Gallo hit by decline in eating out

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E&J Gallo Winery, one of the US’s biggest wineries and the largest exporter of Californian wine, said wine sales to restaurants were falling as people ate out less to save money.

Gina Gallo, a winemaker and grand-daughter of one of the vineyard’s founders, Julio Gallo, said that the winery had noticed “a little dip” in restaurant sales a few weeks ago.

Some 20 per cent of the winery’s US sales, which include mainstream brands such as Turning Leaf and Gallo Family Vineyard, go to restaurants.

Ms Gallo told the Financial Times in an interview that people who travel from out of state or abroad to big cities like New York and Los Angeles appeared to be
cutting back on eating out and saving their spending money for clothes or other things they could “take home” with them.

However, sales to wine stores remained “very solid”, she said, adding that the group had kept its prices flat or lowered them to maintain sales as the US economy weakened.

Ms Gallo said E&J Gallo planned to remain an independent, family-run vineyard even as wine industry consolidation increased, with multinational drinks groups showing increasing interest in wine.

“We definitely want to stay family-owned. We feel it’s our biggest strength.”

Diageo, the British group that owns Johnnie Walker whisky and Guinness beer, in January bought Rosenblum Cellars, one of the country’s biggest producers of Zinfandel, for $105m.

It has said its aim is to be the “leading premium wine company” in the US.

Premium wine – wines priced above $15 – is the fastest-growing segment of the US market.

Ms Gallo said E&J Gallo also wanted to develop more premium wines.

E&J was planning to expand by seeking more international partners, Ms Gallo said. About one-third of the group’s 60 brands are non-American.

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