Singh upbeat on Gallo’s European prospects
After six months as vice president and general manager for Europe at E&J Gallo, Devinder Singh is upbeat about his role and the international prospects for his company. He met with Olly Wehring to discuss the opportunities and challenges awaiting Gallo in Europe.
Careers often involve making sacrifices, but greater love hath no man than giving up the Californian sunshine for a posting in the UK. Six months ago, that is precisely what Devinder Singh, as vice president and general manager for Europe at E&J Gallo, had to do. But in spite of the weather, he seems to be relishing the role.
While new to the UK, Singh is not new to Gallo's international wine business. He has been with the Californian wine giant for seven years, five of which have been spent in the international field.
We start by looking at the markets around the continent that Singh is most satisfied with. "Clearly, the UK is an established market place, but we think that that growth will continue in the coming years," he says. Other markets that are producing strong growth for the company are Ireland and Poland. It is the German market, however, which is giving Singh the biggest headache.
"We do have a very significant presence (in Germany)," he says. "Among our major competitors, we are the only key player in that marketplace and we have the number one brand in terms of value share in Germany. The key issue that makes it difficult is that the discounters have a very heavy presence. Around 50% of wine sold in Germany is sold through the discount channel. That presents brand-builders like Gallo with a significant challenge."
Singh also notes the difficulties presented by the Nordic markets, many of which have monopoly systems in place. "It's a very long process of launching your brands (in the Nordic markets)," he says. "That, coupled with restrictions on the marketing activity you can engage in makes it difficult, but we believe there are significant opportunities in the Nordic markets."
Turning specifically to the UK, I ask when he predicts that California will overtake France as the most popular wine region. "I would rather say my hunch and not my prediction," he laughs, "because predictions in this industry are notoriously difficult to make. It could happen by the end of 2007."
Singh is keen to stress, however, that Gallo markets wine from other countries too, including France, and is proud of its international offerings. The international line-up comprises McWilliam's from Australia, the Chilean wine Viña Chilcaya and the French wine brand Red Bicyclette. "Gallo really believes not only in the New World but also in the Old World done in a new way. We've had a fantastic reception from the trade for Red Bicyclette. Consumers love French wine but are really intimidated by the branding behind it."
So, with the company clearly committed to offering an international portfolio, attention naturally turns to other countries. In particular, rumours abound in Argentina at the moment that Gallo representatives have been spending time in the country. However, Gallo has a reputation for playing its cards about as close to its chest as is possible without recourse to a thoracotomy, and not surprisingly Singh reverted to the tight-lipped company way when quizzed on the subject.
"We continue to explore every opportunity that comes along," he says. "Our needs differ by marketplace. In Europe, our needs are very different from our needs in the US. We have an import group that is continuously evaluating opportunities both for the international and domestic divisions."
While he concedes that in the short term Gallo will focus primarily on Gallo Family Vineyards, McWilliam's and Viña Chilcaya, Singh promises "some exciting news in the next 24 to 36 months".
Turning to the ongoing consolidation within the global wine industry, Singh sees the trend as positive for the sector as a whole. "There has been a lot of activity in terms of industry consolidation over the past few years and this will continue in the future," he says.
"There aren't many big or even medium-sized wineries left any more, but consolidation will continue. I would say that Gallo has participated in that but we have done it very differently. While some of our competitors have paid huge premiums on wineries, our approach is quite different - we form alliances with distinguished companies from other countries and we exploit the equity within those brands by bringing Gallo's power in terms of distribution and brand building."
Since Constellation Brands has completed a handful of acquisitions over the past 18 months, however, Gallo has lost its grip on the number one global wine company position. However, Singh takes a fairly upbeat view of this reversal. "I don't think that (keeping the number one position) as a target in itself drives us," he says. "Our goals are very different. Just being the number one or number two is not the primary driver for us. If we continue to meet consumer needs, we'll continue to drive the growth.
Being big isn't the be-all and end-all for the family." Singh also believes that Gallo is more of a pure wine company than its rivals. "(For) most of our competitors, wine is a very small part of their overall portfolio," he adds.
As we wind up, I ask Singh how he's finding living in the UK. He seems extremely upbeat. "My family and I love it here," he smiles. The intimation is that he has seen off the British winter and, with the sun shining, now has the summer to look forward to. I do not have the heart to tell him that for a Californian, a British summer is likely to be a far more depressing affair!
After six months as vice president and general manager for Europe at E&J Gallo, Devinder Singh is upbeat about his role and the international prospects for his company. He met with Olly Wehring to dis...
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