Gonzalez Byass has been active in diversifying beyond wine and Sherry in recent years

Gonzalez Byass has been active in diversifying beyond wine and Sherry in recent years

Jorge Grosse has been CEO of González Byass since mid-2006. Earlier this year, just-drink editor Olly Wehring met him in London to discuss Sherry, casks and the firm's moves to diversify its portfolio.

just-drinks: What is the ownership structure of Gonzalez Byass?

Jorge Grosse: More or less 95% is owned by the Gonzalez family. The remaining 5% is split between our distributors in Switzerland and Japan - the latter is Mercian, which is now owned by Kirin. In the late 1980s, there were no Byass descendants, so they sold back their half of the company to the Gonzalez family. At the time, it was a huge investment and they needed some help.

j-d: Has Kirin ever shown an interest in upping its stake?

JG: They are very happy to be part of the company, and we don't have any indication that they want to expand their stake.

We're into the fifth generation of the Gonzalez family on the board. Some of the sixth generation have shares and there is already a seventh. In the medium-term, the family is very close to the business. Our Tio Pepe Sherry brand is seen as part of the family. They have had opportunities to sell in the past, and they've chosen to stick with it.

j-d: The company operates primarily in the Sherry category. How has the sector performed in recent years?

JG: In global numbers, the category has suffered a slight decline for many years. The more popular brands have softened due in part to the age situation (of consumers). But, in the last five years, the speciality Sherries are getting more popular, thanks to an increase in the number of wine writers that are talking about the products and the increase in Sherry bars and Spanish-themed restaurants. They're not booming, but they're doing quite well. That means we may sell fewer cases, but they will be more profitable. This is why we are positive about the future for Sherry.

j-d: And, how is Gonzalez Byass performing within the Sherry sector?

JG: We follow the category trend - maybe slightly better. But, we're not the exception. Our speciality brands are growing, while our main brands - Tio Pepe and Croft - are following the broader trend. Speciality Sherry is a very small part of our business.

j-d: Has the geographical footprint for Sherry changed at all?

JG: The main markets are the same, but Asia is starting to show more interest, particularly in the speciality Sherries: Some bartenders are starting to use them as cocktail ingredients. These products are priced at the premium level (GBP20 to GBP50 per bottle), they're not extremely expensive.

The CEO of González Byass, Jorge Grosse

j-d: Can you give us details of the company's attempts to diversify outside of Sherry in recent years?

JG: When the family saw the Sherry category start to slow, they decided - about 20 years ago - to diversify. They had two small wineries, one in Rioja the other in Pinares, that they decided to start pushing. Then, in early-2000, they bought land and developed Finca Constancia in Toledo, and planted some vineyards in the south of Spain. In 2008, we bought a winery in the Aragon region, between Catalunya and Navarra.

Then, there is our spirits business. In brandy, our Soberano brand is one of the largest in Spain. Also, we have an anisette called Chinchón and a gin, London No 1, that is produced in London. We've just launched a blended whisky that is produced in Scotland but finished in Sherry casks for about a year in Jerez - this is the point of differentiation. We launched it a few months ago in Taiwan. They really know about whisky there.

We have been suppliers of casks to Whyte & Mackay for at least 100 years - we have a very strong relationship with them. So, today, they are supplying us with whisky.

With our gin, it was a joint-venture with the owner of the brand. We had the option to buy the brand, which after a few years we did. It was successful in Spain and then high-end gins became more popular in other countries; this trend was initiated in Spain. One of our short-term priorities is to develop it abroad. We'll look to increase our presence in the UK, Germany, Colombia and Brazil. We've also just started selling it in the US and China. It's becoming an international brand, not just a local Spanish brand.

j-d: How important is a point of differentiation for your spirits portfolio?

JG: With London No 1, we market it as a gin that is perfect for gin & tonics. Also, the colour of the product is blue. While some of our distributors have been reluctant to take the product, the high-priced gin category is growing worldwide.

Our approach to spirits is to operate in the high-end space. We're not looking to buy brands, it's more in-house seeds that we want to develop. It is different in wine, where there are places in Spain where we do not have a presence that we'd look to make a move into. That would be our strategy. 

j-d: You mentioned casks earlier. How big a part of the Gonzalez Byass business is the selling of Sherry casks for whisk(e)y?

JG: For us, the cask side is, maybe not marginal, then certainly not our main business. It's complementary to our Sherry business, but we could live without it. That said, we'd prefer to live with it! It's very nice to have, but we do not need to have it. It makes us very proud to see some of our Sherries in a whisky. It's a nice relationship for Sherry.

Demand for our casks is going up - we are seeing positive developments in this regard. However, the price of a normal cask is more or less stable. The more special casks, such as 30- or 50-year-old casks, have become more expensive. In absolute terms, we expect the amount we earn from the sale of casks to grow.

j-d: How has the company performed of late?

JG: In the last eight years, we have grown by about 40%. Spain has been quite difficult for us, but we feel we are at the bottom of the depression in the country. Internationally, we are doing quite well, so we cannot really complain. Around 45% of our sales are domestic.

j-d: How has the company changed since you became CEO?

JG: In the last eight years, we have put together a team that have bought into our philosophy. It wasn't a matter of capabilities, it was more about being team players. I can work very well with the family and that gives you courage to take new challenges - it's a matter of trust, and trust comes from time together.

We are results-oriented, and we now have an environment that encourages us to try new things. Failure isn't punished, so people are encouraged to try new things. Challenges keep you young, so we've tried to move the company out of its comfort zone. If we don't re-invent ourselves, someone will come along and fill that space. It's not change for change's sake, it's encouraging people to avoid complacency.

Our next three-year plan has just started and our aim is to complete our portfolio. We need to fill some gaps that cannot be filled with organic growth.