Thursday, June 28, 2007
Monday, June 18, 2007
PBS Frontline on Ernest Gallo
http://www.pbs.org/wgbh/pages/frontline/president/players/gallo.html
Ernest Gallo is the hard-charging patriarch of the family-owned E&J Gallo Winery in Modesto, California. The company is the largest winemaker in the world, and the producer of several popular brands including Carlo Rossi wines and Bartles & Jaymes wine coolers. It is also a political powerhouse which over the years has given millions of dollars to candidates of both parties. For all its success, the business has in some ways kept a low profile. Eighty-six year-old Ernest Gallo gives few interviews and the winery offers none of the tours and tastings found at other California vineyards.
Ernest Gallo was born in 1909 in the Sierra Nevada foothills of California, the first son of Italian immigrants. He grew up learning his father Joe's grape-growing business along with his two younger brothers, Julio and Joe. In 1933 the family was scarred by a tragedy when the boys' parents were found dead, an apparent murder/suicide in which the elder Joe shot his wife and then himself. Following his parents' deaths, Ernest became head of the family and the business. Ernest oversaw the winery's sales operations, Julio handled production, and youngest brother Joe was an employee. Ernest pushed to build the company, aiming at a broad national market and driving himself and his employees hard. He sometimes worked sixteen-hour days and took long sales trips around the country by car. In 1936, he reportedly was hospitalized six months for exhaustion.
With the end of Prohibition, the Gallo brothers set out to dominate what was then a relatively small and down-market American wine industry. Ernest wanted the company to be the "Campbell Soup company of the wine industry" and effectively marketed cheap, fortified (20% alcohol content) wines like White Port and Thunderbird in inner city markets. A radio jingle for perhaps the Gallos' most notorious product went like this: "What's the word? /Thunderbird/ How's it sold?/ Good and cold/What's the jive?/ Bird's alive/ What's the price?/ Thirty twice." According to author Ellen Hawkes, who wrote an unauthorized history of the Gallo family called Blood and Wine, Ernest later delighted in telling the story of driving through a tough, inner city neighborhood. Seeing a man on the sidewalk, Gallo rolled down his window and called out, "What's the word?" The immediate answer was, "Thunderbird."
As the company grew, eventually becoming the largest winemaker in the country and then the world, it struggled to shed its low-rent image. A New Yorker cartoon about winedrinkers captured the dilemma. The caption reads, "Surprisingly good, isn't it? It's Gallo. Mort and I simply got tired of being snobs." The drawing warmed the heart of Ernest Gallo and now hangs in his Modesto, California office. Ernest Gallo's approach to the political system is guided by the same lack of snobbishness. He goes wherever the market is and gives substantial campaign donations to both Republicans and Democrats. He and his late brother Julio -- who died in a 1993 auto accident -- used to divide the political chores in the same way they divided their winery responsibilities. Julio gave more to Republicans and Ernest largely to Democrats.
The Gallos learned the value of political connections as they built their wine empire and dealt with liquor regulators at the national, state, and sometimes county levels. They contributed to the campaigns of then-Congressman Leon Panetta, US Senator Alan Cranston, and California Governor Pete Wilson. In 1978, Cranston pushed an amendment custom-tailored to allow the family to spread inheritance tax payments out over several years through the Senate. The move saved the Gallos millions of dollars. As the family has grown, so has its fortune, and Ernest has long been anxious to protect the business he plans to leave to his heirs. He wrote recently, "I look forward to [my grandchildren] coming into their winery.
The 1978 measure was dubbed "the Gallo wine amendment" by Kansas Senator Bob Dole. In 1986, however, when Congress was changing the tax code, Dole took a different tack. When Dole supported a second tax amendment lobbied for by the Gallos, his PAC received $20,000 from Ernest, Julio and their wives in one day. The amendment passed and Bob Dole was on his way to cementing his relationship with the Gallos, who according to federal campaign records, have since become his top career benefactors. The Gallos have contributed $381,000 to Dole over the years and about $900,000 to foundations with which the Senator has been connected.
