StateWays - March/April 2017

StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions

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StateWays | | March/April 2017 26 INTERVIEW WITH BILL TERLATO, CEO OF TERLATO WINES Terlato Wines enjoyed a robust year in 2016, as a number of its brands performed strongly. The colonially themed The Federalist topped 200,000 cases for the fi rst time, thanks to an amazing 81.8% growth last year. Piper-Heidsieck Champagne grew 7.1% in its second year to 45,000 cases, while sales of Le Charmel increased 12.2% in its fourth year to 22,000 cases. Seven Daughters saw another year of growth, 12.2%, fi nishing 2016 with 230,000 cases. We spoke with Bill Terlato, CEO of Terlato Wines, about his company's impressive 2016. StateWays: What does it mean to you to be a Growth Brands winner? Bill Terlato: Recognition as a Growth Brand is validation that our brands are resonating with consumers, trade accounts and consumers. SW: What industry trends are impacting your brands? BT: People looking to trade up and willing to spend more for quality is benefi tting brands across our portfolio. Piper-Heidsieck's prestige cuvee, Rare, at a $180 suggested retail price, is gaining share and growing value for the brand. For The Federalist, Millennials are much more engaged with wine at an earlier age and are more willing to trade up and are helping to drive the growth of the luxury segment. Seven Daughters is winning with huge consumer enthusiasm for packaging innovation and access to higher quality wine in cans. Exceptional quality, convenience and portability have enormous appeal with Millennials. SW: What off-premise marketing programs and activations in 2016 led to your brands' success? BT: The Federalist has exploded off-premise. We partnered with retailers to run programs around every American holiday: President's Day, Memorial Day, 4th of July and Thanksgiving. And we had a partnership with Rock the Vote that put The Federalist front- and-center during the run-up to Election Day. We've also seen the most success activating around our Millennial male consumers' passion points with cross merchandising programs in BBQ and craft beer. Piper-Heidsieck had a lot of eye- catching POP during the holiday season, including a red ice jacket and red cube displays that allowed the brand to stand out on the store fl oors. The launch of Seven Daughters Moscato and Pinot Noir in cans was a key growth driver for the brand. We had a great partnership sponsoring 5K runs, which allowed the brand to engage with a highly targeted consumer audience with sampling, social media and infl uencer outreach, and activation at local retailer stores. SW: What marketing do you have planned for this year? BT: Piper-Heidsieck will launch a new integrated campaign called 'Dash of Seduction,' which will target the new generation of Champagne drinkers: upper Millennials, aged 30-40, with a heavy focus on digital activation. The Federalist just launched its fi rst bourbon barrel-aged zinfandel with fantastic results. We sold out of the fi rst vintage in weeks. This was a natural extension for the brand, and we'll launch our second vintage next fall. Seven Daughters will continue its growth streak with the launch of Italian rosé in cans this spring – perfect timing for spring and summer concerts, festival and picnics. WINE COMEBACK BRANDS (000 9-liter cases) '15/'16 Brand Supplier 2013 2014 2015 2016p % Change Chateau Ste. Michelle Ste. Michelle Wine Estates 2,753 3,035 3,253 3,400 4.5% Clos du Bois Constellation Brands 1,765 1,690 1,755 1,930 10.0% J. Lohr Estates J. Lohr Wines 1,439 1,406 1,439 1,493 3.8% Freixenet Freixenet USA 519 541 560 590 5.4% Segura Viudas Freixenet USA 225 225 250 270 8.0% Santa Julia Winesellers, Ltd. 158 147 183 200 9.3% Black Stallion DFV Wines 32 50 42 60 42.9% Soleil Mimosa Southwest Wines 43 48 45 50 11.1% Source: The Beverage Information & Insights Group (p) Preliminary. $11.99," says Phillips Stroud. "We have a different competitive set from the big guys, and it works to our advantage." Consumers who will open their wallet for better products allow Michael David Winery to "continue to make the best wine we can and meet their needs," she adds. "It truly is a win-win." Premiumization also paid dividends in 2016 for the New Zealand-based Oyster Bay. This Delegat brand took home a Fast Track award after growing 10.2% in 2016 to 693,000 cases. Jenn Fox, Delegat USA trade marketing manager, attributes this in part to Oyster Bay establishing an identity through its pre- mium quality and price point. "A top-fi ve super-premium wine in America, Oyster Bay Sau- vignon Blanc is becoming part of popular wine cul- ture," she says. "Premiumization as a trend seems here to stay, with the growth of $10+ wines." Of course, all the trends in the world wouldn't be worth a penny without the right operating part- ners. Fox makes sure to point out that Oyster Bay's 2017 GROWTH BRANDS WINE 2017 GROWTH BRANDS WINE

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