?
We see changes in regulatory environment - duties and tax - we hope we don't see the point where wine is singled out, making it unreachable for consumers. I think the wine category's always taken a very positive approach to promotion in conjunction with the consumption of food. Wine is a beverage of moderation. We hope we're able to continue promoting positive attributes of wine consumption and not see regulatory constraints that would artificially restrict the potential for growth of the category.
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