Ernest Gallo has also been helpful to President Clinton who made him a co-chair of a fundraising lunch in San Francisco last September. Ernest raised $100,000 in a matter of days for that event. This was only weeks after Ernest had had a private meeting with the President, according to The Los Angeles Times, to discuss Chilean wine imports. The Gallo support for President Clinton and Majority Leader Dole paid off. Not only did Congress delay any action to increase Chilean wine imports this fall, but it passed increased funding for a wine promotion program that gives Gallo millions of dollars to promote its wines overseas. A bipartisan group of Senators derided the program this past October as one of a "dirty dozen" examples of corporate welfare, but the program has survived and its funding has been increased.
Meanwhile, Ernest has taken the same hardball approach to family as he has to politics. In 1989 Ernest won a bitter court battle with his brother Joe who claimed that his elder brothers had denied him the share in the family business left to him by his parents. Joe was also barred from marketing a brand of cheese using the family name Gallo. As a result, the elderly brothers, to whom family had once meant so much, are now estranged.
Ernest Gallo is the hard-charging patriarch of the family-owned E&J Gallo Winery in Modesto, California. The company is the largest winemaker in the world, and the producer of several popular brands including Carlo Rossi wines and Bartles & Jaymes wine coolers. It is also a political powerhouse which over the years has given millions of dollars to candidates of both parties. For all its success, the business has in some ways kept a low profile. Eighty-six year-old Ernest Gallo gives few interviews and the winery offers none of the tours and tastings found at other California vineyards.
Ernest Gallo was born in 1909 in the Sierra Nevada foothills of California, the first son of Italian immigrants. He grew up learning his father Joe's grape-growing business along with his two younger brothers, Julio and Joe. In 1933 the family was scarred by a tragedy when the boys' parents were found dead, an apparent murder/suicide in which the elder Joe shot his wife and then himself. Following his parents' deaths, Ernest became head of the family and the business. Ernest oversaw the winery's sales operations, Julio handled production, and youngest brother Joe was an employee. Ernest pushed to build the company, aiming at a broad national market and driving himself and his employees hard. He sometimes worked sixteen-hour days and took long sales trips around the country by car. In 1936, he reportedly was hospitalized six months for exhaustion.
With the end of Prohibition, the Gallo brothers set out to dominate what was then a relatively small and down-market American wine industry. Ernest wanted the company to be the "Campbell Soup company of the wine industry" and effectively marketed cheap, fortified (20% alcohol content) wines like White Port and Thunderbird in inner city markets. A radio jingle for perhaps the Gallos' most notorious product went like this: "What's the word? /Thunderbird/ How's it sold?/ Good and cold/What's the jive?/ Bird's alive/ What's the price?/ Thirty twice." According to author Ellen Hawkes, who wrote an unauthorized history of the Gallo family called Blood and Wine, Ernest later delighted in telling the story of driving through a tough, inner city neighborhood. Seeing a man on the sidewalk, Gallo rolled down his window and called out, "What's the word?" The immediate answer was, "Thunderbird."
As the company grew, eventually becoming the largest winemaker in the country and then the world, it struggled to shed its low-rent image. A New Yorker cartoon about winedrinkers captured the dilemma. The caption reads, "Surprisingly good, isn't it? It's Gallo. Mort and I simply got tired of being snobs." The drawing warmed the heart of Ernest Gallo and now hangs in his Modesto, California office. Ernest Gallo's approach to the political system is guided by the same lack of snobbishness. He goes wherever the market is and gives substantial campaign donations to both Republicans and Democrats. He and his late brother Julio -- who died in a 1993 auto accident -- used to divide the political chores in the same way they divided their winery responsibilities. Julio gave more to Republicans and Ernest largely to Democrats.
The Gallos learned the value of political connections as they built their wine empire and dealt with liquor regulators at the national, state, and sometimes county levels. They contributed to the campaigns of then-Congressman Leon Panetta, US Senator Alan Cranston, and California Governor Pete Wilson. In 1978, Cranston pushed an amendment custom-tailored to allow the family to spread inheritance tax payments out over several years through the Senate. The move saved the Gallos millions of dollars. As the family has grown, so has its fortune, and Ernest has long been anxious to protect the business he plans to leave to his heirs. He wrote recently, "I look forward to [my grandchildren] coming into their winery.
