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Interview, Part 2: Delicato’s Diversification Drive

November 7, 2019

While Delicato Family Wines continues to feed demand for its largest brand, Bota Box, the company has also diversified into imports and more upscale domestic offerings lately, acquiring the former V2 Wine Group for an undisclosed sum and launching a new fine wine division, Transcendent Wines, encompassing brands from California, Chile, Oregon, France, and Germany. President and CEO Chris Indelicato discusses those moves in the second part of our interview.

SND: What’s behind the recent push into imports?

Indelicato: We think we can be a full-service provider to retailers and distributors in a consolidating market. The fine wine division gives us the opportunity to market both agency brands—like Torbreck, Casa Real, and Schloss Vollrads—as well as our Black Stallion Limited Release and Diora brands, for example, allowing us to expand in the on-premise. We like where the fine wine piece is going. On the import side, we also brought on the Schmitt Söhne portfolio, and that transition has gone extremely well. We’re now wrestling with the same tariffs everyone else is on imports, but I think we’ll be fine over the long term. Our biggest import, Viña Santa Rita, is having a nice turnaround—and at a dollar higher retail price than it was previously. Overall, we’re now at roughly 1 million cases of imports.

SND: Will you consider adding more brands to that range?

Indelicato: Yes, both domestics and imports. There’s a lot of opportunity out there. That said, we’re being very particular, because we’re looking for partners who want to be long-term strategic players in the fine wine business.

SND: Which other brands across the Delicato portfolio are priorities currently?

Indelicato: About two years ago our Gnarly Head brand (depleting about 660,000 cases last year, according to Impact Databank) peaked and then lost some of its volume. In the last 90 days we put out a new label, returning some of the orange and copper that had been there before the last change, and that really seems to be resonating. It’s hard to believe a packaging change could be that impactful, but the brand is now growing again. We also have our 1924 line of wines under Gnarly Head, which have a bigger profile, and we just launched a Bourbon Barrel Cabernet. The Z. Alexander Brown brand (approximately 160,000 cases) is also doing really well, growing in the 15%-20% range. On Noble Vines (approximately 630,000 cases), we’ve launched a new Marquis Red, which has been well received, and we have a little brand called Three Finger Jack that’s positioned at $18 and somewhat surprisingly has excellent traction on-premise. Lastly, we have Diora—our brand from the Santa Lucia Highlands and our San Bernabe vineyard in Monterey. Diora has been in the on-premise for a few years, and now we’re scaling that and launching it broadly across the country.

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