Spirit of Gallo eyes whiskey and vodka

The general manager of Spirit of Gallo has highlighted American whiskey and vodka as areas of “white space” in the group’s portfolio.

California-headquartered wine producer E&J Gallo established Spirit of Gallo in March 2022.

Its portfolio includes hard seltzer brand High Noon, New Amsterdam Vodka, RumChata liqueur and Camarena Tequila, among others.

The division’s senior vice-president and general manager, Britt West, said Spirit of Gallo is the third-largest spirits supplier in the US by volume.

However, he said that the company has “significant category gaps” and “so much white space”.

“We need to have more in American whiskey,” West explained, noting that the group should have “more than one entrant” in the category.

The company entered the American whiskey sector in July 2022 after making a ‘strategic investment’ in Horse Soldier Bourbon.

He also cited interest in the vodka category despite its slowing sales. “We have one entrant in vodka [New Amsterdam] and it’s US$11 to US$12 a bottle.

“When you think about all the different price points across vodka and the sheer size of the category, you can’t predict it. Even though it’s flattening in growth, one out of every three drinks in the US is a vodka-based drink. So it is still just an enormous juggernaut – if you can crack the code, the return can be very large.”

West believes the company has a strong portfolio in agave spirits, a category that is booming in the US and poised to overtake vodka in 2023.

“I think we’ve made great work in rounding out our agave portfolio, with three very distinct propositions from Camarena to Don Fulano and Komos, and we’re very happy with the way all three brands are performing in the Tequila space,” he added.

West hopes to expand into the premium segment, too. “The [spirits] portfolio has a lot of scale and low-end price points like New Amsterdam Vodka. I’d like to see more premium price points and continue to be able to both innovate internally and be participants in the acquisition market.”

Redeveloping premium brandy

West also noted the potential for brandy in the States, as “opposed to focusing on Cognac”, which has struggled in the market over the past year.

“We’re working a lot on trying to redevelop the premium US brandy category,” he said. “We have two brands: Argonaut is more of a cocktail-focused brand. It’s seen good, small growth in California. On the luxury side, we have Germain-Robin, which really was craft before craft distilling. The liquid is exceptional.

“There’s an opportunity there to put some pride back into our brandy traditions in the US. The US was not traditionally a whiskey-producing country – to go way back, it was a brandy-producing country, as many colonies were, quite frankly. So there’s an opportunity to bring back the quality and take ownership over what has historically been a great place for making brandy, in California. We have the grapes for it.”

Looking to 2024, West has noticed a “consumer pause on premiumisation and exploration of new brands” as the industry enters a “tough period” after years of accelerated growth rates.

“I think 2024 is a year of grinding out results,” he said. “The industry overall is very, very healthy.”

On his priorities for the year ahead, West said: “We are playing catch-up in all things agave and all things American whiskey. We will continue to work hard against Komos [and] to work hard against Horse Soldier Bourbon.”

West also noted “nice momentum” for RumChata since it joined Gallo’s portfolio in 2021. The group recently introduced pumpkin spice and coconut-flavoured variants to the range.

Soju potential

The company recently tapped into the Korean soju market with a new distribution partnership with Lotte Chilsung Beverage Co.

In the US, Spirit of Gallo will distribute soju brands Soonhari, Chum Churum and Saero from January 2024.

“About a year and a half ago, I started seeing soju pop up in 375ml formats and then I started seeing flavoured sojus pop up in the oddest places, like Madison, Wisconsin, parts of Boston,” West explained of the move into the category.

He believes consumers are looking at soju as a full-flavoured, higher-ABV ready-to-drink product.

“It has a screw cap on it. So I can open it and drink it and then put the screw cap back on it – unlike anything in a can which, once opened, has to be consumed,” he added.

“My hypothesis is that some of the softness we’re seeing in flavoured vodka in the US is the result of younger LDA [legal drinking age] consumers wanting to explore different cultures and flavours. [Soju] provides it in a really interesting deliverable format, which is single-serve glass.

“We saw it emerging in a lot of what we call intellectual hub markets and out of college towns. We saw it coming from students of traditional soju countries that were consuming it. Now, with the popularity of K-pop and everything else, it’s just spread wildly beyond into the general market. We’re excited about the opportunity, it’s got great potential.”