Gallo goes for the hard stuff with new gin

Grain-based drinks unusual for vintner

By JOHN HOLLAND
jholland@modbee.com

last updated: March 19, 2008 12:43:42 PM

E.&J. Gallo Winery, which pretty much has mastered the wine business, is trying its hand at gin.

The Modesto-based company quietly has launched New Amsterdam Straight Gin, a midpriced product aimed at consumers 25 to 49 years old.

This is not Gallo's first foray into the hard stuff — its E.&J. Brandy, distilled from wine, matches the gin's 40 percent alcohol content.

But the gin is nonetheless unusual for Gallo, since it is made from grain rather than the grapes that have been the source of the winery's worldwide success. New Amsterdam also is flavored with juniper berries — the defining characteristic of all gin — and has a touch of citrus.

The gin has a suggested retail price of $13 to $14 a bottle. That puts it in the "premium" category, costing more than "value" gin but less than "high-end premium" and "superpremium," according to the Distilled Spirits Council of the United States.

"We see a great opportunity to launch a new, contemporary American presentation of gin due to its recent revitalization as a fashionable spirit with a growing consumption," Renato Reyes, senior director of marketing for the brand, said in an e-mail.

Gallo is not disclosing how much of the gin it is making. It's being produced in Modesto, but the number of employees involved was not available. The source of the grain Gallo plans to use also wasn't disclosed.

The New Amsterdam name is a nod to the Dutch style of gin-making. The product was test-marketed last year and in January began a yearlong national rollout.

Gallo, founded 75 years ago this summer by the late Ernest and Julio Gallo, has created or acquired more than 40 wine brands. It is the world's second-largest producer by volume, trailing only Constellation Brands.

Mixing hard liquor into a wine company is nothing new. Constellation, for example, produces gin, vodka and rum under the Fleischmann's label, along with many other spirits. Diageo makes Jose Cuervo tequila, Smirnoff vodka, Seagram's whiskey and others.

Gin makers have seen steady growth in U.S. sales in recent years, from $852 million in 2003 to $908 million in 2006, according to the industry group. The premium and high-end premium categories showed the most growth.

Still, gin was last in U.S. sales among the major spirits in 2006. Vodka led the way at about $4 billion, followed by rum, bourbon, scotch and tequila.

Gallo makes vermouth, a fortified wine that, when mixed with gin and an olive, becomes a martini. But the company says New Amsterdam is so easy on the palate, it can be sipped straight.

Reyes cited its "superior taste profile that appeals to consumers who are looking for a smoother-tasting gin."

Bee staff writer John Holland can be reached at jholland@modbee.com or 578-2385.

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