Dateline: Asia

Wines & Vines, August, 2002 by Kevin Sinclair

Gallo has a strategy to put its ultra-premium fine wines into the hands of discerning Asian consumers. It's going to start by featuring its cheaper lines on supermarket shelves then move up to the elegant--and expensive--Gallo of Sonoma labels.

Their Hong Kong partner in this canny marketing drive is a former hotelier named Patricio de La Fuente, a comparative newcomer to the wine industry. He discussed the best way to position the fine wines in Hong Kong with Gallo of Sonoma marketing director, Patrick Dodd, and regional Japan-based marketing associate, Thomas Hsiao.

All are confident that there is a potential strong market in Hong Kong for Gallo premium wines, which retail here for up to US$70. But first, says Dodd, it's important to build the name recognition by coming in at lower levels. Gallo has been a familiar name in Asia for decades, largely, as in the United States, because of its less expensive range.

"We've got to be careful not to be snobbish, not to seem to cater only to the elite," Dodd explains. "There's the Italian approach that wine is something to be enjoyed everyday. Obviously, nobody is going to pay $70 everyday for a bottle of wine. So the other labels and levels also have an important part to play."

Hsiao says that people respect the Gallo name on a bottle, and Dodd adds that marketing tactics will target the innovators of Asia to try to sell the newer range of up-market brands to consumers already prepared to try something new.

One selling point is the company's impressive recent string of gold medals won at VinItaly. Gallo was the first non-Italian winery to win the Primo Gran Award. Gallo labels also won seven awards at this year's big Wines of the Pacific Rim Show in Hong Kong.

Dodd, Hsiao and de la Fuente all agree that education is a key ingredient to marketing success, and emphasis on the Gallo range of varietals will come in handy.

Dodd argues that a strong presence in Hong Kong is a cornerstone to selling fine wines in Southeast Asia.

"It's easier to come in with the expensive, strong labels and then bring in the cheaper lines," he admits. "We've decided to do it the other way around." Another key to success is finding the right partner. Patricio de la Fuente--half Chilean, half Dutch--grew up in Hong Kong, studied hotel management in Holland and worked in F&B with Hyatt.

In 1998, he was offered a job in wine. He loved the business. Two years later, he set up his own highly successful company, Links Concepts, with offices in China, Cambodia and Vietnam.

When wool and wheat prices in Australia collapsed in the 1960s, the Lange farming family in the remote Frankland River region of Western Australia looked about for another crop. How about grapes?

In the century that the hardy clan had worked the blistering land, they had never before planted commercial fruit. But they thought there would be a ready market among the rising generation of winemakers in their vast state.

It took a lot of preparation, but in the end, Merv and Judy Lange were right. They traveled widely among Australian wine regions. They read, they talked and they studied. Then they planted, pruned and tended to their new crops of French classical vines. When the time came for harvesting, they had come to a decision.

"We'd put so much effort and money into the grapes, we decided, what the hell, let's go the whole hog," amiable Merv Lange recalls.

They decided to make their own wine.

The Cabernet Sauvignon, Riesling, Malbec and Shiraz planted in 1971 have now been joined on the 3,062 acre-estate by Semillon, Chenin blanc, Sauvignon blanc and Chardonnay. The Langes are now so proficient in winemaking that their tasting room walls are lined with trophies, including global awards from such tasting challenges as Penguin books.

Having produced good wines, the next step was marketing. The home market in Australia was fine, but they wanted to wave their house flag abroad. Now, their major markets are Britain, Scandinavia, Japan, Singapore, Switzerland, France (Merv notes with delight) and Hong Kong.

Their prime quality wines are listed in Hong Kong in top restaurants and clubs, a strategy that local distributor Cliff See says pays dividends. Once a quality wine is in famous outlets, then he puts the second-ranking labels on supermarket and wineshop shelves.

Judy Lange, who is the marketing executive, says the strategy is working well. Selling in such outlets as Yu restaurant in the harborside Hong Kong Inter-Continental Hotel boosts the prime label's reputation as a prestige product, helping to elevate retail sales in both the elegant label they have made famous over the course of 30 years and the new, updated, art deco style packaging.

When Fabrice Rosset took over as president of Champagne Deutz in 1996, 27,000 cases of the output of 55,000 cases bore special labels. Over the years, Champagne Deutz had built up many relationships with outlets and put their private names on the premier sparkling wine.

That was too many, the hardheaded businessman decided. Today, only two valued clients have the honor of bannering their names on Deutz labels. One is the famed Taillevent 3-star restaurant group in France, and the other is The Peninsula Hotel in Hong Kong.