Argentine Jorge A. Grosse is CEO of Spanish company González Byass, one of Spain’s most renowned wine companies. Founded in Jerez in 1835, the company has always been a leader in Sherry production, producing the popular fino sherry Tio Pepe, among other wines. The González family, who took full control of the company in 1988, have made a significant contribution to Spain, including a series of industrial and cultural innovations. Today, the company is run by the fourth and fifth generations, and includes the wineries Vilarnau (Cava), Finca Constancia (Castile-La Mancha), Finca Moncloa (Cádiz), Beronia (Rioja) and Viñas del Vero (Somontano) in its portfolio of properties, along with a distribution company.
Before taking the position of CEO, Mr Grosse gained an MBA at the University of Chicago and worked with Torres for 16 years.
MEININGER’S: How much of the business is still devoted to Sherry?
GROSSE: In our branded business, 25% of sales are coming from Sherry, 25% is coming from spirits, 45% from wines and 5% from our agencies. In terms of profitability I would say that Sherry is in the middle between spirits and wine. We’re in the branded part of the Sherry business, so it’s more profitable than wine. We are a big player in the still wine business, and have a portfolio of powerful brands. We are also quite successful with our spirits – we have Lepanto brandy, and are doing very well with London Nº 1 gin. It’s the number two gin here in Spain. The high-end gins have been mainly developed in Spain, but they’re going round the world. We also have things that no one suspects; we are a big provider of barrels to the whisky industry – barrels that have been aged with Sherry wine. Some of the big brands have our big barrels.
MEININGER’S: How do you keep a flagship brand like Tio Pepe fresh and exciting?
GROSSE: Tio Pepe is one of the oldest brands in Spain. There is an old letter that the founder sent to his partner in England in the 19th century, saying: “I am going to sell you a very pale wine that you have tasted here.” In some ways, Tio Pepe is more than a Sherry – it’s an icon of Spain. But the brand is constrained by the Sherry category, because everybody knows it everywhere.
We decided to work with En Rama, a fino that has not been filtered, which is taken out of the barrel and bottled. It has a life span less than six months. We began with less than 500 cases in 2011, selling to the Wine Society members in the UK – and the first vintage was sold out in two days. People were asking for it and we were saying ‘no’, and the second year we produced a little more. The first year was less than 500 cases and we extended to Spain because, in Spain, in the beginning we were thinking that people were not going to be interested. In England people are more interested in these special things, but we had a lot of interest in Spain and are doing now it in different countries, Holland, Germany.
MEININGER’S: Does it help reinvigorate the category?
GROSSE: Yes, we found a correlation between the sales of Tio Pepe En Rama with this interest in Sherry bars in places like England and New York. This new wave gave a push to Tio Pepe too, plus we found people in the press talking about Sherry in a very positive way, so we are seeing a trend now. At one time Sherry was boring and linked with old people, but now it’s like we’ve jumped a generation. The En Rama has got sommeliers talking about Sherry.
MEININGER’S: There is a broader interest in Sherry emerging as well, isn’t there?
GROSSE: Sherry is extremely complex and that’s something that went against it. But now there’s a big interest worldwide in wine. People are interested in wine courses. If you want to presume that you know about wines, you have to have knowledge about Sherries. You appreciate that you have very dry Sherries, sweet, old – there is a big combination of products. We have done dinners that are nothing but Sherries. These are signs we have seen only in the past three or four years, and it’s encouraging.
MEININGER’S: There’s no getting round the fact that Sherry is complex, though. How do you communicate that much information?
GROSSE: Education, education, education. For example, late last year we had our first Sherry master class. We brought several journalists and sommeliers and did two and a half days of very intensive teaching about Sherries, from the vineyard to the barrels. That gave a lot of information to people that allows them to better explain Sherry to their customers.
MEININGER’S: How do you use new technology to communicate your message?
GROSSE: We have done some Internet tastings using [winemaker] Antonio Flores and bloggers and we are doing more of these streaming tastings. We ask people to buy a few bottles and then they can share the tasting with the winemakers. They can share their ideas and be online together, so these new technologies are helping us. We have done some with bloggers and some that are open to ordinary people. Antonio is very active, especially on Twitter. It has made him famous. So we have put him into the communications part of the business, because we have so many things to communicate and it’s given the business a big jump.
Every year we have the Jerez festival, a big event where the whole town is a party. It’s very special, with the horses, and it’s something we use to bring a lot of customers here. To make the most for people who have come from far away, we do tastings. We cannot do all the tastings with Antonio, so he shares with other winemakers from the company. But Antonio is now so famous that people are disappointed if he’s not there, so we have to think about how we handle this. This is very new in the Sherry business. Antonio has to work more now.
MEININGER’S: Which brings up the question of tourism. How important is it to building your image?
GROSSE: It’s so important that it’s a small profit centre in the company. It’s a way also to communicate Sherry. You know these facilities [in Jerez] are unique because we are part of the history here. When you work inside these facilities, you are in places that were formerly streets of Jerez. We receive almost a quarter of a million visitors.
Not only do visitors bring business, but they take away the image and knowledge of our products. It gives us the push to maintain these facilities at a high level. There is an old workhouse that we are now putting in good form because we are going to use that. It has many advantages for us.
MEININGER’S: How do you get interest in markets like the US, which have historically shown no interest in Sherry?
