The Wine Group CEO talks expansion to ‘premium-plus' brands to reach millennials
The Wine Group has grown to become the second-largest U.S. wine company, producing the equivalent of 53 million standard 9-liter cases annually.
Based at Concannon Vineyard in San Francisco's East Bay, the company produces more than two dozen brands that span the post-Prohibition history of U.S. winemaking. It operates 13 wineries in California, New York and Australia. Brands include the world's biggest, Franzia, as well as Cupcake, Chloe, Benziger, Imagery, Love Noir, Glen Ellen, Corbett Canyon, Big House, Flipflop, Almaden, Oakleaf and Mogen David.
The Wine Group started in 1981 in a leveraged buyout by managers of a business unit by that name within Coca-Cola Bottling of New York. It has grown by acquisition, such as Glen Ellen from the Benziger family in 2002, as well as by import alliances and brand creation. The company acquired the Benziger and Imagery brands from the family in 2015.
North Bay Business Journal spoke with Brian Vos, president since 2009 and CEO since 2012. He's set to be the keynote speaker at the Journal's Wine Industry Conference in Santa Rosa on April 26 (nbbj.news/wine18). His wine business career spans nearly three decades, starting with the largest U.S. producer, E&J Gallo, in 1989. He joined The Wine Group as vice president of supply chain in 2002.
In the following interview, Vos talks about his company's drive to innovate brands in the “premium-plus” price segment - below $20 a bottle - and how attracting millennials with lower-priced premium brands will help keep them reaching for quality wines as their careers give them more disposable income.
What are top drivers for the U.S. wine business right now?
BRIAN VOS:
Right now, there is a bit of slowdown in growth. We were growing great for a lot of years. We're still growing, but it is a little tamer than it was. The premium end is driving a lot of (it).
Rosés are, obviously, a big deal. The question is, are they here to stay? Are they year-round (sellers)?
There's packaging innovation with single-serve cans and premium 3-liters like Black Box. They are both providing tons of growth for the category right now.
How is that changing the way you do business, affecting the way you do brand marketing and brand creation?
VOS:
We've been a company that has always believed in balanced offerings for our consumers, so we continue to try to grow premium. At the same, we believe the value consumer is always going to be there and we want to offer those consumers a robust offering as well. You won't see us abandoning the value end and the popular (premium) segment as well, but you will see us leaning in on the (ultra)premium end, because that is where the growth is at.
Are you looking to acquire or create brands toward the faster-growing ultrapremium, even up to the luxury side of the market, as well as continue your other brands at other price points?
VOS:
Our innovation has focused on south of $20. Everyone has different terminology for that (segment). I call it “premium-plus.”
How diversified should companies be in beverage alcohol?
VOS:
We gave spirits a try five to seven years ago. We weren't ultimately successful. We're pretty pragmatic, and we found it was something we weren't really good at. We took a step back and focused on what we're good at.
Some of those brands are still around. We licensed them to someone who is really good at it, and they are giving a go at it.
How diversified should wineries be? It depends on the winery. Pick a name: If you're Duckhorn, you can diversify across very high price points very well. Other wineries have a wider range and serve customers on a volume base.
How is the acquisition of Benziger a signal for the future of your company?
VOS:
We're pragmatic about acquisitions. If they financially make sense and we can strategically make them work, we will compete with others to see if we can acquire them.
I don't think you can read a lot into it, that were trying to do anything significant that (the Benziger deal) is a harbinger of. We're very pragmatic about that. We want to build a balanced portfolio.
Was the Benziger deal part of a strategy to diversify into brands that are in a higher price point or into different categories such as Biodynamic or organic wine?
VOS:
The Biodynamic aspect of the Benziger portfolio is very unique and interesting offering for the consumer, and there are a lot of consumers who find that very compelling. It is a very good story for those who want to visit. That is all about the story-telling around Benziger.
One of the things that attracted us to Benziger is the heritage, the family. It is a really cool story.
We have another brand that came in that acquisition, called Imagery. We continue to operate what, I think, is one of the coolest tasting rooms around with the art and everything else.