Interview, Part 1: Bill Terlato, President And CEO, Terlato Wine Group

Lake Bluff, Illinois-based Terlato Wine Group is among the key players at the high end of the U.S. wine market, with annual volume of nearly 2 million cases, revenues of approximately $375 million, and an average retail bottle price of $20.The portfolio includes a number of prestigious names like Gaja, Chapoutier, Chimney Rock, Piper-Heidsieck, Rust en Vrede, and Domaine Ramonet, among others. In recent years, Terlato has seen significant change, with Santa Margherita, once its largest brand, leaving the range. But it’s been replaced by newer growth offerings like Terlato Family Vineyards Pinot Grigio and The Federalist, both of which have risen to the fore. SND managing editor Daniel Marsteller spoke with president and CEO Bill Terlato to get an update on the company’s progress.

SND: How is business overall as you look across the wine market and the Terlato portfolio?

Terlato: There’s a lot of change happening across the industry, but we’re well-positioned. I think we’ll end this year up about 14%, but more importantly, we’ll be up about 23% in the on-premise, which accounts for 45% of our volume. Within the portfolio, everything that’s a trade-up is doing well.

SND: When Santa Margherita left the portfolio in 2016, you reloaded with Terlato Family Vineyards Friuli Pinot Grigio ($24). How is that effort going?

Terlato: We’re definitely ahead of where we thought we’d be at this point, with volume above 50,000 cases. We’ve opened about 10,000 accounts, and most of them are restaurants. We’ve acquired additional property in Friuli and have about 240 acres now. So we have a long runway in front of us before we run into any growth constraints. We’re looking at this as a generational project, not something that we need to execute in the next quarter or two.

SND: How is the outlook for your sparkling wine range?

Terlato: Sparkling is going very well. Our three main wines are Piper-Heidsieck ($45), Riondo ($15), and Nino Franco ($19). Piper is up 20% so far this year, and it’s accelerating. We’ll close the year at around 70,000 cases. It took us a few years to get Piper repositioned in price, because it was pretty severely discounted right before we got it. We’ve focused on the on-premise, and have seen some nice growth. Riondo is up about 35%, and we’ll probably do close to 200,000 cases this year. There’s a lot of competition in Prosecco, but we’re gaining quite a bit in the on-premise, and we see more upside there. Last year, Prosecco dollar sales exceeded Champagne in the U.S. for the first time, and that gap is widening. Champagne is growing, but Prosecco’s growing a lot faster. Nino Franco is up 17% this year and will do about 58,000 cases. It’s very strong in restaurants. With Prosecco becoming so popular, the higher-priced DOCG wines like Nino Franco have plenty of room to grow. It’s still a relatively small segment of the category, but I think you’ll see trading up happen in Prosecco just like in the rest of the industry.

SND: Which other imported wines in the portfolio are performing well, and do you expect to add any new brands in the near term?

Terlato: The Chapoutier line is growing nicely, and will do over 160,000 cases this year, with Belleruche ($17) among the top rosés from France. From Italy, the Gaja wines are doing well, as are Il Poggione Brunellos. We’re also seeing a lot of interest in wines like Cusumano’s Alta Mora from Mount Etna in Sicily, and in the indigenous varietals from Feudi San Gregorio in Campania. We’re very selective in adding brands, because we want to be able to give them the right energy without taking away from our existing business. So at the most we’re looking to add one or two brands a year. If we get to a point where growth is harder to come by, then we might look to more aggressively fill holes in the portfolio.

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