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Interview, Part 2: Richard Cacciato of Frederick Wildman & Sons Ltd.

August 16, 2012

In the second part of our interview with Richard Cacciato, the president and CEO of Frederick Wildman & Sons discusses the brand portfolio and recent trends.

SND: What are the growth areas of your business?

Cacciato: Fortunately, there’s not just one brand or segment driving growth. Italian wines are a big part of our business, and we’re seeing strong growth there—from brands like Folonari, Melini, Ca’ Donini and Santi. In March, we acquired distribution rights to Marchesi di Barolo, and we’re very excited about that. Our French wines are bucking the trend and growing. Pascal Jolivet was up by 14% last year. Hugel grew by 8%, and Leflaive grew by 20%.

SND: How do you account for that growth?

Cacciato: We’re starting to see a change in consumer behavior. Fortunately last year, especially for Burgundy, the 2009 vintage generated tremendous interest. Although we were growing with Leflaive, a good part of its 20% growth in 2011 must be attributed to the 2009 vintage. We also acquired the agency for Domaine Faiveley last year, and it was very impactful for us. It’s a great property that really fits the Wildman portfolio.

SND: You lost Trapiche effective April 1 to The Wine Group. Why do you think they made that decision?

Cacciato: Our contract was due to terminate August 31, but we worked out an agreement to surrender the brand early. Prior to that point, Trapiche grew every single year. It was an Impact “Hot Brand” for several years. The Argentina category has become mainstream. Gallo is very much in it, as is Constellation. Trapiche felt that they needed to work with a larger company in the U.S. For us it’s bittersweet, because we take great pride in our accomplishments with Trapiche. We began when nobody was selling Argentine wines. We were pioneers in building the category in the U.S.

SND: How is Pol Roger doing?

Cacciato: Champagne was dramatically affected right after 2007. With agreement from Pol Roger, we decided to reposition the brand. So, we’ve been increasing the price on Pol Roger. The Champagne business is a luxury, but a very competitive category. At the Brut non-vintage level, it can be cutthroat, with very low margins. Retail prices really don’t reflect the products’ value. We were in the melée with everyone else, looking to have sharp pricing in order to get listed in by-the-glass and Champagne pours. But we and Pol Roger agreed that wasn’t really beneficial for the long term. So we began moving prices up, leaving that very aggressive pricing area. We’d been doing about 14,000 cases of Pol Roger, and you must understand, this is a small house. We lost 50% of our volume, so we’re now at about 7,000 cases. But we’re now seeing the brand stabilize, and we’re confident as we move forward that consumers are now purchasing Pol Roger based on its value. Our wholesale price is about $400 a case. So with full margin, it’s now retailing at about $50 a bottle.

SND: Your portfolio now also includes specialty spirits. How is that going?

Cacciato: A few years ago I decided to start a very small, boutique spirits division at Wildman, using Chartreuse as a nucleus and adding products around it. Last year, we were approached by Spencerfield Spirit Company, a small distiller in Scotland that produces Sheep Dip, a vatted malt which is a blend of single malt whiskies, and Pig’s Nose, a blended Scotch. They had been distributed in the U.S., first by Beam and later by Admiral. Just prior to that, we were approached by an American named John Rexer living in Oaxaca, Mexico, who produces three mezcals under the brand name Ilegal. They’re beautifully packaged and very high quality. We began distributing it in mid-2010, retailing about $60 a bottle for the Joven—the basic product. The Reposado retails at about $80. They also have an Añejo, which is aged in oak and sells for about $125. Chartreuse, meanwhile, has been embraced by mixologists across the country. If they need to add a little bit of flavor or spice to a cocktail, they utilize Chartreuse.

SND: What are you doing to attract millennial consumers? Are you active in social media?

Cacciato: We’re investing in the IT side, and I think we’ve got one of the better websites in the industry today. We’re looking at different ways to utilize technology. We’re now actually making product offerings across the country, using our website. We have a database of email addresses of top retailers around the country who’ve chosen to participate. About once a month, we make an offering online across the U.S. It’s like a shopping cart. If it’s a high-end Burgundy or a Barolo, we’ll post the number of cases available. It’s usually limited to one or two cases per customer because we don’t want somebody buying it all. They click on it and say what they want. We get all that info back and can see where it’s coming from by state, break it up and send it to our distributors in the various states. The distributor confirms the order with the retailer, purchases it from us and ships it. We just started doing this about a year ago. It’s very, very effective.

Frederick Wildman – Leading Brands1
(thousands of nine-liter cases)
Percent Change3
Brand 2009 2010 2011 2009-2010 2010-2011
Folonari 294 286 296 -2.7% 3.6%
Ca’Donini 92 101 106 10.4% 4.8%
Parallel 45 46 48 50 3.9% 3.7%
Melini 33 33 39 -1.5% 19.5%
Santi 35 36 37 2.0% 2.2%
El Coto 31 33 33 5.8% 0.6%
Chartreuse 5 6 7 15.2% 28.1%
Pol Roger 7 7 7 -1.4% 1.4%
Paul Jaboulet Ainé 4 5 5 9.8% 11.1%
Churchills Port 2 3 3 15.6%
Total Leading Brands2 549 556 583 1.2% 4.8%
1 Excludes Trapiche.
2 Addition of columns may not agree due to rounding.
3 Based on unrounded data.

Source: Impact Databank

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