INTERVIEW: E&J GALLO – Wordly Wise

Brian Carlisle, Ernest & Julio Gallo’s international vice president, is the man driving the brand forward globally. Charlotte Hey meets an experienced and driven individual who is genuinely excited by his product

“I’m a bit nervous about this interview,” said Brian Carlisle, smiling, as I walked into his office in Uxbridge a month ago. Admittedly he’s only been in the job for 12 months and this was his first interview with a drinks trade publication – but nervous? I’d done a bit of research in preparation for my 60-minute appointment with Mr Carlisle and he was not the kind of person who I would envisage being phased by any kind of interview, let alone this one.

Perhaps the reason for his alleged nervousness was the fact that he’s spent most of his life in the food industry – 28 years in fact. “I started off as a marketing guy for Cadbury and spent 23 years with Kraft in marketing and general management positions and ending up for my last three years running Europe.”

For a man who made Dawn French the face of Terry’s Chocolate Orange, who knows Sir Terry Leahy “quite well” and who has been in control of a US$5 billion business across 20 countries you would be forgiven for thinking he’d left any kind of nervousness behind him. His easy charm and open manner certainly didn’t give it away and I wasn’t going to own up to the fact that I was feeling slightly nervous myself.

First interview nerves, however, were soon forgotten as the conversation started to flow. Carlisle’s appointment has been something of a departure for the Gallo family company. It is the first time they have had someone in such a senior role based outside of Modesto, for a start. And, on speaking to various members of his team, in his role as vice president general manager, international, he is already providing the inspiration and drive that will take Gallo forward internationally.

“My background has been driving consumer brands,” he modestly states, “people think Kraft is just Dairy Lea and Philadelphia, but it has been, in fact, the biggest coffee business in Europe over the past 12 years. Growing that business across Europe was great fun and I feel the model for food is still all about connecting with consumers.” A skill he plans to trail blaze in the wine business perhaps?

World of excitement
“The wine business is exciting,” he continues, “the food business is all about struggling for two and three per cent market growth – if you get that then you’ve done really well. It’s a market characterised by low growth and less competition, but that doesn’t mean it’s not fierce – with only two or three players, we are always fighting like hell for share.”

Slightly different then from the way the wine sector works, it must have been something of a shock when he began to study its composition. Carlisle smiles, “You come into wine and think my God, the largest brand has 94% share of the market to go for… the whole model is completely different. You don’t see advertising to any great extent, the connection with the consumer is much more subtle but you still have the same challenges as the food market: you have to trade, the off-trade in particular are tough guys to deal with.”

The relaxed manner in which the new international head of the Gallo family business expresses himself belies an incisive commercial intellect. Soon the discussion turns to the relation between retailers and suppliers; he is firmly of the belief that the most important ways in which value can be added in the wine business is through collaboration and imaginative marketing by brand owners that effectively connect with the consumer. “The people who want to grow their business have to work with retailers collaboratively. I have always found that it is possible, that the ‘win-win situation’ does exist,” Carlisle explains. “It is well known that Gallo works with most of the retailers in the US – our role is to enable them to optimise on their returns from the category, and by letting us do some of the work we are creating our own opportunities. I think we need to be more collaborative with our customers, especially given our position as category captains, not just for our own brands but for the whole category.

“For example, I am fascinated by what Safeway have done in the US by taking the decision to not sell any wine under US$10. By doing so they have positioned themselves in a premium position, that’s a massive driver in the market. How interesting would that be in the UK market for example? In many respects the retailers, as the gatekeepers, can drive the way the market works, surely it is only in our interest to see how we can collaborate.”

But as Carlisle knows all too well, the UK market faces a number of issues when it comes to trading the consumer up through the price points. “Whoever I talk to who is involved in the UK market it’s all about ‘wouldn’t it be nice if we could mirror the way the consumer wants to go in the market’.

The right track

The people in the industry want to discover the quality path – so give them a chance, don’t just track them down to the price-promoted product at the end of the aisle every week.” That being said, however, Carlisle is also aware that in the UK market what’s happened has happened. “We can’t wind the clock back,” he says, “a lot of brand owners took a lot of money from advertising investment to trade investment. There’s nothing wrong with trade investment if you’re driving volume but you should never undermine the value of the brand. That’s when you start worrying – when consumers only really start buying when it’s on deal. I think that’s a shame.”

It’s refreshing to meet someone who still considers the wine category as “one of the most engaging categories that you could ever hope to work in”, a category where “everybody has got a point of view”. But to Carlisle (and perhaps this is where he differs from some of our more jaded wine trade colleagues) “the opportunities are endless. We’ve got brands that cover the spectrum of quality and price range and what we are trying to do is encourage people to step up because for a relatively small increase in price it’s amazing how the quality changes.”

