Practical Winery
58-D Paul Drive, San Rafael, CA 94903-2054
phone:415/479-5819 · fax:415/492-9325

September/October 2000

Callaway Wines Go On "Coastal Standard Time"

Andrew Hidas

Reinvention. Politicians do it every day — sometimes several times a day — but their reinventions rarely come even close to having the living substance that goes into a bottle of wine. So when Callaway Vineyard & Winery, the well-known Temecula, California-based brand owned by Allied Domecq Wines, USA, embarked on an overhaul of its entire line this year, the effort, unlike political makeovers, represented much more than an expensive, superficial polishing of its image.

“We’ve stripped the entire operation right down to the bare bones and are bringing it back to life as something completely new,” says Ruth Souroujon, marketing director of Allied Domecq’s California brands. “The Callaway that everyone knew is gone. This is a radical reinvention of our brand.”

The reinvention is comprehensive — involving geographic, viticultural, stylistic, and image factors. In September, Callaway said good-bye to the “Temecula Valley” appellation on its wines. Callaway has gone “Coastal” by sourcing at least 50% of its grapes from Central Coast growers in Santa Barbara, San Luis Obispo, and Monterey counties. In 2001, the mix will be 70% Central Coast, with Temecula grapes having an even smaller role in succeeding years.

The name will change right along with the grape sourcing — from Callaway Vineyard & Winery to Callaway Coastal Winery.

In addition, the winemaking style itself has changed to a “more contemporary taste profile.” For the first time, Callaway Chardonnay has undergone oak enhancement — part of the blend is barrel-fermented and barrel-aged — while its Merlot and Cabernet Sauvignon are “richer, rounder, and more food-friendly,” says Souroujon.
Marketing the reinvention
And then there’s the marketing.

It starts with the new packaging that aims to be hip and stylish, according to Souroujon. “We’ve taken our label design cues from architectural, fashion, and high-end retail industries to communicate the lifestyle component of wine,” she says.

Callaway’s research has shown that consumers like the warm, natural palate of colors like saffron, sage, teal, and okra. “The wine package looks great on a restaurant table or in the kitchen,” Souroujon notes.
Talking up a “reinvention,” at least in a way that will reach consumers, isn’t cheap. Allied Domecq is spending upwards of $4 million to break its new “Callaway Coastal” wines in a national print, TV, radio, and promotional campaign. The effort aims to reach sophisticated consumers who identify with the more informal, relaxed approach Callaway is promoting for wine enjoyment.

To that end, Allied Domecq, which also counts Clos Du Bois, William Hill Winery, and Atlas Peak Vineyards among its California brands, hired Open Minds/The Ponzi Group (Laguna Beach, CA) to create a national ad campaign. The campaign debuted in October, focused mainly on Chicago, Los Angeles, and northern California markets.

Print and radio ads complement an intensive television blitz on the Arts & Entertainment cable channel, which industry research shows wine drinkers watch. Earley & Earley (Half Moon Bay, CA) has designed promotional materials to accompany the campaign theme.

Open Minds, creators of the wildly successful “Budweiser frogs” television campaign, came up with a trademarked “Coastal Standard Time” tagline for Callaway wines. Print ads feature imagery such as four legs (one pair definitely attached to a female, the other not) dangling barefoot from a hammock, with the ocean as backdrop. The headline: “May we suggest a crisp Chardonnay with your stud-muffin?” The inset reads: “4:24 p.m. COASTAL STANDARD TIME™.”

“Our company is completely committed to taking wine off its pedestal,” says Souroujon. “We’ve done a lot of research preceding this brand reinvention, and what consumers have been telling us is that they’re intimidated by the wine-buying process, not only by which wine to buy, but which wine with which food, and how to order in restaurants. By using relaxed, informal imagery in our ads, and by pinpointing different times of the day (or night) when you might enjoy wine, we’re trying to tell people that wine fits your lifestyle every day.

