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A New Vintage Gallo

Wine Is a Tough Business, and the World's Largest Winery Is Intent on Staying on Top. The Third Generation Is Playing a Big Part in the Plan -- After All, It's Their Future, Too.

March 02, 1997|BARRY STAVRO | Barry Stavro is a Times business writer

Whatever the reason, Turning Leaf and Gossamer Bay are drawing attention along supermarket aisles. At a Ralphs store in Woodland Hills, Rick Swan pushed a shopping cart holding two bottles of Turning Leaf Chardonnay. "For $7 [a bottle] it's not bad. I don't buy it continuously. I like variety," he says. Who makes Turning Leaf? "I can't remember without looking," he says, spinning the bottle, searching for the answer. But the fine print doesn't reveal any secrets. It reads: Vinted And Bottled By Turning Leaf Vineyards, Modesto, CA.

Wendy Betton, a shopper at a Lucky store in Woodland Hills, had a bottle of the Gossamer Bay Chardonnay in her cart. "It was the price and the TV commercial that sold me on it," she says. When told the wine was a Gallo product, Betton said, "Oh, is it really? If I'd known, I probably wouldn't have bought it. I don't like Gallo. It's cheap."

Rojek committed plenty of space at Thrifty stores for Gallo's new wines, and it's paid off. "Gallo is one of the few beverage companies, that if they introduce a product like Turning Leaf or Gossamer Bay, you as a buyer felt very confident that the customer would know about the product. A lot of other major wineries introduce brands, and the customer never sees it" before coming into the store, he says. John Anderson, a wine consultant in San Francisco, explains, "95% of the wine-drinking public buys with their eyes and ears. Not their nose and mouth."

Jeff Yapp, a former Gallo sales executive, credits Joe Gallo for also making the company the biggest American wine exporter. "It was Joe's idea to make it a worldwide brand," Yapp says. Wine analysts estimate that Gallo sold 6 million cases of wine overseas last year, more than most American wineries could ever dream of selling in the United States. In England, Gallo went from nonexistent to the No. 1 imported wine in three years by marketing Gallo not as a bargain brand, but by emphasizing the care the family took in growing quality grapes.

"One of the great moments of my life was traveling with Ernest through customs in England four or five years ago," Yapp says. "The customs officer looked at his passport and said, 'Are you the Ernest Gallo who makes those great California wines?' "

But Yapp, like many younger Gallo executives, finally left. He now works for 20th Century Fox. "I love the Gallos," Yapp says. But he wanted an equity stake where he worked. "And in their company, short of marriage, that was not going to happen."

For the Gallos, the final territory in which to stake a big claim is at the top end of the wine trade. "The Gallos wanted to be the biggest. Now they want to be the biggest and best in better wines," says Romano. "Face it, that's what Ernest's dream is. Look how much money they're spending in Sonoma."

The Gallo family has been on a shopping spree in Sonoma County--one of the prime wine-growing areas in the United States--in recent years and now owns eight vineyards. Last May they paid $7 million to buy a 1,700-acre cattle ranch owned by the late actor Fred MacMurray, who used the spot as his escape from Hollywood. The Gallos figure only 300 to 500 acres of the ranch can be used for grapes because of a bowl of mountains and forests that encircles the property. But Bob Gallo wanted the place.

The Gallos not only control a lot of land--they sculpt it. Using a fleet of giant earthmovers--equipment bought from the Alaskan pipeline project--they remove four to six feet of topsoil, digging into the hard-pack, then use earthmovers for the actual contouring. Drainage pipes are put in, topsoil is spread back on and the grapes planted. Other growers are awed and envious. Most of them have to make do with the lay of the land: If a spot is hilly, they carve out terraces and plant. Sculpting the land, as the Gallos do, is an expense they can't afford. "I've never seen anything like it," says Ed Everett, president of New World Wines, a San Francisco wine importer and consultant.

All this can cost $25,000 per acre of planted vineyards, $5,000 of that for reshaping the earth, and this excludes the purchase price, says Matt Gallo, 33, Julio Gallo's grandson, who is in charge of the family's big Sonoma County operation. "When is the payback? I don't know," Matt says. "The payback is longer than in most companies. Our investments are generational and very long-term. We're more concerned with successful wines. What we're trying to accomplish in Sonoma in the next 20 years is to become a legendary winemaking family in ultra-premium wines."

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