The 1978 measure was dubbed "the Gallo wine amendment" by Kansas Senator Bob Dole. In 1986, however, when Congress was changing the tax code, Dole took a different tack. When Dole supported a second tax amendment lobbied for by the Gallos, his PAC received $20,000 from Ernest, Julio and their wives in one day. The amendment passed and Bob Dole was on his way to cementing his relationship with the Gallos, who according to federal campaign records, have since become his top career benefactors. The Gallos have contributed $381,000 to Dole over the years and about $900,000 to foundations with which the Senator has been connected.
Ernest Gallo has also been helpful to President Clinton who made him a co-chair of a fundraising lunch in San Francisco last September. Ernest raised $100,000 in a matter of days for that event. This was only weeks after Ernest had had a private meeting with the President, according to The Los Angeles Times, to discuss Chilean wine imports. The Gallo support for President Clinton and Majority Leader Dole paid off. Not only did Congress delay any action to increase Chilean wine imports this fall, but it passed increased funding for a wine promotion program that gives Gallo millions of dollars to promote its wines overseas. A bipartisan group of Senators derided the program this past October as one of a "dirty dozen" examples of corporate welfare, but the program has survived and its funding has been increased.
Meanwhile, Ernest has taken the same hardball approach to family as he has to politics. In 1989 Ernest won a bitter court battle with his brother Joe who claimed that his elder brothers had denied him the share in the family business left to him by his parents. Joe was also barred from marketing a brand of cheese using the family name Gallo. As a result, the elderly brothers, to whom family had once meant so much, are now estranged.
Saturday, June 16, 2007
Donna Gabaccia on "Business, Nation, and Alcohol Niche"
Donna Gabaccia, "As American as Budweiser and Pickles: Nation-Building in American Food Industries ," in Warren Belasco and Philip Scranton (eds.), Food Nations : Selling Taste in Consumer Societies, New York, Routledge, 2002
Biographies in the 24-volume, 17,000-entry American National Biography show that foreigners were more likely to become leaders in food industry than in American business generally.
Nativity shaped businessmen's lives in the late nineteenth and early twentieth century in significant ways. Many commestibles produced on a large scale never become icons of American eating: wine, but not condesed milk, white flour, or canned peaches became the focus of intense consumer scrutiny, distrust, and regulation.
Xenophobia and cultural conflicts associated with nation-building characterized the early years of American consumer society, preventing the free expression and celebration of the mutliculturalism that has now become such a familiar part of American consumer marketplace and sense of national identity.
Under many respects, the activity of foreign-born food businessmen did not differ from that of natives:
The food industry were routinized industries, specializing in bulk and mass production;
Many of the technical innovations that made mass production possible in American food industries came from Europe;
[Entrepreneurs recognized and pursued political connections that would be beneficial to their companies' success; ]
Entrepreneurs sought national markets for their products;
Foreigners in American food industries showed the same creativity in packaging, branding, and marketing exhibited by the natives who made cold cereals a popular new American breakfast worldwide;
The most striking difference between the foreign born and the native born was the concentration of the foreign-born in a distinctive alcohol niche in the American economy. This alcohol niche alone explains foreigners' relatively high representation in Ameican food industries.
WHY THE PIEDMONTESE???
Something other than cultural capital or ethnic self-segregation produced the alcohol niche (e.g., Italian immigrants had a rich tradition in baking, but failed to achieve dominance in that industry).
Foreign entrepreneurs moved into alcohol production because natives and immigrants of British and even Irish origin were abandoned it: a cultural revulsion against alcohol developed among many middle-class and working-class Anglo-Americans with the Second Great Awakening of evangelical Protestantism in the 1830.
Conflicts over alcohol production and consumption soon became a major dimension of the food fights of the country's early consumer society (see the reform initiatives aiming at changing slum-dwelling immigrant food habits). Historians of temperance and prohibition movements have alway acknowledged the xenophobic elements they contained.
Although mass-produced and marketed nationwide, alcoholic beverages clearly did not become American as a result (by labeling only some mass-produced foods as clearly "American," the food fights of early consumer socieety held the potential for shaping American business practices into the twentieth century--the great challenge for the Gallos has been to attempt to turn wine into an "American" consumer good...)
A strong and growing market for alcoholic beverages, coupled with a politically powerful movement to purge the American nation of the problems associated with alcohol abuse, created a paradoxically business climate in the United States in the nineteenth century. Only foreigners seemed willing to assume the risks of investment under these conditions, and the association of alcohol with foreigness became so pronounced that it affected business practices even in less controversial food industries.
