GALLO EYES BIGGER SWIG OF VARIETALS

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E&J Gallo Winery this fall will market a superpremium version of its Turning Leaf varietals, further challenging the marketing niche of rival Kendall-Jackson Winery.

Earlier this month, Kendall-Jackson sued Gallo in U.S. District Court in San Francisco on charges of trademark infringement and unfair distribution tactics. Both Kendall-Jackson and Turning Leaf, which does not have the Gallo name on the label, have similarly shaped bottles and labels bearing a multicolored leaf.

Turning Leaf, introduced last summer and handled by Foote, Cone & Belding, San Francisco, initially was marketed at a $5-to-$7 price, undercutting Kendall-Jackson's $10-to-$12 range.

The new product, to be called Sonoma Turning Leaf, is even more targeted to Kendall-Jackson because of the expected higher pricetag.

GROWTH IN VARIETALS

Gallo, which owns extensive vineyards in Sonoma County, is working to acquire a bigger share of the booming varietal market, which has grown from $200 million in 1980 to $2.5 billion in 1995.

"We are scheduling new Turning Leaf wines for later this year," confirmed Tedi Burris, Gallo public relations manager.

One industry insider, however, doubts Gallo's Turning Leaf brand will be on the market by the yearend.

"My bet is that Kendall-Jackson will prevail" in its legal case, said one industry analyst.

Meanwhile, Gallo has returned to its agency of seven years, Dailey & Associates, Los Angeles, after a three-year hiatus.

The marketer gave the shop an assignment for its Sonoma varietals, a line that's separate from Turning Leaf and that features the Gallo name on the label.

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