E&J Gallo Swot Analysis
E&J Gallo's strengths include producing differently flavored spiked seltzers and use of real ingredients. A description of these strengths, weaknesses, opportunities, and threats is provided below.
- E&J Gallo's spiked seltzer brands also known as hard seltzers come in different flavors, including the delectable watermelon flavor. The different flavors cater for the different customers’ tastes and preferences. It also enables the company to attract more customers who will be enticed by any of the different flavors. Specifically, the watermelon flavor has proved to be the company’s most popular spiked seltzer.
- E&J Gallo's spirit-based spiked seltzers are made from real vodka and real juice. Considering that most players in the spiked seltzer sector make their products with synthetics flavors, E&J Gallo differentiates itself by providing the authentic flavors of real ingredients. Besides creating a competitive advantage, using real vodka and fruit juices positions the brands as healthy and pure.
- A major weakness in the E&J Gallo's spiked seltzer category is lack of variety. Besides the High Noon brand that comes in different flavors, the company has no other flagship brands in the spiked seltzer category. Although it has planned to launch another brand, Barefoot, in February 2020, a wide variety is needed to enable the company cut a market niche in the rapidly growing market. Lack of variety also exposes it to competition as more companies enter into the lucrative category.
- Compared to its competitors brands such as Constellation’s White Claw, E&J Gallo’s brands in the spiked seltzer category are little known. Competing brands like White Claw and Truly are household names among spiked seltzers' drinkers. Thus, the company will find it hard to widen its market share without investing substantial amount of resources in marketing and promotion. Brand unfamiliarity will also make penetration of certain geographical markets difficult.
- The growing popularity of spike seltzers is a perfect opportunity for E&J Gallo to grow the category. The bubbly booze’s sales have soared with over 200% in 2019 compared to 2018. Spiked Seltzers are particularly popular among the millennials who are conscious about their health. The company should position itself to leverage the sector’s growth potential by introducing more brands and embarking on aggressive promotion.
- Having entered the market in 2019, E&J Gallo is among the pioneers in the rising spiked seltzers' market, which gives it an opportunity to cut a market niche before the market is saturated. For example, its High Moon brand is the only hard seltzer in the market made of real vodka. Thus, it should capitalize on the early mover’s advantage before other big players in the beer industry move in. Considering that it already has an established brand in the category, the company has an opportunity to be a leading pioneer through aggressive marketing.
- E&J Gallo's spiked seltzer sector faces stiff competition from other popular brands by rival companies such as White Claw. White Claw is the leading brand in the US holding a 61% market share. As the company launches Barefoot, it should come up with effective competing tactics that will help it withstand the current and imminent competition.
- The popularity of spiked seltzers and the growing market potential is likely to attract many players likely to use unorthodox methods to penetrate the market. One such method would be imitating E&J Gallo’s brands and flavors. While the company enjoys the protection of the law in this area, it is easy to replicate a spiked seltzer at home. Imitators may also develop substandard spiked seltzers with the company's brand name, thus ruining its brand image.