GROSSE: Antonio was in the US doing complete tastings and introducing the Sherries. Cocktails is another avenue. We have mixologists working for us to develop our high-end spirits, but he will explain to his fellow mixologists how to make cocktails with Sherry. It’s not a surprise, because here in Jerez we drink a mix of Tio Pepe and Sprite – in some ways that’s a cocktail. In Japan they were working with cocktails for a long time. But now Sherry is mixing with other spirits and it’s developing in so many places. We’re paying more attention.
MEININGER’S: Where does the on-trade fit into your strategy?
GROSSE: We believe that a brand is developed in the on-trade. This was true 50 years ago, it was true 20 years ago and it’s true today. It’s important to be in the on-trade. Of course in different markets we have a different share; here in Spain it’s close to 75%. In the UK, the off-trade is a huge portion of the market, but the on-trade is still important and we have increased the number of people we have devoted to it. Same thing in Mexico.
GROSSE: Our company has a long relationship in Mexico. We have most of our brands represented there. Wine is growing. It’s growing and it’s a very important market in value for Spain also, and growing in the high end.
MEININGER’S: Speaking of other markets, what work are you doing in Asia?
GROSSE: We are doing very well, coming from a low base. We have our own representative office in China with three people, and we work with several distributors in China. Mercian in Japan are company shareholders, though they have less than 5% of the company. Mercian is one of the biggest wine distribution companies in Japan.
MEININGER’S: Many of the extended family members of González Byass own shares in the company. Running a family business has its own difficulties at the best of times.
GROSSE: There are 150 shareholders, all family. They feel that Tio Pepe is a member of their family and they have a very strong attachment to the company. From an economic point of view, we try to have a constant dividend without big ups and downs, so if times are good they receive the same as when times are bad so they have a stable flow of funds. The idea is that they have an understanding of what’s going on in the business and they can feel the business as part of them.
MEININGER’S: With such an extended family, how do you satisfy everyone’s need to be involved with running a major international company?
GROSSE: They made a decision about 50 years ago that the CEO shouldn’t be a member of the family, so there is a clear division between management of the business and the family ownership. There are mechanisms in place that give the family the information and the way to participate in the strategy of the company that they can feel what they are, owners. It’s an art.
MEININGER’S: You bought Viñas del Vero in Somontano in 2008, just before the global financial crisis. How has the acute situation in Spain affected your business?
GROSSE: Fortunately before the crisis we were shifting more and more to exports, so we didn’t have to adjust our strategy when it began. We already knew that we had to grow in the export markets. We have companies in the UK, Mexico and now the US, where we have bought a small company so we have distribution there. We have doubled the resources we dedicate to international markets.
MEININGER’S: In 1982 the company bought Bodegas Beronia in Rioja, a noted winery making wines in classic Rioja style. Under your management the winery has innovated and is producing more consumer-friendly varietal wines. Can one brand manage two approaches?
GROSSE: Rioja has achieved brand awareness as both a category and a region. So of course you always have a spread of prices, and a cluster of small- and medium-sized companies as well as big ones. Rioja itself is diverse. With Beronia, we work in the middle-upper side of the business – £10.00 ($16.70) and above. We offer the three standard categories they have in Rioja – normal Rioja wines, the Crianza and the Reserves – but we innovate as well. There are a large number of people looking for Rioja who are looking for a wine that is easy drinking and good with food. These are wines that a lot of people like. Then we have the special things. These are wines with a lot of tannins that are not for everybody.
MEININGER’S: Marketing for spirits is a lot more sophisticated than wine. Have you brought any of your experience in spirits to your approach to wine?
GROSSE: In spirits, everything is marketing. They work more with the value of the brands and the emotional attachment of the brand to people, and they develop a way to communicate and make people ask for the products. Wine is different. They are brands also, but you need a lot of personal involvement of the people who have produced the wine. You have to communicate in a different way. You need the winemaker to communicate. You need journalists to understand the product. It’s a different game. Also, we don’t have the resources of the spirits by definition.
From an organizational point of view, marketing one winery is not a problem. The problem you have is with different wineries and how you balance the economies of scale of working with the marketing departments of different wineries. Our solution is that the heads of the different wineries do not report to a technical director, but directly to me, and we give them a say in the strategy of the company. It’s not easy. It’s difficult. You need a good team to make it happen.
MEININGER’S: You also have a distribution company. Does distributing other brands cause conflicts of interest?
GROSSE: I see more advantages than disadvantages. The brands complement our portfolio, so we can give our customers a better assortment of wines. The key is to treat the brands as if they were our own. This is why the managers of the distribution company are rewarded for the development of the company, not just of González Byass brands. We look for a good fit within our portfolio. For example, we have Jackson Estate from New Zealand, Wirra Wirra from Australia and Deutz Champagne, and there are parts of the business that we are not in.
MEININGER’S: Do you have any expansion or acquisition plans?
GROSSE: This is something that we are considering. There are a couple of regions in Spain we are lacking. We always have offers that come that we consider. We mainly look to see if they fit with our sales team.
MEININGER’S: Where do you want the company to be in ten years?
GROSSE: I would like to see the company with a few more wineries in Spain. Continued development of the value part of the business, meaning brands at the high end. More distribution outside Spain. I think the company will continue to share the values it has more deeply inside the company. We have found our road and we want the company to continue this.