Of course he admits that Gallo is very focused on fishing where the fish are, for him that is a deliberate strategy. But to his mind, “When you have got a body of consumers at one level dipping in and wanting to move up in quality a brand ought to be able to get them do that because of the trust that they have in the brand name.

“There is nothing wrong with providing the consumers with the opportunity to get better value. What I think you need do is to try to emphasise some of the other forms of investment that you have to try and build brands – classic marketing techniques of allowing them to engage with the brand when it’s appropriate. It’s much more subtle, using many more micro-marketing techniques.”

International vision
Moving away from the UK, Carlisle turns his attention to his broader role, that of running the international markets. He concedes that, “For most manufacturers Europe is a bit of a drag, its tough. The market is not growing and there are some pretty challenging markets – the UK being probably the most competitive one.

“Price compression in Germany makes the market as tough as old boots, and I don’t see the recovery that has been mooted happening so fast in the food and drink industry, it’s a pretty soft market. I mean the Germans will cross the road to save 20 cents on a bottle of wine or a pack of coffee, that’s the way they operate.” He continues, “Poland on the other hand is very buoyant, there’s a lot of disposable income coming through and we’re positioned very well with a brand we have managed to create an equity for with a good value proposition – it’s all about value, isn’t that what makes people come back?”

Carlisle admits to an obvious interest in markets which are less developed – he believes that by complementing some of the tougher, more mature markets with the interesting growth markets he can maximise the portfolio to its full potential. And the breadth of the portfolio is interesting. While E&J Gallo may not be that interested in too much acquisition (see box) they do believe in spotting the way the market moves and acquiring or developing brands to fit consumer demand. “We have a huge business out in Asia – the leading imported brand in China, Japan, Korea, Taiwan (and in Poland) is Carlo Rossi – one of our brands that doesn’t even exist in the UK. In some of these less developed markets it is almost like winding the clock back. You can have a lot more control on how you position brands and how you communicate to consumers.

“In Japan, for example, the way you get to consumers is not through supermarkets, when they drink wine they go out to restaurants, the whole channel strategy is fascinating. It’s all about promoters, displays, having women dress in your Carlo Rossi uniform – it’s a wonderful opportunity.”

After just over an hour’s conversation it is clear what is so engaging and, possibly quite inspiring, for Carlisle’s colleagues across the many markets he manages – it’s his enthusiasm and his apparent belief that in the wine trade it is all to play for. With just a year under his belt he has got a handle on the marketing and business issues at stake.

Happy medium
“You go to anyone in the trade and ask them what they want they are most likely to say, “Well if I could get just 50 pence a bottle more for my wine then I’d be a very happy man.” But how would Carlisle say the wine brand owners can do that? “They need to give it more profile, they need to shift emphasis and, without losing their competitive strength, they need to try and get consumers to spend a little bit more and give them a reason to… there’s a phrase the food industry use, which I hesitate to use, it’s called ‘aisle re-invention’. I mean you walk down a wine aisle and the industry is not doing a great job helping the consumers find their way through the hundreds of brands they are confronted with. There is every possibility that you could seriously reduce the number of SKUs in an aisle and not lose a lot of sale.”

A brave statement or just realistic? “We have to be aware of what is coming along the line for the industry, Tesco’s recent announcement about carbon printing is going to affect manufacturers much more than is perhaps now appreciated and the issues around social responsibility are going to have far-reaching implications for the way we market and sell.” Carlisle might be relatively new to wine but he’s not new to how the consumer operates or to how work international markets effectively with the brands at his disposal. Nervous? Not a jot of it… 

CV

2006: Vice president, E&J Gallo Winery, general manager, international. Responsible for all markets outside of US.
2004-2005: Career break. Spent time with wife, family and golf clubs. Went flashpacking.
1982-2004: Group vice president, Kraft Inc, president Western Europe. Various general management and marketing roles across Europe.
1977-1982: Marketing, Cadbury Schweppes.
Education: Business degree from University of Edinburgh.

Carlisle on consolidation
“I am not sure why or where the economic motive for more consolidation is at the moment. Any business has to drive its top line and reduce its costs. When you acquire a business, or try to consolidate an industry, you have to keep the combined top line growing, because the shorter-term synergies of putting the back room and the cost base together run out after a couple of years. You have to drive top line from day one – therefore where’s the value going to come from? How are you going to drive the premium? Also, consolidation tends not to take capacity out and there’s a lot of capacity currently floating about in the wine world.”

Carlisle on life and “flashpacking”
“I left Kraft three years ago and decided to take a career break, to spend more time with those things like my golf clubs, my family and my wife. Having packed my two kids off to university in the previous year I found myself having a gap year myself and it all came about after reading an article about flash packing, the new 40-50 year old version of back packing, the difference being sitting at the front of the plane and staying in nice hotels.”

© db March 2007