Answers and Questions to Case Discussion E.J. Gallo Winery
1.) Why did Gallo company start with selling fortified wines, jug wines?
- accommodation to American market
- strong wines were substitute products for liquor, they were affordable for everyone
- no wine tradition in the U.S. as in Western Europe (France, Italy)
2.) What do you think about the integration level of Gallo?
- full vertical integration made it possible to create really "own" brands
- own R&D ? testing of more than 400 varieties of grapes to find the best tasting ones
- later (from 1967) long-term contracts with suppliers (wine growers) who met fully Gallo´s quality standards (guaranteed quality)
- own marketing activities helped to recognise the customer needs better than the competitors ? crucial factor for the success of Gallo´s brands
- usual distribution was to sell the wine to a wholesaler; Gallo distributed it directly to the liquor stores or groceries -> higher margins
3.) What are the key success factors for the performance until the 1980´s?
- mass production ? low costs ? cheap prices
- market share was won by price investments ? Gallo could offer its products under profit to push out competitors out of the market
- good marketing activities which fitted to the customers ? famous jingle in radio
- centering on few strong brands
4.) What has changed since the 1980´s and how did Gallo come along with the change?
- ...