Interview, Part 1: Chris Fehrnstrom, CMO, Constellation Wine & Spirits
July 17, 2014Constellation Brands is one of the spirits and wine industry’s true giants. Constellation ranks second in U.S. wine sales, behind only E.&J. Gallo, and is also one of the U.S. spirits market’s leading players, with a portfolio featuring brands like Svedka (the market’s third-biggest vodka brand), Black Velvet (the number-two Canadian whisky brand) and Paul Masson brandy. SND managing editor Peter Zwiebach recently met with Chris Fehrnstrom, chief marketing officer of Constellation’s spirits and wine division, at the company’s San Francisco offices to see what Constellation has been up to in 2014 and take a look ahead.
In Part 1 of this two-part interview, Fehrnstrom touches on Constellation’s revised approach to brand-building and increased focus on new products.
SND: While Constellation has a vast portfolio of brands, you’ve taken a sharper focus on your more promising brands of late. How is that strategy working out?
Fehrnstrom: We have a portfolio of around 80 brands, and we simply can’t focus on that entire lineup. So we’ve taken an approach of identifying a subset of brands that we believe have significant growth potential, and over the course of the past few years have increasingly focused our brand-building investment behind those. Fortunately, we’re seeing that strategy pay off, both with bigger and smaller brands. For instance, Woodbridge, which is now at around 9 million cases, has been growing consistently at 5%-6% since we enhanced our support of it. We’ve put a marketing campaign called “Unleash the Unexpected” behind Kim Crawford, and that brand is growing at around 25% and gaining share in a very competitive New Zealand wine category. And the strategy is working out for new additions as well. We acquired Mark West about a year ago, and are now building distribution and gaining on-premise placements for it, and it’s up by around 15%.
SND: Have any brands been particularly disappointing, or performed below expectations?
Fehrnstrom: I’ll mention a brand that’s been relatively struggling for the past several years—Ravenswood (the brand’s U.S. volume has declined by 35% since 2007, according to Impact Databank). With the Zinfandel segment generally struggling, though, we’ve taken a different approach this year in trying to revitalize the growth trajectory. We developed a line extension off of the Ravenswood brand called Besieged. Besieged is based on a story that’s authentic and is all around that first harvest (Ravenswood founder) Joel Peterson had with Ravenswood. If you turn the label around, it says Ravenswood. And it’s doing really well. It’s a red blend, and has been extremely successful, and that’s revitalizing Ravenswood overall. So depending where a brand is and what challenges it faces, we’re working in a variety of ways to tackle the growth issues those brands face.
SND: You’ve also put far more emphasis on new products in recent years. How are your efforts going on that front?
Fehrnstrom: Innovation is critically important to our overall strategy. We have a separate innovation team that we’ve been investing behind over the past three years, and our goal is to be competitive with overall new product growth rates in the marketplace. Dreaming Tree is a perfect example of the success we’ve had with new products. It finished last year at around 350,000 cases. We anticipate that we’re going to grow the brand to 500,000 cases this year. Interestingly, while we have steadily increased investment behind innovation over the past few years, the overall rate of new product launches in the wine market appears to be slowing slightly. We think retailers are becoming overwhelmed with the number of new wine products, which from our perspective requires us to be even more on the money with our propositions. And we continue to look for white spaces to attack, either in our portfolio or in the category. For instance, a few years back we saw the encouraging trends for Prosecco, and we introduced a Prosecco under the Ruffino name, which was widely associated with Chianti. Our Ruffino Prosecco was up by more than 100% in the 12 weeks through June 1. And we have a number of brands that are in the pipeline, ready to be tested, both in 2014 and 2015.
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