E&J Gallo Winery is the world's largest exporter of Californian wine

Earlier this month, Paul Sorrentino, E&J Gallo Winery's general manager for Europe, the Middle East & Africa, came to London for the UK launch of a range of higher-end wine expressions from the group. While in town, he spoke to just-drinks about the new wines, as well as looking at how Gallo finds out what consumers want as well as the future for the Dark Horse brand.

just-drinks: Why is E&J Gallo launching this range of higher-end wines?

Paul Sorrentino: People know about Barefoot, they know about the Gallo family, and more and more they are learning about Dark Horse and Apothic. For us, the big business going forward is to drive not premium but super-premium and luxury, showing the diversity of wines from California.

All prices range from GBP15 (US$21) to in excess of GBP100, and everything in between - with every one of them having a unique story about its own winery, as well as their own brand image.

j-d: What do consumers today think of Californian wine?

PS: The thing that I've found when we talk about Californian wine in the UK and Europe in general is, often times, people just talk about 'California'. When people talk about French wine, they talk about regions - they talk about Bordeaux, they talk about Burgundy and its Pinot Noir.

We're introducing the diversity that California has to offer. We want to showcase what California has to offer so we can change that conversation. We want people to think about California as a terrific place that makes unique styles of wine in different parts - it's a big state.

j-d: How many wines are included in the range?

PS: More than a dozen - these are brands that we're either introducing new or have plans for expanding. They're all from independent wineries with their own winemaking team and they all have their own unique story. They just happen to be owned by a bigger company.

(The range includes Talbott, a winery in Monterey that Gallo purchased in 2015, which is known for Pinot Noir and Chardonnay. Other expressions include Cabernet Sauvignon from Louis M Martini in Sonoma Valley, which joined Gallo in 2002, and a traditional method sparkling wine from J Vineyards & Winery in Healdsburg, which Gallo bought in 2015.)

j-d: Is there any activity coming up in M&A for Gallo?

PS: I don't know, but I can tell you that we are continually focused on the premium side of our business. Opportunities that we will look at - it's premium. That's where we see the consumer going, so it's natural for us to want to move in those directions.

j-d: How has the Dark Horse brand performed since its UK launch in 2015?

PS: When we taste people on it - when they don't know the price point - they're pleasantly surprised that it's just north of GBP7, on average. In GBP7-and-above in the UK, it's now a top ten wine by volume (Nielsen).

This Spring, UK consumers will be able to have Dark Horse Rosé. We've had it in the US for the last couple of years on limited release. We would sell it in and it would be gone before the middle of summer.

Dark Horse is doing well throughout the rest of Western Europe, another big market for us is Germany, where we've had the same approach - it's premium to the category. On the continent, the Zinfandel category is bigger, so we're adding that to the Dark Horse range in places like Germany and Denmark. Some got it at the tail-end of last year and it will continue to roll out, along with the rosé.

j-d: Is most of your marketing spend going on Dark Horse in the next year, then?

PS: I wouldn't say most - Barefoot is still really big, and so is Gallo Family Vineyards. In order for us to get our [fine wine] portfolio going, that's also going to have investment.

We've doubled-down our investment on Dark Horse - we'll spend more than we did last year. We think there's a tremendous opportunity for it. The average bottle price for wine [in the UK] is just north of GBP5. So, it's not a big jump for consumers - they're going to get a wine that will punch well above its weight.

j-d: How do you go about forecasting what consumers want for the next five years?

PS: We place a lot of value on consumer research, whether it's our consumer research group based in the US, or our brand teams throughout Europe. A great example of this is our business in Poland. We did some consumer research there and we found that there's a barrier to entry into wine for consumers. The barrier could be distilled down to three things: they didn't like the taste, they didn't like how it made them feel or wine represents too formal a drinking occasion for them.

We took those consumer findings and introduced a range of wines called Carlo Rossi Refresh - an easy-to-drink table wine with natural fruit variants. It launched in 2016 and it's performing very well; the Rossi brand in Poland has a double-digit share of the overall wine category and our [Refresh] innovation on Rossi now represents upwards of 20% of our brand. The great part is that it brought a whole new consumer not only to the Carlo Rossi franchise, but also to the wine space. These were people that sat on the sidelines, because wine wasn't for them.

We also do research into what else is in a consumer's basket when they are at a grocery store, so we understand their purchase decision. We've done path-to-purchase studies where we have looked at 'what's that moment of truth' - making a list? Logging on to computer? What is the moment when they make a decision around a wine purchase?

We also look at how consumers shop, what's their consideration set when in store and how they look at wine.

j-d: How does new technology affect what people are drinking?

PS: Consumers are smarter than ever before - and not just about wine. The days of a consumer walking into a store and seeing something on a gondola end or tripping over a display in the centre aisle - those days have changed. We are spending a lot of time on the digital side - as we think about traditional marketing, we are really shifting the mix towards digital. Everybody walks around with a computer in their hand - or even on their wrist.

The other thing we're doing with that is talking to consumers in an interactive way. They don't want static, they want to be able to engage with a brand, to have some back and forth.

You'll see more digital and less of the traditional, but they all have a place - we have a large portfolio of brands, some of which might resonate better in print.

The other thing is this trend towards premium, not just in our category but I look at what people spend on a pair of trainers these days. And, these aren't trainers to go running in - they're trainers to wear with a suit.

There's this trend towards premium and it has definitely impacted our category in a positive way. But, those consumers don't want to be marketed to in the way that you would some other brands at a different price point. They want to discover something, a story. How can they feel that they have a connection to Louis M Martini winery on route 29 in the heart of Napa Valley, when they live in London? How do you create that connection?

As we've shifted our business towards more premium wines in the last 15-to-20 years, we're learning to talk to consumers a little bit differently.

j-d: Once you've recruited new consumers, like with Rossi Refresh in Poland, does the bottom-end then start to fall away as the market matures?

Not necessarily, because you'll always have new consumers to the space. There has to be a point of entry, whether that's taste or price. It evolves, but we need to constantly evolve with the consumer because they are going to want something new and different - and a story. They're also going to want something that they can trust. We look at how can we capture consumers for the entire lifecycle of wine-drinking occasions.