LABOR OR CULTURAL CAPITAL???
Immigrant entrepreneurs faced typical problems in industrializing the production of alcohol. An American market for wine--fueled by wealthy plantation owners and urban merchants alike--had already existed before the American revolution, as steady imports of wine and spirits reveal. Efforts to produce wine from native grapes repeatedly failed, while distilling alcohol from corn and other native grains expanded rapidly. Industrialization in the next century produced a steadily growing market for wine among Americans eager to emulate the consumption habits of Europe's aristocracies, among immigrants with more plebeian traditions of wine drinking, and among bohemians rejecting Victorian Anglo-American respectability.
Haraszthy attempted traditional wine-making on a large scale but also experimented with new growing and processing technologies, with an all-Chinese workforce, and with the construction of huge underground vats for processing and aging wines.
Haraszthy seemed to grasp a necessary connection of business and politics in the United States yet remained curiously blind to American moral values as expressed through politics. His closest political ties in the late 1850s were to proslavery Democrats who despised his enthusiasm for his Chinese workforce and may have had doubts about the morality of alcohol as well. Haraszthy also disastrously misinterpreted California politicians' economic boosterism for a committment to state-sponsored economic development (a common-enough pattern in Europe). In 1861, as a member of a commission appointed by California's governor to investigate wine-making possibilities in the state, Haraszthy traveled widely throughout Europe and the Mediterranean and returned with over 100,000 vine cuttings purchased on credit for $12,000.
Within the alcohol niche, businessmen of foreign origin obviously faced special business risks. It seems quite likely that they responded by keeping leadership and ownership of their businesses strictly within their families, sometimes over several generations. When Haraszthy began his Buena Vista winery, his widowed father and three sons became his only business associates until failure forced him into incoproration. Strategically (and as a Catholic), he encouraged two of his sons to marry daughters of the native California rancher, wine maker, and political figure, Mariano Guadalupe Vallejo, and sent one to france to train as a champagne maker.
Family-owned and managed businesses were of course common in the United States in the nineteenth century. Family savings--not banking or ethnic community associations--long remaineed the main source of capital for food industry entrepreneurs regardless of origin. Beginning in the late nineteenth century, however, raising capital through incorporation and public ownership, bureaucratic managament by paid corporate experts, and consolidation into ever-larger trusts and conglomerates began to redefine the national and supposedly American genius for big business. Foreigners and natives made different choices already in the nineteenth century, raising questions about the impact of xenophobia and food fights on business strategy more generally during this transition. Differently managerial cultures apparently marked native- and foreign-origin food businesses well into the twentieth century. Corporate and bureaucratically managed enterprises, along with their products, increasingly defined what seemed modern and "American" in American business. By contrast, familist and foreign strategies of business characterized both smaller mom-and-pop enterprises and the much larger enterprises associated with the alcohol niche and foreigness in the food fights of America's emerging consumer society.
Biographies in the 24-volume, 17,000-entry American National Biography show that foreigners were more likely to become leaders in food industry than in American business generally.
Nativity shaped businessmen's lives in the late nineteenth and early twentieth century in significant ways. Many commestibles produced on a large scale never become icons of American eating: wine, but not condesed milk, white flour, or canned peaches became the focus of intense consumer scrutiny, distrust, and regulation.
Xenophobia and cultural conflicts associated with nation-building characterized the early years of American consumer society, preventing the free expression and celebration of the mutliculturalism that has now become such a familiar part of American consumer marketplace and sense of national identity.
Under many respects, the activity of foreign-born food businessmen did not differ from that of natives:
The food industry were routinized industries, specializing in bulk and mass production;
Many of the technical innovations that made mass production possible in American food industries came from Europe;
[Entrepreneurs recognized and pursued political connections that would be beneficial to their companies' success; ]
Entrepreneurs sought national markets for their products;
Foreigners in American food industries showed the same creativity in packaging, branding, and marketing exhibited by the natives who made cold cereals a popular new American breakfast worldwide;
The most striking difference between the foreign born and the native born was the concentration of the foreign-born in a distinctive alcohol niche in the American economy. This alcohol niche alone explains foreigners' relatively high representation in Ameican food industries.
