Gallo doubles down on premium following 2024 slowdown

By Jo Gilbert

Published: 26 March, 2025

Californian specialist E&J Gallo is continuing to invest significantly in its luxury portfolio despite moderation headwinds coming thick and fast and the on-trade suffering in mature markets.

The Californian juggernaut experienced something of a road bump in its upwards premium trajectory last year, with sales in a portfolio which includes leading brands such as Orin Swift and Rombauer experiencing slowed growth.

Edouard Baijot MW (pictured), director of luxury international at the company, explained to Harpers: “Since the creation of our EMEA premium organisation in 2018, we have achieved double-digit growth in the UK. But for the first time in 2024, we noticed a slowdown, with 7% year-on-year growth of our luxury portfolio.

Read more: Virgin Wines eyes profit growth surge to £100m

“We anticipated that 2024 would present its challenges, but I didn’t foresee the fine wine sector being so significantly affected.”

Harpers caught up with Baijot in a quiet moment towards the end of Monday’s (24 March) London luxury portfolio tasting, where 40 different wines from Napa, Sonoma, Santa Lucia Highlands and Santa Maria Valley were on show.

For the first time, the UK trade was also able to try three wines from Massican (Annia, Gemina and a Chardonnay from the Hyde Vineyard in Carneros) and the trilogy from Denner in Paso Robles. The first is Ditch Digger, a southern Rhône-style blend; the second, Dirt Worshipper, a powerful Syrah; and finally Mother of Exiles, which explores the potential of Bordeaux varieties in Paso Robles.

Historically for Gallo, this luxury segment has demonstrated resilience. However, Baijot was candid about the extent to which mitigation was necessary after global wine production exceeded demand by 10% in 2023, leading to an abundance of wines across all categories.

“While we were aware that distributors were holding inventory, it became evident that retailers, independent sellers, restaurants and even end-consumers were also overstocked, resulting in reduced transaction volumes,” he said.

The company has not been deterred by the blip however, and is now consciously leaning into its premiumisation portfolio as a way of alleviating moderation trends while also aiming to re-invigorate a moribund on-trade.

Though the UK on-trade has suffered from significant volume decline in recent years, the value of spend has in many cases remained the same or increased at Gallo in line with general premiumisation trends. To support this, the company is now doubling its investment in the channel in 2025 to gain share and support its partners. An activation that has been successful in this space is a partnership with Coravin to deliver Coravin BTG menus for more premium wines.

“We believe in democratising fine wine, so alongside our Michelin and five-star accounts, we serve consumers with wines that resonate with them in more casual dining, bars and hotels,” Baijot said.

Gallo began its portfolio of fine wine brands with the acquisition of Napa Valley Winery Louis M. Martini in 2002. The objective was to highlight the diversity of California via the stories and the artistry behind each estates, and reaching a broad audience by having a multi-channel approach.

For international markets, Gallo then started to focus on growing its luxury portfolio significantly after the acquisition of Orin Swift in 2016. The brand, created by Dave Phinney, already had a selective international distribution network – and this furnished Gallo with access to partners and a new route to market which was lacking in the company’s previously volume-led model. Since 2016, Gallo has accelerated acquisitions in the luxury segment with Pahlmeyer in 2019, Denner in 2022 and Massican and Rombauer in September 2023.

A new role was also created for Baijot as director of luxury international in 2022 to grow the international portfolio, which spans 10 different estates across California. The full portfolio contains Massican, Talbott, Denner, The Language of Yes, Rombauer, Louis M. Martini, Orin Swift, J Vineyards, Jayson and Pahlmeyer.

The largest volume brands are Orin Swift and Rombauer, which represent almost 80% of Gallo’s luxury revenue, followed by Louis M. Martini and Pahlmeyer. As a family business, Gallo does not publicly share its figures – only to the extent that its luxury business “has a significant impact on our revenue with a growing share year on year”, Baijot said.

Now, the company is focused on returning its luxury portfolio to double-digit growth in key markets such as the UK, where Baijot and co are aiming to create new experiences for consumers and connecting particularly with the younger generation.

Keen to keep the focus on the positives, Baijot opted to swing the conversation away from the usual pit-stops of moderation, higher taxation and tariffs. Instead, he stressed how connection and engagement are “the biggest opportunity for luxury brands. Wine enthusiasts, but also younger consumers, are looking for memorable experiences and want to understand better the wines they drink. Immersion through vineyard tours, wine tastings and lifestyle experiences at the winery are key to building loyalty and reaching new wine drinkers,” he concluded.

Printer friendly version