Glen Ellen--a Special Taste for Marketing

After a long day of making the rounds of major San Francisco Bay Area retailers who sell his family’s wines, Bruno Benziger stepped into the cool interior of the 120-year-old ranch house that serves as home of Glen Ellen Winery and accepted a glass of Sauvignon blanc.

“I didn’t see any Scotch around,” Benziger confided later, disclosing, a bit sheepishly, his beverage of preference.

Loyalty may be a factor in Benziger’s lingering liking for imported whiskey in the heart of Northern California’s wine country. After all, Scotch fueled the first Benziger fortune, made while a partner in Park-Benziger, a New York importer of wines and spirits established around the turn of the century. “Bruno, you know, was the first to import bulk Scotch for bottling in this country, reducing the excise tax on it,” explained Jon Fredrikson, president of the San Francisco wine consulting firm of Gomberg, Fredrikson & Associates. That saved consumers about $1 a bottle.

Today, however, it is wine--not Scotch--that is creating a new Benziger fortune.

But the success in both cases stems from an alertness to consumer demand that has been as rare in the wine business as was bargain-priced Chardonnay until the numerous members of the Benziger family pulled up their White Plains, N.Y., roots and sunk them in this Sonoma County hamlet barely seven years ago.

“Glen Ellen Winery is run by some very astute people who know the market very keenly,” Fredrikson said.

The Benziger family--five children are in the business and two remain in school--may have been new to wine production , but it has a long tradition in marketing wine and spirits. And they had the good fortune to enter the field at a time when California was brimming with more varietal wines than the existing market could consume.

“There was an ocean of wine out there,” recalled eldest son, Michael, 36, who persuaded his father in late 1980 to buy the overgrown Glen Ellen property at the end of Jack London Ranch Road and who now serves as the partnership’s general manager. Nobody wanted the bulk wine, he recalled, but Bruno Benziger--the veteran marketer--quickly saw an overlooked sales opportunity. “Give me something to sell!” Michael recalled him saying.

Wines Won Prizes

Consumers respond to “price points,” said Joe Benziger, Michael’s 33-year-old brother and Glen Ellen’s cellar master. It was a lesson that Joe and his brother, Bob, 35, had learned in developing a retail wine business in White Plains before coming to Glen Ellen.

“You’ve got to watch the price points in the market,” Joe explained. “After all, people don’t need to buy wine, and there’s always a price point where you’ll turn to something else.”

And the reverse, the Benzigers were to find, is also true.

In 1981, using an improvised winery and the best grapes available on their property’s vines, the Benzigers produced their first wines. These were estate-bottled 1981 vintages of Sauvignon blanc and Chardonnay that astounded the wine world (not to mention the Benzigers) by winning the top two prizes at the 1982 Sonoma County Harvest Fair. Then, while completing a permanent winery, the family bought up thousands of gallons of unwanted bulk varietal wine, which was blended, bottled and retailed at nearly jug wine prices under the Glen Ellen Proprietor’s Reserve label.

“The estate wines initially put us on the map,” Michael Benziger recalled as he walked the steep vineyards recently with a visitor. “Then, almost simultaneously, we came out with the Proprietor’s Reserve red and white--the red then was 80% Cabernet and the white mostly French Colombard, but in a very dry style.” By 1984, bulk Cabernet Sauvignon and Chardonnay were added to the Proprietor’s Reserve program, and Bruno Benziger brought them to market at the unheard of price of $3.50 a bottle--about half the price of the cheapest Chardonnay then available.

Large Share of Market

“That’s when it really took off!” Michael said.

Other wineries--including Fetzers, Sutter Home, Sebastiani and E & J Gallo--have since entered the market for low-priced premium wines, a segment Fredrikson calls “the fighting varietals.” But Glen Ellen remains the “clear leader,” he said. “They were the pioneer in that category.”

From nothing when Glen Ellen introduced the low-priced varietals, the category (defined as retailing for between $3 and $7 per 750-milliliter bottle) last year accounted for 15% of all California wine sold and 25% of the revenue, Fredrikson reported. In contrast, jug wine (retailing for less than $3, often a good deal less) accounted for 80% of the volume sold but only 55% of the revenue.

The payoff for Glen Ellen Winery was almost instantaneous: While the family’s business plan called for production of 30,000 nine-liter cases by 1990, by capitalizing on the ready supply of bulk varietals that goal was surpassed within 18 months. From 6,450 cases sold in 1982, sales topped 1.5 million cases last year, according to Bruno Benziger. And the company is running ahead of its 1988 projection of 2.2 million cases sold.

Thus, propelled by mass marketing of the Proprietor’s Reserve line and the critical success of its estate-bottled varietals, Glen Ellen Winery achieved in barely half a decade a strong brand and a solidly financed operation.

“We were lucky,” the brothers acknowledge. But more than luck was involved since the presence of that “ocean of wine” was no secret, and Glen Ellen’s sales continued to grow after the surplus evaporated, demonstrating the winery’s ability to adapt.

“We couldn’t be at the mercy of the bulk wine market,” Michael Benziger explained.

Not Buying More Vineyards

So the family in 1984 began lining up growers to supply Glen Ellen’s grapes, and last year the company bought from 270 different producers and used no bulk wine at all. The wisdom of long-term leasing has now become evident in the face of drought-induced shortages of premium grapes that shot prices up 37% in 1985 and another 18% in 1986, the California Department of Food and Agriculture reported last month.

The Benzigers have no intention, however, of imitating some of their neighbors in the Napa Valley who have been buying additional vineyard acreage to assure adequate future supplies of grapes. “What we do best is blend, bottle and market wine,” Michael Benziger said. “We want to stay flexible by not owning properties with big stone wineries on them.”

Glen Ellen has also moved to sort out its production of super-premium priced estate-produced wines from the high-volume Proprietor’s Reserve program. The latter will move in July to a new winery being built on Highway 121 near Sonoma. Not only will the move head off growing annoyance by suburban residents over the to-and-fro of heavy trucks through their town, but it will save the winery “a dime a case” in shipping costs, Bruno Benziger estimates.

“That’s a quarter of a million dollars on 2.5 million cases,” he pointed out.

It will also free the overtaxed, 7,500-square-foot winery here to concentrate on the newly relabeled Benziger of Glen Ellen “super-premium” wines, which retail at double-digit prices.

Meanwhile, another fast-growing market segment has caught the Benzigers’ interest: sparkling wine made in the traditional French method. The Glen Ellen version, due in 1989, will be produced at Gloria Ferrer Champagne Caves, a 2-year-old Sonoma County sparkling-wine facility built by the Spanish family that owns Freixenet, the world’s largest producer of methode champenoise sparklers.

But Glen Ellen, Benziger said, will provide the blend. The problem now is to decide--all in the family--what that blend, or cuvee , should be. There’s no lack of opinions, he said.