WHY THE PIEDMONTESE???
Something other than cultural capital or ethnic self-segregation produced the alcohol niche (e.g., Italian immigrants had a rich tradition in baking, but failed to achieve dominance in that industry).
Foreign entrepreneurs moved into alcohol production because natives and immigrants of British and even Irish origin were abandoned it: a cultural revulsion against alcohol developed among many middle-class and working-class Anglo-Americans with the Second Great Awakening of evangelical Protestantism in the 1830.
Conflicts over alcohol production and consumption soon became a major dimension of the food fights of the country's early consumer society (see the reform initiatives aiming at changing slum-dwelling immigrant food habits). Historians of temperance and prohibition movements have alway acknowledged the xenophobic elements they contained.
Although mass-produced and marketed nationwide, alcoholic beverages clearly did not become American as a result (by labeling only some mass-produced foods as clearly "American," the food fights of early consumer socieety held the potential for shaping American business practices into the twentieth century--the great challenge for the Gallos has been to attempt to turn wine into an "American" consumer good...)
A strong and growing market for alcoholic beverages, coupled with a politically powerful movement to purge the American nation of the problems associated with alcohol abuse, created a paradoxically business climate in the United States in the nineteenth century. Only foreigners seemed willing to assume the risks of investment under these conditions, and the association of alcohol with foreigness became so pronounced that it affected business practices even in less controversial food industries.
LABOR OR CULTURAL CAPITAL???
Immigrant entrepreneurs faced typical problems in industrializing the production of alcohol. An American market for wine--fueled by wealthy plantation owners and urban merchants alike--had already existed before the American revolution, as steady imports of wine and spirits reveal. Efforts to produce wine from native grapes repeatedly failed, while distilling alcohol from corn and other native grains expanded rapidly. Industrialization in the next century produced a steadily growing market for wine among Americans eager to emulate the consumption habits of Europe's aristocracies, among immigrants with more plebeian traditions of wine drinking, and among bohemians rejecting Victorian Anglo-American respectability.
Haraszthy attempted traditional wine-making on a large scale but also experimented with new growing and processing technologies, with an all-Chinese workforce, and with the construction of huge underground vats for processing and aging wines.
Haraszthy seemed to grasp a necessary connection of business and politics in the United States yet remained curiously blind to American moral values as expressed through politics. His closest political ties in the late 1850s were to proslavery Democrats who despised his enthusiasm for his Chinese workforce and may have had doubts about the morality of alcohol as well. Haraszthy also disastrously misinterpreted California politicians' economic boosterism for a committment to state-sponsored economic development (a common-enough pattern in Europe). In 1861, as a member of a commission appointed by California's governor to investigate wine-making possibilities in the state, Haraszthy traveled widely throughout Europe and the Mediterranean and returned with over 100,000 vine cuttings purchased on credit for $12,000.
Within the alcohol niche, businessmen of foreign origin obviously faced special business risks. It seems quite likely that they responded by keeping leadership and ownership of their businesses strictly within their families, sometimes over several generations. When Haraszthy began his Buena Vista winery, his widowed father and three sons became his only business associates until failure forced him into incoproration. Strategically (and as a Catholic), he encouraged two of his sons to marry daughters of the native California rancher, wine maker, and political figure, Mariano Guadalupe Vallejo, and sent one to france to train as a champagne maker.
Family-owned and managed businesses were of course common in the United States in the nineteenth century. Family savings--not banking or ethnic community associations--long remaineed the main source of capital for food industry entrepreneurs regardless of origin. Beginning in the late nineteenth century, however, raising capital through incorporation and public ownership, bureaucratic managament by paid corporate experts, and consolidation into ever-larger trusts and conglomerates began to redefine the national and supposedly American genius for big business. Foreigners and natives made different choices already in the nineteenth century, raising questions about the impact of xenophobia and food fights on business strategy more generally during this transition. Differently managerial cultures apparently marked native- and foreign-origin food businesses well into the twentieth century. Corporate and bureaucratically managed enterprises, along with their products, increasingly defined what seemed modern and "American" in American business. By contrast, familist and foreign strategies of business characterized both smaller mom-and-pop enterprises and the much larger enterprises associated with the alcohol niche and foreigness in the food fights of America's emerging consumer society.
