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Banfi Products Corp.

 


Address:
1111 Cedar Swamp Road
Glen Head, New York 11545
U.S.A.

Telephone: (516) 626-9200
Toll Free: 800-645-6511
Fax: (516) 626-9218
http://www.banfivintners.com

Statistics:
Private Company
Founded: 1919
Employees: 150
Sales: $251 million (1998)
NAIC: 31213 Wineries; 42282 Wine & Distilled Alcoholic Beverage Wholesalers


Company Perspectives:


Banfi Vintners, an international wine marketer, has ranked as the U.S.A.'s leading wine importer for more than three decades. It is an arm of the privately held Banfi Products Corp., a family-owned and operated firm founded in New York in 1919 by John Mariani, Sr. He named it for an aunt, Teodolinda Banfi, a woman of eclectic tastes who supervised his early education and greatly influenced his views toward fine wines.


Key Dates:


1919: Company is founded to import Italian foods and medicinal bitters.
1969: Now a wine distributor, Banfi imports 20,000 cases of Riunite.
1975: Riunite becomes top U.S. wine import, with two million cases sold.
1978: Banfi begins buying Italian vineyards and wineries.
1984: Riunite's U.S. sales peak at 11.2 million cases.
1988: Banfi inherits distribution of the Chilean brand Concha y Toro.
1999: The Tuscan operation is voted Italy's best wine estate.


Company History:

Banfi Products Corp. is a family-owned and -operated firm whose Banfi Vintners division is the leading wine importer in the United States. Its top-selling brand--and the leading imported wine label in the nation--is Riunite, a fizzy, sweetish Italian wine which Banfi introduced in the 1970s and marketed by convincing Americans it was all right to ignore wine snobs and drink it on the rocks. Hard on Riunite's heels is Concha y Toro, a Chilean brand distributed by Banfi that ranks second among wine imports to the United States. Banfi is the exclusive importer of both labels.

In another class entirely are the products of the company's Italian vineyards and wineries, especially the fine wines produced at Castello Banfi, a Tuscan estate.

Banfi to 1980: Striking Gold on Italian Red

Giovanni (John) Mariani and a brother founded the House of Banfi in 1919 to import medicinal bitters and Italian food products, naming it for Teodolinda Banfi, an aunt who was head of the household staff of the Milanese archbishop who later became Pope Pius XI. Located in the Little Italy area of Manhattan just below Greenwich Village, the firm began importing classic Italian wines after the end of Prohibition. World War II interrupted this trade, and after the war the firm turned to Bordeaux wines from France. Mariani's sons made annual visits to the vineyards and cellars of the Bordeaux region and also to other renowned wine-growing areas, such as France's Burgundy and Germany's Rhineland.

Over the objections of their father, John Mariani, Jr., and his brother Harry went to Italy in 1967 to search for a low-alcohol, semisweet wine that could be chilled. While in the Emilia Romagna region of north central Italy, they were introduced to a fruity, fizzy Lambrusco grown from the grapes of a growers' cooperative federation named Cantine Cooperative Riunite. Over the next year John Mariani spent much of his time speaking to the cooperative managers and oenologists about making changes for the U.S. market. 'We tried several blends based on different proportions of the grapes they used, and experimented with ways to bring out the fruit and body,' he later told Charles G. Bruck of Fortune. Mariani not only wanted Riunite Lambrusco to be sweeter, he wanted its natural effervescence to be reduced so that the wine would not be subject to a U.S. tax aimed at imported champagne. Riunite's technicians solved the problem by stopping fermentation early, keeping sugar content high, alcohol low, and bubbly carbon dioxide below the tax level.

