How a Wine Powerhouse Is Seeking to Grow Its Flagship Brand

Thanks to Terlato Wines, Pinot Grigio Became a Huge Success in the U.S., and It Looks to Do the Same With Chianti

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There's plain old market research. And then there's the kind of market research Bill Terlato gets to do.

About three times a week, he and a handful of employees at his family-run wine company gather at their headquarters north of Chicago, a sprawling English manor adorned with European antiques. And over a professionally prepared lunch, Mr. Terlato and his colleagues taste wine, comparing their brands against the competition in a blind test .

Bill Terlato
Bill Terlato

"We just want to know where we stand," he said. "And I venture a guess that a lot of wine companies and maybe even winemakers, they make their wine and they know their wine. But they don't spend a lot of time drinking other people's wine. And I think if there is one hallmark that we do, it's that we taste everything we can get our hands on."

Mr. Terlato is president-CEO of Terlato Wines International, whose humble roots date back to a pair of small retail stores in Chicago in the mid-20th century. Today Terlato is a wine powerhouse, with a 100-person sales force overseeing more than 50 brands, spanning regions from Napa to France and accounting for more than one of every 10 bottles of wine sold in the U.S. for $14 or more, according to company statistics.

The company's breakthrough came in the late 1970s, when Mr. Terlato's father, Anthony, during an expedition to Italy discovered Santa Margherita Pinot Grigio. He brought it to the states at a time when basically no when had heard of Pinto Grigio. And along with his father, Bill Terlato essentially built the category from scratch. Or, as he says, "restaurant by restaurant, one at a time, account by account."

Now the Terlatos are seeking to expand their flagship brand, launching a new Santa Margherita Chianti Classico Riserva for about $25 a bottle, and pouring more marketing behind the brand's prosecco, a sparkling wine. Although chianti is more associated with pizza, pasta and red-checkered tablecloths, the Terlatos are trying to push it as a pairing for a wider array of meals, like fine steak dinners.

In a kickoff of sorts, the Terlotos served the wine recently to invited food bloggers and others over a steak dinner at Chicago's famed Gene & Georgetti steakhouse. Ad Age talked to Bill Terlato before the event about the launch and other trends in the wine industry.

Ad Age : Santa Margherita is best known for its pinot grigio, but now you are putting more energy behind other varietals. Why?

Mr. Terlato: Naturally, you want to see the brand meeting the needs of the customers. And so what we looked for was other wines that would reflect the personality of the brand and that aren't necessarily taking away from or cannibalizing the core.

They are kind of mutually exclusive because you have a sparkling wine, you have a white, and a red. So they're really used in different occasions. It's an opportunity for us to make sure our customers have the opportunity to have a Santa Margherita wine if they want a sparkling, a white or a red.

Ad Age : What kind of advertising is planned?

Mr. Terlato: We advertise them independently. There's pinot grigio advertising, which includes TV and print and social media, and we also do events and public relations. ... There's a whole series of prosecco ads that are getting ready to launch this fall which we've just finalized. And then there will be chianti ads, and also online as well, plus a series of events.

Ad Age : People have always associated wine with food, but is it becoming even more important?

Mr. Terlato: We are developing a stronger food culture in the U.S. and I think that 's part of what is driving the popularity of wine. People are interested in the hottest new restaurants. They are interest in food preparation. They are interested in the source of the ingredients.

As people become more interested in food and as they become interested in the dining scene, wine is definitely being carried along with that in a strong way. ... We're seeing much like you had in Europe 40 or 50 years ago. And I think that bodes well for wine for many years to come.

Ad Age : Your dad is credited with discovering Santa Margherita more than three decades ago and bringing it to the states. But you are credited with growing the brand. What was your secret to success?

Mr. Terlato: We really felt like people discovered wine in restaurants. It was very important for us. A lot of people in the industry used to pursue retail because it was easier to get the product placed because they have many more offerings and it also was easier to get bigger orders because they have more storage space and more room. We kind of went restaurant by restaurant, one at a time, account by account, really focusing on getting the product in there so people could discover the product there.

Ad Age : Then what happened?

Mr. Terlato: Back then, Italian wines were really only sold in Italian restaurants. If you went to a steak place or if you went to the Four Seasons hotel or any other restaurant with continental cuisine, they didn't really serve Italian wine. Santa Margherita was really the wine that broke the mold and showed it could transcend the category.

Ad Age : You appear to have held the pricing steady, not even lowering it during the recession. Why?

Mr. Terlato: The key for Santa Margherita is consistency. It's consistency of quality, consistency of availability and consistency of price, and I think that 's important for any product with any customer base.

Ad Age : Santa Margherita grew on the backs of baby boomers. How are you responding to millennials with this and your other brands?

Mr. Terlato: We have brands that do very well with millennials. We have a brand called Seven Daughters that started out as red and white blends with seven white grapes in the white and seven red grapes in the red. Now we've expanded it to include single varietals as well.

It really wasn't created with the idea that we're going to market this to millennials. But they've embraced it and I think it's the whole sense of discovery, of understanding that there were different varietals in the blend and the winemaker put this together like a chef would put together a recipe with different ingredients and different seasonings, and when you put them all together you enhance the whole with the sum of the parts.

Ad Age : What have you learned about millennials?

Mr. Terlato: I have couple of kids that have graduated from college and one just going. When I was in school everybody drank beer. Today they drink wine. It was amazing for me to see that there was an interest in wine, there was even knowledge about wine. And they're not drinking the low end. Millennials index very high toward what's considered luxury wine, which is over $15 a bottle. They index almost 2 to 1 -- the whole category -- and that was counterintuitive when we commissioned the research, but very telling to us. These are a generation of young people that grew up with brands and brands are important to them and brands say something about who they are.

Ad Age : Terlato has sponsored and been featured on Bravo's "Top Chef." Have you measured the return on this investment?

Mr. Terlato: Obviously you have a lot of people who see it. I couldn't tell you how many bottles of wine that it's sold. It's one of those things where it's something that feels right.

Ad Age : You are an avid golfer, and I've heard you've played with Tiger Woods and Michael Jordan. Which was more fun?

Mr. Terlato: Michael is great and Tiger is as well. I've played considerably more with Michael because I've known him for much longer. As a matter of fact, I met Tiger through him.

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