Tuesday, May 29, 2007
Photographs -- Center for Migration Studies -- http://cmsny.library.net/
1.
[American Bankers' Association visits Andrea Sbarbaro's Pompeiian villa at Italian-Swiss Colony, Asti, California, ca. 1905] [picture]. (1905) [Titles]
2.
[Andrea Sbarbaro, founder of Italian-Swiss Colony Wines of Asti, California, ca. 1905] [picture]. (1905) [Titles]
3.
[Home of an executive of Italian-Swiss Colony Wines, Asti, California, ca. 1906] [picture]. (1906) [Titles]
4.
ITALIAN SWISS COLONY (ASTI, CALIF.) [Subjects]
5.
ITALIAN SWISS COLONY (ASTI, CALIF.) -- PHOTOGRAPHS. [Subjects: Returns 8 items]
6.
[Italian-Swiss Colony Distillery and Canteen, Asti, California, ca. 1906] [picture]. (1906) [Titles]
7.
[Italian-Swiss Colony vineyard and buildings, Asti, California, ca. 1905] [picture]. (1905) [Titles]
8.
[Italian-Swiss Colony Wine warehouse, San Francisco, California, ca. 1906] [picture]. (1906) [Titles]
9.
[Largest wine tank in the world, 25 meters long, 11 meters wide, and 25 meters deep, holds 20,000 liters, Italian Swiss Colony Wine Company, Asti, California, ca. 1906] [picture]. (1906) [Titles]
10.
[Pietro Carlo Rossi of the Italian-Swiss Colony wine manufacturing firm, San Francisco, ca. 1906] [picture]. (1906) [Titles]
[American Bankers' Association visits Andrea Sbarbaro's Pompeiian villa at Italian-Swiss Colony, Asti, California, ca. 1905] [picture]. (1905) [Titles]
2.
[Andrea Sbarbaro, founder of Italian-Swiss Colony Wines of Asti, California, ca. 1905] [picture]. (1905) [Titles]
3.
[Home of an executive of Italian-Swiss Colony Wines, Asti, California, ca. 1906] [picture]. (1906) [Titles]
4.
ITALIAN SWISS COLONY (ASTI, CALIF.) [Subjects]
5.
ITALIAN SWISS COLONY (ASTI, CALIF.) -- PHOTOGRAPHS. [Subjects: Returns 8 items]
6.
[Italian-Swiss Colony Distillery and Canteen, Asti, California, ca. 1906] [picture]. (1906) [Titles]
7.
[Italian-Swiss Colony vineyard and buildings, Asti, California, ca. 1905] [picture]. (1905) [Titles]
8.
[Italian-Swiss Colony Wine warehouse, San Francisco, California, ca. 1906] [picture]. (1906) [Titles]
9.
[Largest wine tank in the world, 25 meters long, 11 meters wide, and 25 meters deep, holds 20,000 liters, Italian Swiss Colony Wine Company, Asti, California, ca. 1906] [picture]. (1906) [Titles]
10.
[Pietro Carlo Rossi of the Italian-Swiss Colony wine manufacturing firm, San Francisco, ca. 1906] [picture]. (1906) [Titles]
Tuesday, May 08, 2007
Tuesday, April 10, 2007
Does the "Gallo Law" exempt the winery from estate taxes?
A Staff Report by the Straight Dope Science Advisory Board
Nov. 26, 2002
Dear Straight Dope:
Is it true that vintners Ernest and Julio Gallo got friendly politicians to pass a law for one day that allowed them to pass a large portion of their assets to family members without paying estate or gift taxes and the following day, after the exchange, the law reverted to its original state? The professor of a tax class I took around 1987 mentioned it, saying people referred to it as the "Gallo Law." --Bob Brown, Boston, MA
SDSTAFF Veg replies:
Some people might call it the "Gallo Law," Bob, but it's usually referred to as the "Gallo Wine Amendment." The story behind it just goes to show that when you make a fortune, make sure you give some of it to a politician or two--and it doesn't matter what party they represent, because, in the end, they're all members of the Green party.
Ernest Gallo has been the head of E&J Gallo Winery in Modesto, California, since 1933, when his parents died. (It was an apparent murder-suicide, in which Ernest's dad killed his mum and then turned the gun on himself.) His brother Julio handled production, and their other brother Joe was an employee.