Banfi, which moved from New York City to Long Island in 1970, began test marketing Riunite in New York, Los Angeles, Chicago, and Miami in 1968, sponsoring tastings for consumer groups and pressing distributors for orders. The initial consignment of 100 cases grew to 20,000 cases in 1969 and 50,000 in 1970. The drink--packaged with a twist-off top rather than corked--caught on with young people and showed great potential as an entry-level wine, but Banfi restricted it to the test areas until 1974. After going into nationwide distribution, Riunite reached second place among imported wine brands in 1975, with 1.2 million cases sold. The following year Banfi invested $4 million in promotion and advertising, and sales reached two million cases, putting Riunite into first place, displacing Portugal's Mateus.

During the 1970s Riunite rode the crest of a wave that saw table-wine imports grow by 500 percent in the United States and Lambrusco-type wines by an eye-popping 40fold. 'Somehow or other, in the 1970s, it became fashionable to drink wine,' a Banfi executive explained to Warren Thayer for a 1984 Marketing & Media Decisions article. At the same time, he added, 'wine became accessible to a broader group of people. The wine business went from being a specialty business to one that is on the cusp of being a mass appeal business.'

Banfi's first advertisements were low-budget radio spots featuring Buffalo Bob Smith of the early TV show Howdy Doody, backed by a chorus, which included Harry Mariani, singing 'It's Ri-u-ni-te time!' to the tune of the show's theme song. In 1974 the company switched its account to a firm that introduced award-winning television commercials typically suggesting a dose of Riunite to settle lovers' quarrels. Banfi switched to more upscale commercials in 1978, although still with a hint of romance. At the same time the Marianis were encouraging the public to quaff Riunite casually, with ads that matched the words 'nice' and 'ice.' By 1981 one ad showed a bottle of wine being tossed from hand to hand at a picnic, like a soft drink. In addition, like beer or soda, Riunite was as light on the pocketbook as on the palette, averaging just $3 a bottle.

Branching Out in the 1980s

By 1980 Banfi alone was importing more wine from Italy--some nine million cases a year--than France and Germany combined were exporting to the United States. Its Riunite imports now included a white (Bianco) and a rosé (Rosato) wine as well as Lambrusco red. The distributor, now known as Villa Banfi, moved its headquarters in 1983 from Farmingdale, Long Island, to an estate, complete with a 60-room mansion, in Old Brookville. Adjacent to the 52-acre grounds, Banfi purchased 75 acres of rolling farmland for eventual planting of grapevines. It also took a half-interest in Villa Armando, a California winery.

Beyond these acquisitions, John Mariani sought to bring to fruition a longstanding dream&mdashø produce internationally acknowledged fine wines. Between 1978 and 1981 his company invested $40 million in Italian vineyards or acreage suitable for planting grapevines. By 1984--when company sales reached an estimated $225 million--Villa Banfi had not only purchased two wineries in the Piedmont region of northern Italy but 7,100 acres of prime wine-producing land just outside the medieval walled town of Montalcino, perched on a hilltop south of Siena. Here workers planted vines of cabernet sauvignon, chardonnay, pinot grigio, and brunello, the ancient grape of Tuscany, very similar to sangiovese. The company restored a 1,000-year-old fortress on the property (renamed Castello Banfi) and established one of the most technologically advanced wineries in western Europe, including computer-monitored pressing and temperature-control systems and vats made of stainless steel rather than concrete.

Aided by $17 million worth of advertising--90 percent on television--Villa Banfi sold about 11 million cases of Riunite in 1983, more than the next six imported brands combined. The following year the company topped even this total with 11.2 million cases, but the boom ended in 1985 when Banfi had to recall 1.4 million cases of Riunite after the federal government found trace amounts in samples of a chemical normally used in antifreeze. This debacle not only cost the company $34 million to recall and destroy the wine but left Riunite with a stigma that could not be erased, even though the Food and Drug Administration later acknowledged that the wine was safe to drink. Ironically, John Mariani had told Jeanne Toomey of Advertising Age four years earlier that, after traces of asbestos had been found in his father during a postmortem examination, 'I then became engrossed in the pure and natural aspect of our products ... I ... made every effort to see that there were no additives.' In 1986, in addition, sales of all Italian wines were rocked by a scandal arising from the addition of toxic wood alcohol to cheap bulk wines.

