Gallo: High Noon Could Become Largest Spirits Brand In The U.S. This YearMarch 10, 2022
E.&J. Gallo, the largest winemaker worldwide, has quietly grown into a spirits giant over the past decade, expanding from its initial E.&J. Brandy to field a portfolio including a host of labels at a variety of price points.According to Impact Databank, Gallo is now the fourth-largest spirits player in the U.S. with annual volume of approximately 20 million cases. Today, the company is rebranding its spirits unit as “Spirit of Gallo,” as it aims to continue asserting itself in the category. “Our founders, Ernest and Julio, didn’t stop with wine,” said CEO Ernest Gallo. “Their initial entry into spirits was brandy, a natural extension from wine. Our commitment to this category continues. Spirit of Gallo offers us the opportunity to highlight our portfolio of spirits, which includes Tequila, rum, vodka, gin, vermouth, Scotch whisky and more.” SND executive editor Daniel Marsteller spoke with Britt West, vice president and general manager of Spirit of Gallo, to see where the company is headed next.
SND: What’s the rationale for rebranding Gallo’s spirits unit?
West: We have now become the fourth-largest spirits company in the United States by volume, and yet we have the lowest awareness of any spirits company in the industry. The truth is that spirits are a major part of our history. With E.&J. Brandy, we’ve been in the business for almost 50 years now. It’s time to make sure that it is known to the trade specifically what we’re doing as a portfolio, and how we’re continuing to invest in more spirits-dedicated resources as a company.
SND: What are you seeing in the market currently?
West: The start of the year’s been terrific. We see High Noon continuing to grow and take share of seltzer. We see continued momentum with all things Tequila, both with our own Camarena brand and our import brand Don Fulano, which has shown great growth over the past year. When you look back to the dark days of 2020, one thing I wouldn’t have expected was how well our luxury spirits have ended up doing. We’ve seen phenomenal growth on Diplomatico rum, and Dalmore is the fastest-growing single malt in the country, with Jura coming right behind it. Amaro Montenegro really picked up over the course of 2021. These are all high double-digit growth brands, and as the on-premise is opening back up we’re seeing these luxury spirits continue to gain momentum there too. I’d add that our California Brandy House in downtown Napa has beaten all expectations. It provides a storefront where consumers can go in and get educated on the category, and we can introduce them to premium expressions of Germain-Robin and Argonaut.
SND: Where does High Noon specifically have room to continue gaining consumers?
West: If we meet our projections this year, High Noon will be the largest spirits brand in the industry. A minimum of 10% of every category in beverage alcohol is premium. We’ve not yet achieved 10% premium in hard seltzer, and from that we see that there’s still enormous upside potential for the brand. We’re still very bullish on it, and we see a lot of consumers trading up in hard seltzer. That’s what will continue to fuel momentum on High Noon.
SND: Are you looking to add more brands to Spirit of Gallo?
West: Last year was a big digestion year with the acquisition of RumChata, and we think there’s still a lot of growth ahead for that brand. We need to be in American whiskey, which is a category gap for us, and it will probably be several different segments of American whiskey. But as a family-owned company that’s not in a rush to provide publicly traded quarterly return numbers, we have the ability to be patient and make sure that we’re really choosing the right brands, the right partners for acquisition. So we’ll be very thoughtful about our direction into whiskey. Also, this spring we’ll be introducing a new spirits-based RTD brand with some very unique flavors and a compelling proposition.
|Spirit of Gallo—Top Six Brands in the U.S.|
|1||High Noon Sun Sips||Hard Seltzer||2,950||8,835||199.5%|
|Total Top Six||13,507||19,460||44.1%|
|1 Based on unrounded data.
2 Includes flavors.
3 Includes FrappaChata.
Source: IMPACT DATABANK © 2022