Gallo wanted his company to be the "Campbell Soup company of the wine industry." Early on, Campbell's probably wasn't too happy with the comparison, since Gallo sought his goal by selling fortified wines like Thunderbird and Ripple. But Gallo's efforts succeeded. His company became the largest winemaker in the country, and eventually the world.
As the company grew, the Gallos gave lots of money to politicians--Julio gave more to Republicans and Ernest gave more to Democrats, but let's face it, it all came out of the same wine vat. One of the many recipients was Democrat Alan Cranston, a California senator. The Gallos helped Cranston win a tough re-election bid, and in 1978 Cranston returned the favor. A Washington law firm custom-tailored some legislation to allow the family to spread inheritance tax payments over several years. Cranston submitted the new tax rule as an amendment to another bill and helped push it through the Senate (which wasn't that difficult--Cranston brought the bill to the Senate floor on a rare Saturday session where it was passed with only a handful of senators present). The measure was dubbed the "Gallo Wine Amendment" by then-senator Bob Dole of Kansas.
Dole was a Republican and Cranston was a Democrat, but the story hops over to the other side of the aisle eight years later. In 1986, the Democrats were rewriting the tax code (again). The Gallos decided that an amendment on the table could lower their inheritance taxes further still, so they lobbied for it. And who did they lobby but the very guy who had derisively labeled Cranston's amendment eight years earlier: Bob Dole. We don't know was said in private, but what a coincidence that when Bob Dole supported this second amendment, his political action committee (PAC) received four $5,000 checks from Ernest, Ernest's wife, Julio, and Julio's wife.
The favorable tax treatment authorized by the amendment expired in 1990--maybe that's where your professor got the idea that the Gallo law expired the next day. He may also have confused the Cranston Gallo law with the Dole Gallo law. Easy enough to do--as you can see, there are a lot of Gallo laws.
Ernest Gallo later helped raise $100,000 in a matter of days for a fundraising event for President Clinton, making it clear once again that he's willing to hop to the other side of the aisle whenever necessary. In this case it was apparently necessary because the U.S. was considering increasing Chilean wine imports. The fundraising effort--as well as additional contributions over the years to Senator Dole (who had become the Senate majority leader), foundations he supports, and his PAC totaling more than $1 million--apparently worked. Not only did Congress delay action to increase Chilean wine imports, but it increased funding for a program that gave Gallo millions of dollars to promote its wines overseas.
So, Bob, we see again that money is the grease that keeps the wine presses operating. I don't know about you, but after all this politics, I could use . . . well, normally I'd say a glass of wine, but right now I'd prefer some less sullied beverage. You think politicians get contributions from the makers of lemonade?
--SDSTAFF VegStraight Dope Science Advisory Board
Nov. 26, 2002
Dear Straight Dope:
Is it true that vintners Ernest and Julio Gallo got friendly politicians to pass a law for one day that allowed them to pass a large portion of their assets to family members without paying estate or gift taxes and the following day, after the exchange, the law reverted to its original state? The professor of a tax class I took around 1987 mentioned it, saying people referred to it as the "Gallo Law." --Bob Brown, Boston, MA
SDSTAFF Veg replies:
Some people might call it the "Gallo Law," Bob, but it's usually referred to as the "Gallo Wine Amendment." The story behind it just goes to show that when you make a fortune, make sure you give some of it to a politician or two--and it doesn't matter what party they represent, because, in the end, they're all members of the Green party.
Ernest Gallo has been the head of E&J Gallo Winery in Modesto, California, since 1933, when his parents died. (It was an apparent murder-suicide, in which Ernest's dad killed his mum and then turned the gun on himself.) His brother Julio handled production, and their other brother Joe was an employee.
Gallo wanted his company to be the "Campbell Soup company of the wine industry." Early on, Campbell's probably wasn't too happy with the comparison, since Gallo sought his goal by selling fortified wines like Thunderbird and Ripple. But Gallo's efforts succeeded. His company became the largest winemaker in the country, and eventually the world.
