This advertising content was produced in collaboration with our partner, Spirit of Gallo.
Trend forecasting can be a challenging undertaking, but with a firm grasp on how sales across categories and regions have grown and where they’ve lagged, a company’s well-grounded predictions can lead to smart risk-taking and huge growth. That’s evidenced by the 90-year-old, family-owned E. & J. Gallo’s March 2022 unveiling of Spirit of Gallo, a platform for the company’s award-winning spirits portfolio to the trade.
It takes a company with an excellent track record and proven success in the beverage industry to expand a wine business’ reach into the giant global spirits industry. And if the longevity and expansion of Gallo’s wine commerce is any indication, it’s clear that the company has an ability to tap into consumer preferences and bring innovation that not only align with trends, but also with the company’s strengths. “The innovation and acquisitions that we have made over the last six to seven years have been made because those brands were both additive to, and hold the values of, Spirit of Gallo,” says Britt West, the senior vice president and general manager of Spirit of Gallo.
The portfolio’s beginnings can be traced back to 1975, when the company introduced E&J Brandy. Today, Gallo is the fourth-largest spirits supplier by volume in the U.S. Its brands speak to some of today’s biggest consumer interests, indicating the company’s ability to observe and assess the marketplace, take risks, and place smart bets on where they think it’s going.
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Things seem to be paying off—for the company and the consumer alike. Spirit of Gallo’s growth has brought intriguing brands to bars, restaurants, and retailers that speak to of-the-moment purchasing trends. “Whether it’s Tequila Komos talking about their aged expressions or the Horse Soldier Bourbon team talking about the uniqueness of their single-barrel expressions, we have lots to discuss when it comes to what is inside the bottle,” says West.
Trading Up Continues With Premiumization
Markets may bounce up and plunge, but through it all, the spirits industry tends to stay steady, and premium spirits do especially well as an affordable luxury. As such, premiumization has become an increasingly consequential trend. According to the Distilled Spirits Council of the United States, the premium segment of most categories grew at a faster rate than value brands in the past few years.
Among Gallo’s premium and super-premium selections are Amaro Montenegro, Don Fulano tequila made by fifth-generation tequileros, and The Dalmore, an historic single malt Highland Scotch whose noted master blender, Richard Patterson, is known for creating some of the most expensive whiskies in the world. The Dalmore also recently introduced a 14-year-old expression finished in Pedro Ximénez casks. Each brand is a pillar of luxury in its respective category, driving home Spirit of Gallo’s competitive stance in the premium and ultra-premium sectors.
“Premiumization is always a consideration when we do any prioritization exercise as we believe we have a diverse portfolio that meets the needs of consumers throughout their consumption journey across the years,” says West. “To that end, we believe it is important that we build lifelong relationships with consumers so that they remain within the Spirit of Gallo family as they go through their various life stages.”
Shaking Up the Home Bar
Pandemic-era lockdowns led to the stratospheric growth in home-bartending. A third of consumers in the U.S. say they have made cocktails more often as of September 2020 than they did before COVID-19, according to Mintel. Moreover, consumers do not find the process daunting: fewer than 20 percent of U.S. consumers who purchase spirits say that making cocktails at home requires too much effort. This creates an opportunity for brands to offer high-quality, versatile spirits marketed for the home bar.
“At Spirit of Gallo, we always think quality first, regardless of the price point. Whether a $12 bottle of New Amsterdam Vodka or a $80 bottle of Horse Soldier Bourbon, we want the consumer to always enjoy the quality of what they put in their glass,” says West. “Each of our brands offers something unique in their respective categories. Something that stands out from the competition.”
West points to RumHaven, which is made with real coconut water, a meaningful differentiation from competitors when it comes to taste and an accessible enhancement to a home bar. Camarena Tequila, New Amsterdam Vodka, and Stratusphere Gin by New Amsterdam are other products from the portfolio that can elevate the home bartender’s game.
Innovation in RTDs
The past two years have shown that ready-to-drink (RTD) cocktails can offer just as much quality and attention to craft as a freshly stirred drink. In large part, the sector’s success is led by its portability and variety. Now cocktails are a viable option for occasions and events where once wine and beer were the only choices that offered quick convenience.
According to a spokesperson at IWSR, RTDs grew by 15 percent in volume and 23 percent in value from 2020 to 2021, indicating that consumers are reaching for better quality brands—and Gallo have positioned themselves to perform well in this competitive realm.
The portfolio is a showcase of innovation. Since Gallo’s May 2019 release of High Noon, the breakout low-calorie vodka-based seltzer made with real vodka and real juice, it unveiled Faux Pas, which was developed with woman-owned and -run media company Betches, and Wildcard, a canned cocktail line made with New Amsterdam Vodka.
“What excites me about the success of RTD as a category is how quickly and successfully we were able to address this clear consumer behavior shift,” says West. “With the demand by consumers to take spirits to usage occasions that have been traditionally dominated by beer, a huge opportunity presented itself for high quality and great tasting RTD alternatives.”
The Power in Authenticity
The American spirits industry has no shortage of legends whose personal histories make a brand’s legacy rich and engaging, and as the craft spirits sector has grown over the past decades, a new generation of legend-worthy producers has emerged. Whenever Horse Soldier Bourbon hosts a bottle-signing event, guests line up to meet founders John Koko, Elizabeth Pritchard-Koko, and Scott Neil, as they tell the Horse Soldier story made famous in the 2018 action-drama movie 12 Strong.
The founders of the Horse Soldier brand are retired members of the hand-selected detachment of Green Berets from the 5th Special Forces Group who were the first to enter Afghanistan on horseback in the weeks following the 9/11 terrorist attacks. “I’ve seen it on multiple occasions—the Horse Soldier team receives a standing ovation after their Whiskey and War Stories,” says West, referring to the storytelling event series hosted by Horse Soldier. “People truly connect with the brand, the founders, and their journey. It’s powerful.”
Faux Pas also harnesses the power of a compelling story. With media company Betches as partners, their pioneering and creative use of Instagram communicates the brand’s core values and personality. As West says, “Storytelling must come from a place of authenticity. Consumers quickly see past a gimmick.” He adds, “Storytelling has been core to the DNA of E. & J. Gallo since its inception so it’s inherent within Spirit of Gallo as well.”
Age Matters in Brown Spirits
Sales of bourbon and American rye grew in tandem with the cocktail boom, and still today, legacy distillers are investing and expanding, and small craft distillers continue to open at a steady rate. “We, of course, keep a close eye on marketplace trends and brown spirit growth is here to stay,” says West. Gallo is well prepared to keep pace. Its range of brown spirits includes musician A$AP Rocky’s Canadian blended whiskey, Mercer + Prince, the award-winning Horse Soldier Bourbon, and the heritage-rich single malts of Dalmore and Jura. Speaking of the growth of brown spirits in reference to their acquisitions, West adds: “It certainly did play a part in the decision making, but the brands have earned attention on their own merits.”
Age has long been an indicator of value for consumers of bourbon and Scotch, but that association has rippled out across other categories, as demonstrated by the strength of reposado and añejo tequilas and the increasing attention paid to long-sleepy Canadian whiskey. Gallo’s August 2022 investment in Tequila Komos includes the consistently highly-rated extra añejo expression, made all the more luxurious by its ceramic bottle.
“Our robust portfolio of brown spirits is what excites me most about the trend,” says West. ”We are only scratching the surface on what our brands can bring to consumers and I’m excited to see what the team does.”
Dispatch
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