Villa Banfi had already taken a step to broaden its line by introducing D'Oro, a product of its Strevi winery in Piedmont fermented from the same muscat grape from which sparkling Asti Spumante is produced. To compensate for the drop in sales of its standard Riunite table wines, the company, in 1986, introduced fruit-flavored Riunite Peach and Riunite Raspberry as competitors in the wine-cooler category, adding a third--Sunny Apple--soon after. D'Oro and the standard Riunite red, rosé, and white wines were positioned against popular California table wines, while the company's own fine wines began to appear in the United States at prices ranging from $5 to $28 a bottle.

The switch to fruit-flavored Riunite came just in time for Villa Banfi--now renamed Banfi Vintners&mdash sales of the company's standard table wines continued to drop in 1986 and 1987. Some 8.1 million cases of Riunite were sold in 1987, with the fruit-flavored brands accounting for more than 30 percent of sales. With wine-cooler sales stagnating the following year, however, Banfi introduced its fourth Riunite table wine, Blush Bianco. Also in 1988, the company purchased Excelsior, a small company that was importing Concha y Toro, the leading wine brand in Chile. To exploit foreign markets, Banfi had signed agreements with companies as large and diverse as Mitsubishi in Japan, Hiram Walker in Canada, and Allied Breweries in Great Britain to act as its agents.

Harvesting Its Own Wine in the 1990s

In 1991 the Excelsior operation became Excelsior Wines & Spirits, in order to emphasize that it was distributing a wide variety of alcoholic beverages other than the traditional Banfi products. Excelsior was carrying more than 100 wine lines in the New York metropolitan area and also had signed an agreement to distribute M.S. Walker's liquor brands. Excelsior, a subsidiary, grew in sales from $12 million in 1990 to $26 million in 1996 but sold its wholesale line the following year to Charmer Industries Inc., a larger wine and liquor wholesaler. Harry Mariani explained to Alan J. Wax of Newsday that it would have been 'economically difficult' for Excelsior to compete with major national distributors.

By 1994 Banfi was producing a wide range of wines at its estate in Tuscany, where 2,700 of the 7,100 acres now had been given to plantings. Brunello di Montalcino was selling for $50 a bottle. Another Brunello, Poggio all'Oro, was named best of show that year in a competition of 741 wines from 16 countries. Besides Castello Banfi's Brunellos, the estate was producing blends of sangiovese, cabernet sauvignon, syrah, pinot grigio, and chardonnay, and the Strevi winery operation was continuing to produce a sparkling red wine named Barchetto d'Acqui.

The company also had planted chardonnay grapes on about 47 acres of its Old Brookville property but sold the grapes to other vintners instead of making its own wine. North Shore Old Wealth, a chardonnay made at Chateau Frank from these grapes, was selling for about $12 a bottle in 1998. Banfi also had owned, since the 1980s, Jumby Bay, a 312-acre resort and vacation-home community on a private island north of Antigua in the West Indies. In 1997 the company brought suit against developer Homer G. Williams after reportedly losing in excess of $20 million of its $50 million investment on a failed business venture there.

By 1999 Banfi Vintners had spent $200 million--none of it borrowed--on its Tuscan operation, which was producing 400,000 cases of wine per year, plus olive oil and balsamic vinegar. About one-tenth of the wine yield was Brunello di Montalcino, selling for between $25 and $250 a bottle. A British wine writer was quoted by Phyllis Berman of Forbes in these words, 'The great wine estates of France have nothing to compare with it. In all of Europe, Castello Banfi is unique.' The 16,000-member Association of Italian Sommeliers voted Castello Banfi Italy's 'Best Wine Estate' in 1999, and in 2000 the VinItaly Wine Competition voted Castello Banfi 'International Winery of the Year' for an unprecedented fourth time. Vini Banfi of Strevi was continuing to produce premium sparkling wines, and Principessa Gavia of Gavi, also in Piedmont, was producing Principessa Gavia from the Cortese di Gavi grape. On Long Island, Banfi continued to maintain the only commercial vineyard in Long Island's Nassau County and the closest one to New York City, growing grapes for about 2,000 gallons a year of Old Brookville Chardonnay.

