E. & J. Gallo Winery, the world’s largest winemaker, is rolling out a Web platform designed to drastically improve the quality of its retail sales information and make it a shrewder b-to-b marketer.
Gallo’s technology gambit is perhaps the biggest ever undertaken in the booming multibillion-dollar U.S. wine industry, which is always thirsty for reliable store-level sales data.
It is too early to determine exactly how much Gallo is saving in sales costs by using the platform, which gives it marketers and distributor partners real-time store sales information. Peter Abate, Gallo’s VP-sales and analytic solutions, estimates the savings at 5% to 6%.
Gallo’s platform is a boon at a time when the company dearly needs one. While sales are robust, up 12% last year to $1.5 billion, the family-owned company is facing stiff competition from non-U.S. wineries.
The company has been marketing heavily to increasingly powerful and centralized retail store buyers, created by feverish consolidation in the grocery industry. Gallo does not sell directly to retail stores or their buyers but rather through 493 liquor distributors throughout the U.S.
While Modesto, Calif.-based Gallo had used a legacy marketing database since the mid-1980s, it had found it lacking in recent years, said Abate, who has spent 15 of his 24 years with Gallo in sales and sales management positions.
"We spent more and more on resources, and continued to watch our results erode," Abate said. "We thought the integrity of our database was eroding, so that’s why we went down the road with [the Web platform]."
In 1997, the company began experimenting with scaled-down versions of TradeLinx Web database platform and late last year began implementing a full-scale platform.
Gallo’s platform combines up-to-the-minute sales information gathered by the system’s developer, Trade Dimensions, with its own proprietary data. Marketers at the winemaker’s headquarters use the information to plan corporate-level sales, marketing and advertising campaigns based on real-time information, something they weren’t able to do before.
The information is also passed on to Gallo’s regional marketers and distributor partners, who use it for planning calls with buyers for retail stores. It is a real competitive advantage for Gallo, for buyers are increasingly favoring companies that provide them with real-time sales data so they don’t have to crunch the numbers themselves. "We get it on a Thursday, and turn it around to them on a Friday," Abate said.
The platform gives Gallo’s marketers and distributors what is—after marketing dollars—the most powerful tool for planning a sales call: accurate information. In years past, Gallo reps might have made a call with incorrect product or store information, a situation that might alienate a buyer and make Gallo look amateurish, Abate said. "The worst thing you can do to a buyer on a call is say, ‘Hey, our sales with your account are up 33%,’ and then have the buyer say, ‘Yeah, that’s because I just bought 10 stores," he said.
Trade Dimensions, whose clients include Kraft Foods Inc., is able to provide Gallo with up-to-date information for the platform by combining lists, Internet sweeps and sales data from grocery chains. "It’s pretty much an investigative process," said Scott Taylor, group VP-sales and marketing for the Wilton, Conn.-based company. "There’s a need for this as people drive more toward CRM [customer relationship management]. When you start implementing all these systems, you have to start integrating disparate sources of data."
Accurate, real-time sales information also allows Gallo to tweak marketing promotions while they are in progress. "You’re really looking for demand spikes in the three days after you launch a promotion," said Julian Chu, director-retail practice at Cambridge, Mass.-based consultancy Mainspring Inc. "If you have this capability, it allows you to rethink the way you do your marketing and promotions."
Morphing in Modesto
For the past few years, Gallo has been changing its image from that of a mass marketer of downmarket brands such as Thunderbird and Boone’s Farm, to an award-winning vintner capable of competing quality-wise with boutique French and Napa Valley wineries.
It has been immensely successful, winning the coveted Premio Gran Vinitaly "International Winery of the Year 2001" award, and gaining sommeliers’ praise for its Laguna and Stefani lines. It has also recast its branding efforts, featuring Gina Gallo, the granddaughter of founder Julio Gallo, in ads to appeal to a younger, more affluent audience.