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Interview, Part 1: Marc Taub, President And CEO, Palm Bay International

January 29, 2016

Led by its Cavit brand from Italy—the second-largest imported wine in the U.S. market—Palm Bay International continues to expand its 5.8-million-case portfolio with an eye toward moving further upscale. Shanken News Daily senior editor Daniel Marsteller recently met with Palm Bay president and CEO Marc Taub to get his views on the ongoing premiumization push, as well as the U.S. market outlook for 2016.

SND: Which wines are driving growth for Palm Bay currently?

Taub: We’re seeing great growth from $10-$25. Red blends are a big piece of that, and we’re having wonderful success with our Roscato brand, which broke 500,000 cases for 2015 (up from 350,000 cases the previous year). It’s garnering the highest dollar value growth in the category, up almost 80%, and doing well both on- and off-premise. We’re launching a new line of sparkling wines under Roscato ($11.99 a 750-ml.), including a Prosecco, a sparkling Moscato and a sweet red. They’ll be packaged in a squat bottle that sets itself apart from everything else in the category. While the current Roscato wines have a slightly fizzy character to them, this new range will be fully sparkling.

SND: Sparkling wine remains one of the hottest areas of the drinks market. How is your bubbly stable faring?

Taub: Lunetta (+15% to 250,000 cases in 2015) has been a core entry in the Prosecco category from the beginning and continues to see solid growth. We’re also seeing growth in Cava, and in Trento DOC sparkling wine with the Ferrari brand, as well as Cavit’s separate sparkling wine facility, Altemasi. Ferrari and Altemasi are seeding the market with an opportunity to trade up from Prosecco to metodo classico. Trentino DOC starts at about $25 a bottle and goes up to about $100. We’re also scouting producers in Champagne, looking to zero in on the right opportunity.

SND: Cavit is by far your largest brand at 3.6 million cases, up 1% last year. What’s the update there?

Taub: On Cavit, we’re seeing good growth in a slew of different varieties, not just Pinot Grigio. We have a Moscato that’s lightly effervescent and hits a different profile, a red blend that’s showing nicely, and we came out with an Oak Zero Chardonnay, which has done well.

SND: The Southern-Glazer’s and Breakthru Beverage deals are the talk of the industry. How is distributor consolidation altering the landscape?

Taub: We’ve taken the course of working with everybody, not consolidating with one player. We do business with Southern-Glazer’s, RNDC, Young’s and so on, and they understand the portfolio we’re trying to create. We’re working with them to put more people on the street behind our brands, and we’re adding a lot of people on the Palm Bay side to support their efforts. We want more specialization in terms of fine wine, on-premise, independent retail and our chain group. Piece by piece, we’re fractionalizing those opportunities and adding the manpower to support growth. We think we can work in any scenario, but we’re looking for more dedicated resources as distributors continue to consolidate. When we have our national sales meeting in February we’ll have about 150 sales and marketing people there. That’s what it takes today to break through the clutter.

SND: Likewise, retail consolidation has become a significant factor.

Taub: There’s been consolidation from a chain perspective. Kroger is buying up a lot of new banners, most recently Roundy’s. Before that, they acquired Harris Teeter (in 2013). What we like about the situation is they’re leaving a lot of authority with those local banners, so you don’t have a totally homogenous system. The local anchors can retain the fine wine culture that they’ve built.

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