Riunite continued to be the leading imported wine brand in the United States in 1998, with 2.1 million cases sold at $5 a bottle. Some 60 percent of this volume consisted of Lambrusco. In second place was Concha y Toro, with two million cases sold, compared to only 90,000 in 1988, when Banfi purchased Excelsior. Created by Banfi, another Chilean brand, Walnut Crest, was in ninth place. In 1999 Banfi introduced to the United States BRL Hardy's Stonehaven brand, produced from a $13 million new winery on Australia's Limestone Coast. Other wines being carried by Banfi were those from the Borgogno, Cecchi, Florio, Placido, and Sartrori wineries of Italy and the TriVento label from Argentina's Vina Patagonia winery.

Banfi was still being run in 2000 by John Mariani, chairman and chief executive officer, and Harry

Mariani, president and chief operating officer. Both of them had children actively involved in the business, with John's daughter, Cristina, and Harry's son, James, slated to lead the company into the next millennium. In addition to its other holdings, the company had a warehouse in Farmingdale, Long Island, and 22 undeveloped acres in Melville, Long Island.

Principal Divisions: Banfi Vintners.

Principal Competitors: Austin Nichols and Company Inc.; Peerless Importers Inc.; Southern Wine & Spirits Inc.; United Liquors Ltd.





Further Reading:


Berman, Phyllis, 'Up from Buffalo Bob,' Forbes, April 19, 1999, pp. 120, 124.
Boyd, Gerald D., 'Italy's Beloved Brunello,' San Francisco Chronicle, July 22, 1998, Food section, p. 4.
Burck, Charles G., 'The Toyota of the Wine Trade,' Fortune, November 30, 1981, pp. 154--56, 160, 162, 166.
Durie, Elspeth, 'Riunite Lambrusco: A Natural Sparkler Bubbling in Success,' Advertising Age, September 26, 1977, p. 96.
Eskenazi, Gerald, 'Investing in Success,' New York Times Magazine, February 16, 1986, p. 66.
Khermouch, Gerry, 'Banfi's Beer Guy Rethinks Riunite,' Brandweek, July 5, 1999, p. 12.
Miller, Brian K., 'Hoyt Street's Williams Sued Over Failed Venture,' Business Journal-Portland, July 2, 1999, p. 5.
Thayer, Warren, 'Riunite's Bubbly Rise to the Top of the Wine Market,' Marketing & Media Decisions, Spring 1984, pp. 85--87.
Toomey, Jeanne, 'A Citadel of Success,' Advertising Age, July 27, 1981, pp. S42--S43.
'Villa Banfi: Aspiring to World-Class Wines,' Business Week, October 15, 1984, pp. 93--95.
Wax, Alan J., 'Banfi Vintners to Close Wholesale Operation,' Newsday, January 21, 1997, p. A41.
------, 'The House That Riunite Built,' Newsday, June 27, 1994, pp. C1, C6--C7.
------, 'Spirit-Filled Competition,' Newsday, August 28, 1997, p. 47.
------, 'Wine Importer Ends Suit,' Newsday, June 23, 1998, p. A41.
Winters, Patricia, 'Banfi Backs Chilean Wine,' Advertising Age, July 24, 1989, p. 72.
------, 'Banfi Casts Riunite as Award-Winner,' Advertising Age, October 13, 1986, p. 36.
------, 'Riunite Blushes,' Advertising Age, February 15, 1988, p. 4.
------, 'Riunite's New Twist,' Advertising Age, August 3, 1987, p. 12.

Source: International Directory of Company Histories, Vol. 36. St. James Press, 2001.




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