Winebow CEO Moramarco Expects Few Changes, Continued Growth Under New Owners
March 13, 2012New Jersey-based Winebow was founded in 1980 by Leonardo LoCascio to focus on importing high-end Italian wines to the United States. Since then, the company’s import portfolio has grown to include wines and spirits from Chile, Argentina, Spain, Portugal, Austria, Australia, Scotland, Brazil and Japan—a total of approximately 1.8 million cases with an average retail price of $16 a bottle—with Italy remaining the core of the business. Winebow also operates as a wine and spirits wholesaler in New York, New Jersey, Pennsylvania, Washington, D.C., Connecticut, Massachusetts, Illinois and Montgomery County, Maryland. Earlier this year, former majority owners Freeman Spogli & Co. of Los Angeles sold their stake in Winebow to another private equity firm, Dallas-based Brazos. While LoCascio remains chairman of the company, day-to-day operations are now led by veteran wine executive Jon Moramarco, who serves as president and CEO. Shanken News Daily recently spoke with Moramarco about the company’s recent progress and prospects for the future.
SND: How was calendar 2011 for Winebow, and what do you expect for 2012?
Moramarco: Since Winebow’s founding, we’ve never had a down year. We had aggressive targets for 2011, and we exceeded them. This year, on a revenue basis, we’re looking for high single-digit growth—slightly ahead of last year’s pace. We have to work harder now than we did when times were a little better, but the overall market has come back and is now fairly healthy.
SND: Which wines have been driving growth?
Moramarco: Our Italian portfolio has seen good growth across a variety of regions. Most of our brands aren’t mass-products, so we have a lot of niche opportunities across the country. Both Argentina and Chile are also doing quite well for us, as are the Austrian wines.
SND: Which areas have been a tougher sell of late?
Moramarco: We have some great wines from Australia, but they’ve been coming back a bit more slowly than Italy or South America. But we eked out a bit of growth even in our small Australia portfolio last year.
SND: What price points have been hot?
Moramarco: We’ve seen a shift upwards in our average import and wholesale prices, and the on-premise is recovering. In terms of price points at retail (multiply by 2.5 or 3 to get the restaurant price), we’ve seen increased growth up to about $25. For wines higher up the scale—the $100-$125 bottles—we’re also seeing business come back. But we’re not seeing the $25-$75 wines rebounding as quickly, though some individual brands are doing well. So there’s a bit of a squeeze, all related to the price-value relationship. Consumers now recognize that they can get some pretty good wines at $25. If they were previously buying around the $50 range, in many cases they’ve dropped down a tier.
SND: Are there any wine categories where Winebow isn’t currently present, or is underrepresented, but sees opportunities?
Moramarco: We’re starting to see some very positive signs from our Spanish and Portuguese wines. We’ve been enhancing our Spanish portfolio. Since the ownership change, we’ve also been refreshing our strategies and focusing on finding new regions that will emerge over the next 10-15 years. We need to work on those areas now.
SND: Will Winebow expand its wholesale business, or are you comfortable with the current scale?
Moramarco: We operate as a fine wine and artisanal spirits wholesaler. We’re not a mass-market operator. Our footprint tends to work better in independent markets than in chain markets—although we’re in Chicago now and expect to do well there. We do see potential for future expansion. We believe the $10-and-up wine business will continue to grow far faster than wines priced below that level. Some of our bigger competitors cover a much wider breadth of price points and segments, so we think we can outperform them and take advantage of emerging opportunities in new markets as well.
SND: What changes are you expecting at Winebow due to the ownership switch?
Moramarco: Freeman Spogli were great partners. As a private equity operator, they wanted to make a return for their investors, and they saw an opportunity to make a change. The new owners will be involved strategically, but not on a day-to-day basis. So we don’t see major changes ahead, and we expect it to be a long-term relationship.
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