Gallo risks volumes to drive up
Gallo is prepared to
sacrifice sales in
a bid to raise the price of its core brands to £5.99 and above.
The company has signalled its commitment to adding value to the struggling wine market by increasing its recommended retail prices for flagship brands Gallo Family Vineyards and Turning Leaf.
The change of strategy sees the company moving away from promotional deals in favour of "targeted marketing at point of purchase", according to Iain Newell, marketing director for Europe.
"Moving our gravity to £5.99 and above
increases value for the consumer, customer and brand owner," Newell said.
"We've made a strategic decision to redefine what we mean by value and that is
the relationship between quality and price."
The current average price of a 75cl bottle of Gallo Family Vineyards is £4.41, according to the latest Epos data for the 12 months to March 21, 2009.
When Gallo moved prices up by
13p last year - from £4.28 in 2008 - sales dropped 1% in value and 4% in volume, the E pos figures show.
Sliding volumes are a price Gallo is prepared to pay , admitted UK sales director Nick Elkin. "We are confident
we can grow value. Elsewhere we will shed some volume," he said.
said it will abandon "mass media" campaigns , such as its high-profile sponsorship of Gordon Ramsay's The F Word, and will
drive sales through "a focus on superior wine quality, in-store activity,
roadshows and online marketing".
Revamped packaging for Gallo Family Vineyards and Turning Leaf will reach retailers' shelves this summer, and an on-pack and radio push called Gallo Gatherings will
offer the opportunity to win brand experiences, such as a dinner party attended by a chef and a sommelier.
Elkin added that retailers have reacted positively to Gallo
pushing prices up with value-added promotions. "Retailers want to see category value growth. I think the trade as a whole wants retailers and suppliers focused on driving value."