Growing globally: a report from the field

Wines & Vines, March, 2003 by Larry Walker

Anyone who has been paying attention knows that if you re really in the wine business today, the market is international. True, there are a few lucky producers who can throw a few cases of wine into the backseat of their car and sell it to local restaurants. But for the most part, that won't work. What does work?

Jon Fredrikson (Gomberg, Fredrikson & Associates) makes it simple: "You just have to be in the right place at the right time.

David De Boer, vice president international sales for Delicato said, "It doesn't happen overnight. You have to start 15 years ago."

William Terlato, CEO of Paterno Wines International said, "It's all about building the right relationships."

Eric Wente, CEO of Wente Vineyards, said, "It takes commitment."

Sheila Avila, a spokesperson for E. & J. Gallo, said, "We have learned that public relations can play a major role in global brand development."

In some ways, building an international brand isn't that much different than building a national brand. Not much different maybe, but those few differences are critical.

Besides being in the right place at the right time, Fredrikson said perhaps the first step in building a global brand is having the right connections. "You need to know the right people in each market. You have to have the distribution in place," he said. "There obviously has to be good quality for the money, good perceived value in a good package," he added. But none of that matters if you don't have the right trade connections, Fredrikson pointed out.

And, oh yeah, plenty of money to do the marketing and a deep knowledge of the particular global market you are entering.

"Like everything, it takes a team working together" De Boer said. "And the team has to have a good understanding of major markets around the world."

De Boer cited the four P's: Product, place, package and promotion. "It all starts with the product, the quality of the product and the value of the product. Value is especially important today if you want to break into the global market."

Having top quality at good price has certainly been a key for Delicato. Delicato has been one of the California wine industry's most incredible success stories of the past decade. The winery has repositioned itself from a Central Valley jug wine producer to a premium coastal producer. That repositioning has been accomplished nor with smoke and mirrors but with a solid product in the bottle, delivered at a reasonable price. Wine from Central Coast and Lodi grapes are the key to Delicato's success and the fact that for two years in a row they have been named "Winery of the Year" at the International Wine Competition in London.

Delicato's sales are up 40% in volume in 2002, according to De Boer. "Pricing is important," he said. "I think it is difficult to create truly global brands at the higher price-points. A popular price-point gives you access to a broader audience.

De Boer added that just being price-driven wasn't enough. "You have to have the value there," he said.

Beyond the four P's, De Boer said another important element is authenticity. "You've got to have real roots, real legs. That makes it easier for us. We've got the family behind us and we have the vineyards. We truly control the product from the ground up. And not many people can say that at our price-point." (See box on facing page.)

"Of course, you need the strong distributor network. You need companies that are committed to the brand," he said.

De Boer said that it was also critical to get the trade and the media behind the brand. "The press has been very supportive. It's a good story to tell."

Wente Vineyards has been super-successful at playing the international market. "We started in 1978, so we've been at it about 25 years,"

Eric Wente said. "It takes commitment, not a lick and a promise."

He said things are better now because California wines are recognized. "When we started, it was 'Hello.

Goodbye. Call me later.' Now people call us wanting the wine. California is a positive image in the world market for us."

Wente said it is important to know the market, country by country. "One size fits all does not work," he said.

Wente is now in about 150 countries, with more than half of its production sold on the international market.

They opened many of those markets by working through the duty-free system, which Wente said could be used as a springboard into a local market. "But duty free is really a market in itself," he added.

By any odds, one of the most successful wine marketing companies in the past decade or so has been Paterno Wines. The company currently has a portfolio of 39 wines. Paterno sells more than one-third of imported wines over $14 a bottle in the U.S. It is owned and operated by the Terlato family and based in Chicago.

Its biggest success story is the Santa Margherita Pinot grigio, which has been the No. 1 imported restaurant wine in the U.S. for 24 years. "When my father first brought it in, no one even knew what Pinot grigio was," William Terlato, president and chief executive officer of Paterno said.