"They have really changed their stripes and become much more aggressive," said Frank Walters, an analyst at Impact, a beverage-industry trade journal.
So far it is a strategy that has worked.
"Gallo is still the biggest wine company in the U.S. and by far the most profitable," Fredrikson said. "There is almost no waste in that company. They have a product for every grape."
It helps that Gallo is a family company that doesn't have to answer to the quarterly profit dictates of Wall Street, said James Lapsley, a UC Davis wine economist and historian.
That's paid dividends for Gallo and California's wine industry.
"Gallo was often the first California-labeled wine people ever tasted," Lapsley said.
The company is all about being big, efficient and maintaining a cost structure that can compete with winemakers anywhere in the world, Joseph Gallo said as he walked through the massive glass plant on the company's 350-acre campus in this San Joaquin Valley farming and food processing town.
Gallo is planning an expansion of the facility -- already the largest glass factory in the western United States -- that will boost its capacity to 1 billion bottles a year.
Gallo controls virtually the entire process from the fermenting of the grape juice to the manufacture of the cork that closes the bottle.
Nearby, dozens of towering white tanks store 93 million gallons of wine. And that's just a fraction of Gallo's storage. Its giant winery 30 miles south in Livingston holds 157 million gallons.
The company also has a large winery in Sonoma County and several other smaller facilities in other important wine regions, including Napa Valley and the Santa Ynez Valley.
Despite the family's checkered history, the current three generations of family members at the winery appear "to work together pretty well. There's not a feeling in the industry that there are problems," said Joseph Ciatti, a longtime California wine broker who now heads Vintage Wine Trust, a real estate investment trust that focuses on wine properties.
As with all large, family-owned businesses, the Gallos risk that members of a younger generation might push for a sale or financial restructuring so they can cash out. There are 20 cousins in the third generation, and just nine work for the company.
Forbes magazine estimates that the Gallo family is worth about $1.3 billion. The family also is one of the state's largest vineyard holders, owning more than 14,000 acres.
"We need to keep the family involved and connected to the business as we get generations away from the founders," said Chris Gallo, a grandson of Ernest who is a manager in the winery's import business. "We need to be able to pass down to future generations that this is our land and this is how we make wine."
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Times staff writer Don Lee in Shanghai contributed to this report.
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Key dates in the history of Gallo
1933: With Prohibition ending, brothers Ernest and Julio Gallo found E. & J. Gallo Winery in Modesto.
1942: The company expands by buying 2,000 acres of land in Livingston, Calif.
1960s: Rapid growth helps Gallo become the largest winery in the U.S.
1972: Carlo Rossi, Gallo's first nationally distributed brand, is first produced.
1973: After losing representation of laborers at the winery, the United Farm Workers launches a five-year boycott of Gallo wines.
1984: The company introduces Bartles & Jaymes wine coolers.
1986: Ernest and Julio Gallo sue younger brother Joseph Gallo over his use of the family name in marketing cheese.
1989: The older brothers win the exclusive right to use the Gallo name.
1993: Julio Gallo, 82, is killed in a Jeep accident on the family ranch.
2007: Ernest Gallo dies at age 97, two weeks after brother Joseph dies at 87.
2008: The company reaches its 75th year as a family-owned winery.
Sources: E.& J. Gallo Winery
, Times research