“To the ongoing dilemma of ‘Which wine, when?’ we have an ultra-simple answer: ‘Drink what you like.’ That’s why we offer a red and a white option with every one of our recipe suggestions. People need advice, but we’re trying to make the process easier, not more difficult.”

Moving to “wedge premium”
With its Callaway Coastal line (a Chardonnay, Sauvignon Blanc, Chenin Blanc, Merlot, and Cabernet Sauvignon), Callaway is looking to become one of the dominant players in the “wedge premium” category of wines that fetch $7 to $10 retail, Souroujon says. The category grew a healthy 12.8% from 1998 to 1999, according to Gomberg/Fredrickson, wine industry economic consultants in San Francisco.

While the “classic premium” category of $10 to $14 wines grew even more robustly at 14.1% in 1999, the market is about one-third smaller than the wedge premium category. Still, Callaway will also fight the classic premium turf wars with its “Coastal Reserve” label affixed to a Chardonnay, Merlot, and Viognier.

“We’re seeing consumers more willing to pay for quality,” says Souroujon. “It’s a natural progression for people to move up from the ‘popular premium’ (formerly ‘fighting varietal’) category of $3 to $7 wines as they become more sophisticated. The bonus for consumers is that the wedge premium category has evolved into better wines over the past few years without going up in price. Having access to plentiful quality grapes is a key to that development.”

Such access shouldn’t be a problem on the explosive Central Coast, where eager growers have been busy expanding across the rolling hills of a huge viticultural region. Such wineries as Kendall-Jackson, Mondavi, Beaulieu, Meridian, and Fetzer are already established as major Central Coast players. Now comes Callaway, seeking grapes to fill 250,000 cases in 2000, 350,000 next year, and a projected one million cases by 2008.

“We’re keeping all options open with respect to purchases on the Central Coast,” says George Rose, Allied Domecq spokesperson. “We’ve been talking to several growers, exploring a possible purchase of a winery or property to build a winery. We’re not sure how it will turn out, but we do know we’ll become a major player there. Understandably, the growers are excited.”

With so much buzz attending the brand’s overhaul, Rose emphasizes that Temecula continues to be a perfectly functional winery that has been damaged but not destroyed by Pierce’s disease and the glassy-winged sharpshooter. (See sidebar.) Callaway has crushed Central Coast grapes at custom facilities there and trucked the juice to Temecula for production and bottling. Whether this will continue depends on future decisions about establishing a Central Coast winery.

“Temecula is a very good facility with a well-established presence,” Rose says. “More than 120,000 visitors go there every year. To many people in Southern California, Temecula is Wine Country.”
Given the brand’s expansion to the Central Coast, Callaway’s winemaker of 19 years, Dwayne Helmuth, won’t be able to monitor the bi-regional operation alone. So in May, assistant winemaker Darren Proscal, himself a 15-year veteran of Callaway, was promoted to winemaker.

“Our entire operation is still in an evolutionary phase, but we don’t anticipate basing one winemaker in Temecula and the other on the Central Coast,” says John Falcone, who joined Callaway in May as general manager. “We have a team approach, with shared responsibilities. Having worked closely together for 15 years, Dwayne and Darren have a pretty good idea of where they want to take the wines.

Quality is the point
“Our timing appears to be really good. There’s a lot of excitement on the Central Coast — the tide seems to be turning there. Quality growers now have another major player hunting for the best grapes. But I think volume-minded growers will be hard-pressed. These days, you have to do more than stick vines in the ground. Grape quality will ultimately determine pricing.”

What Falcone and the rest of the Callaway/Allied Domecq team also know is that wine quality will be the ultimate judge of this reinvention. In the hot competitive environment the brand is entering on the Central Coast, Callaway wines won’t win any kind of sympathy vote as the best little wines Temecula ever produced. But Callaway officials aren’t looking for sympathy. They’re just looking for more, better, and healthier grapes.