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BEVERAGES

At 75, wine giant Gallo is refining its palate

With its inexpensive brands pouring around the globe, the family-run enterprise is intent on drinking up premium labels

April 04, 2008|Jerry Hirsch | Times Staff Writer

When Liu Lan entertains clients at her Shanghai cosmetics shop, she pulls out a jug of Gallo's Carlo Rossi red wine.

"The taste is fresh and it's easy to get used to," said Liu, 32, who thinks the big bottle "looks special, different from other wines."

The cosmetics shop in crowded Shanghai represents just how much has changed since Ernest and Julio Gallo founded E.& J. Gallo Winery in an industrial section of rural Modesto after Prohibition ended in 1933.

With annual sales of $3.5 billion -- about 70 million cases of wine -- Gallo is the nation's largest winemaker. One out of every five glasses of wine drunk in America is a Gallo wine.

Gallo brands are sold in 90 countries including much of Europe, and the company brings foreign wine to the U.S.: Malbec from the mountains of Argentina, Chianti from Tuscany, Sauvignon Blanc from New Zealand, Shiraz from South Eastern Australia and Pinotage from Swartland, South Africa.

"We can compete very well with anywhere in the world," said Joseph Gallo in a rare interview. He is the current chief executive and son of Ernest.

And as successive generations of Gallos take over running the business -- 15 family members work for the company -- it's clear they plan to compete anywhere in the world.

As the company turns 75 this year amid public and private festivities, outsiders say that the Gallo family has gained a measure of peace from the tensions and tragedies that have chased it through the generations. Over the years, the Gallos have had to overcome bitter divisions and even a suspected murder-suicide.

The roots of the family's wine tradition trace back to Giuseppe Gallo and Assunta Bianco, Italian immigrants who called themselves Joe and Susie after coming to the United States.

Although their sons Ernest and Julio claimed to have learned how to make wine from library books, their first exposure to the business was probably in the Bianco winery that Susie's father owned in Hanford, Calif.

Joe and Susie had an unhappy marriage. In 1933, Joe Gallo apparently shot and killed Susie and then himself, according to Ellen Hawkes, author of "Blood and Wine: The Unauthorized Story of the Gallo Wine Empire."

That was the same year Ernest and Julio started their winery in Modesto.

Divisions also plagued the brothers.

Joe, the youngest, left the business and became a farmer and cheese maker, only to be sued later by his older brothers over the use of the Gallo name on a line of cheeses. Joe sued back, claiming they cheated him out of a third of what was by now a wine empire. A court determined that the older brothers had the legal right to the Gallo name and all of the company.

As it grew, Gallo became almost as well known for labor disputes as it was for its wines.

"We have had a hot-and-cold relationship with Gallo going back to the 1960s," said Arturo Rodriguez, president of the United Farm Workers of America.

After decades of often-bitter battles, Gallo and the UFW now work together again. Their long-standing fight, which included a labor-led boycott of the company that ended in 1978, "caused Gallo problems that there still is a residue of today," said Modesto native David Runsten, now executive director of the Community Alliance with Family Farmers in Davis, Calif.

Some consumers still avoid Gallo-labeled wines because of a lasting and vague sense that the company is anti-union. It is ironic, Runsten noted, that some of those same people purchase Gallo wines not realizing that Red Bicyclette, MacMurray Ranch, Napa Valley Vineyards and Rancho Zabaco are all Gallo products.

Despite its union battles, Gallo is not a particularly politically conservative business. It has contributed nearly $3 million to various state campaigns since 1998, handing out money to Democrats over Republicans by a 2-to-1 margin, according to data from the National Institute on Money in State Politics, which tracks political contributions on its website at www .followthemoney.org.

For decades the company reflected the personalities of Ernest and Julio, insular and conservative businessmen. Now it is starting to open up.

The second generation of Gallos running the business has become particularly adept at spotting opportunities and taking advantage of them, said Jon Fredrikson, a Woodside, Calif., wine industry analyst.

Gallo grew up on selling cheap, often sweet wines such as Hearty Burgundy, Bartles & Jaymes, Ripple and Thunderbird. Its bestseller is still Carlo Rossi, the red jug wine that Liu likes to drink in Shanghai.

Though Rossi remains a good business, it's not where Gallo is headed. The company is "putting enormous emphasis" on premium wines compared with the jug brands, Joseph Gallo said. "That is where the future is."

Gallo trolls for well-known wine brands, gobbles them up and grows them. Such old-line names as Mirassou, Louis M. Martini and Bridlewood Estate Winery are now among the 60 wine labels Gallo owns.

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