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Interview, Part 1: Richard Cacciato, President and CEO, Frederick Wildman & Sons Ltd.

August 15, 2012

New York-based importer Frederick Wildman & Sons’ history dates back to the Repeal of Prohibition, after which Connecticut-born wine connoisseur Frederick Wildman purchased century-old wine importer Bellows & Co. When Wildman retired in 1971, the company became a subsidiary of drinks multinational Hiram Walker. Continuing to expand, it added Paul Jaboulet Ainé and later Gruppo Italiano Vini (GIV) labels Melini, Santi and Folonari, in 1989. In 1993, president and CEO Richard Cacciato and six of the company’s top suppliers acquired Wildman from Hiram Walker. Today Wildman handles over 50 brands, its wine portfolio led by Italy and France in addition to Spain, Portugal, Argentina, New Zealand, Germany and Austria. Wildman also has a specialty spirits division whose portfolio includes Chartreuse liqueur, Pig’s Nose and Sheep Dip Scotches, Ilegal Mezcal and Edinburgh gin. Shanken News Daily recently met with Cacciato for an update on the company’s performance.

SND: How has the American wine consumer changed over the last four years, since the near collapse of the economy in 2008?

Cacciato: We saw a radical change in purchasing patterns almost overnight. We had to analyze it and navigate through this new environment. We remained convinced that consumers still enjoyed high-quality wines, but the challenge was how to make them perceive value. So we started working closely with our supplier and distributor partners to reposition some products. Labels that were being sold for $75-$80 were repositioned down to $50-$60. For wines retailing at more than $20, we found ways to bring them in under $20. That created a perceived value in these products.

SND: You were able to do that without destroying your margins?

Cacciato: Well, everybody tightened up their margins, all along the line. But it worked because we never took a step back. Our case price went down, but our volume continued to grow. Also, at the start of 2009, we restructured Frederick Wildman & Sons into two selling divisions—one for fine wines and one for more volume-oriented products. The latter is focused on grocery and national accounts, both on- and off-premise. The fine wine division targets the on-premise and independent retailers. We set it up right after the economic collapse, hiring 20 new employees at substantial cost. At the time, I said to everyone at Wildman, “We’ll either be seen as visionaries or the greatest fools in our industry.” The new division has performed incredibly well, and the refocus has allowed both branches of our portfolio to grow. We experienced growth in 2009, 2010, 2011 and in the first part of this year.

SND: How much of your business is on-premise?

Cacciato: Our business is about 55% on-premise. But we have brands that run 60%-70% on-premise.

SND: What’s Wildman’s approach to the on-premise?

Cacciato: It has always been a strong focus for us. Right from the beginning, our goal was to be featured on the best wine lists, and we’ve never deviated from that. Even our wholesale business in New York state and New Jersey is 60% on-premise.

SND: Are New York and New Jersey your two biggest markets?

Cacciato: Yes, New York is our biggest market, followed by New Jersey, California, Massachusetts and Florida.

SND: Any plans to buy distribution licenses in any other states?

Cacciato: Not at the moment. But we like the wholesale business. We think we’re pretty good wholesalers in New York and New Jersey. We represent a lot of great brands in both markets—not just the ones we import nationally, but a diverse portfolio with many other prestigious wine brands.

SND: That must give you a lot of vertical integration in those states.

Cacciato: It does. In many cases, we control distribution from the producer. Our shareholder brands we import through Wildman and distribute through Wildman, so we go right to the retailer. Wildman was born with a wholesale license. They’ve always been their own wholesalers. When I got to Wildman, I saw the potential in that part of the business.

SND: How are your relations with wholesalers in the other 48 states?

Cacciato: Over the years that I’ve been with Wildman, we’ve aligned ourselves with Southern Wine & Spirits. We’re also aligned with Glazer’s in the Midwest. In other markets, we have relationships that go back many years. We co-exist very well in New York with Southern. They represent our larger brands. We distribute our more premium brands directly. Folonari is distributed by Southern. Trapiche, when it was part of the portfolio (it moved to The Wine Group April 1), also was distributed by Southern.

SND: How has retail consolidation affected your business?

Cacciato: You have to change how you perceive national chain retailers. We’ve started a separate national accounts division, which works very closely with our distributors’ national accounts groups. We look at how to execute our programming across a number of states, and we’re actively trying to enhance our relationships with those retailers. They’re a force, and they will get larger. It’s very important that we’re a part of their product portfolio. We do business with Costco. We just began a project with Sam’s Club involving one of our Bordeaux properties. We work with Total Wine across the U.S., with BevMo out West and with Binny’s in Illinois. They’re all very important clients.

 

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