As the company grew, the Gallos gave lots of money to politicians--Julio gave more to Republicans and Ernest gave more to Democrats, but let's face it, it all came out of the same wine vat. One of the many recipients was Democrat Alan Cranston, a California senator. The Gallos helped Cranston win a tough re-election bid, and in 1978 Cranston returned the favor. A Washington law firm custom-tailored some legislation to allow the family to spread inheritance tax payments over several years. Cranston submitted the new tax rule as an amendment to another bill and helped push it through the Senate (which wasn't that difficult--Cranston brought the bill to the Senate floor on a rare Saturday session where it was passed with only a handful of senators present). The measure was dubbed the "Gallo Wine Amendment" by then-senator Bob Dole of Kansas.
Dole was a Republican and Cranston was a Democrat, but the story hops over to the other side of the aisle eight years later. In 1986, the Democrats were rewriting the tax code (again). The Gallos decided that an amendment on the table could lower their inheritance taxes further still, so they lobbied for it. And who did they lobby but the very guy who had derisively labeled Cranston's amendment eight years earlier: Bob Dole. We don't know was said in private, but what a coincidence that when Bob Dole supported this second amendment, his political action committee (PAC) received four $5,000 checks from Ernest, Ernest's wife, Julio, and Julio's wife.
The favorable tax treatment authorized by the amendment expired in 1990--maybe that's where your professor got the idea that the Gallo law expired the next day. He may also have confused the Cranston Gallo law with the Dole Gallo law. Easy enough to do--as you can see, there are a lot of Gallo laws.
Ernest Gallo later helped raise $100,000 in a matter of days for a fundraising event for President Clinton, making it clear once again that he's willing to hop to the other side of the aisle whenever necessary. In this case it was apparently necessary because the U.S. was considering increasing Chilean wine imports. The fundraising effort--as well as additional contributions over the years to Senator Dole (who had become the Senate majority leader), foundations he supports, and his PAC totaling more than $1 million--apparently worked. Not only did Congress delay action to increase Chilean wine imports, but it increased funding for a program that gave Gallo millions of dollars to promote its wines overseas.
So, Bob, we see again that money is the grease that keeps the wine presses operating. I don't know about you, but after all this politics, I could use . . . well, normally I'd say a glass of wine, but right now I'd prefer some less sullied beverage. You think politicians get contributions from the makers of lemonade?
--SDSTAFF VegStraight Dope Science Advisory Board
Sunday, April 08, 2007
Photographs -- The Healdsburg Museum & Historical Society
Subject: Re: Information Request: Historical Photographs of the Italian-Swiss Colony, Asti, CA
From: "Daniel Murley" healdsburgmuseum@sbcglobal.net
Date: Mon, March 26, 2007, 8:36 pm
Greetings Simone,
We at the Museum do have many photographic images of the wine industry and some of Italian Swiss Colony.
The number is prohibitive to send you all.
If you could check our website: http://www.healdsburgmuseum.org/ there are some examples. You could also be specific in topical representaion in the images ie. picking, crushing, buildings, people, equipment etc ?
I look forward to hearing from you and hopefully we can supply you with the images you need.
Sincerely,
Daniel
Daniel F. Murley
Curator
The Healdsburg Museum
Healdsburg, CA 95448
(707) 431-3325
Simone Cinotto wrote:
Dear Sirs/Madams,The writer is an Italian historian teaching at the Universities of Turin, and specializing in Italian American Studies. My complete vita with publications is online at http://simonecinotto-cv.blogspot.com/
My current research project is an exploration of the presence of Italian immigrants in California's winemaking before and after Prohibition. I am especially interested in detailing the function of ethnicity in the labor and entrepreneurial experiences of Italian American winemakers. The project has been funded by the local administration of Piedmont (the wine region in the Italian northwest) and its end result will be a book published in both Italian and English.
I spent the whole month of December 2006 doing research in California, visting libraries and archives such as the Bancroft Library of UC at Berkeley, the Shields Library of UC at Davis, the San Francisco Public Library, the Sonoma County Regional Library at Healdsburg, the University Library of California State Polytechnic University, Pomona, and the Charles E. Young Research Library of UCLA. Unfortunately, during my stay, I was unable to visit the Healdsburg Museum & Historical Society. Now I am in the process of writing the book.
The purpose of this letter is the following: we wish to include a photographic section into the book. We have a modest amount of funds we can devote to cover the expenses of reproduction and, if applicable, rights or other fees. Since the book will deal at length with the case study of the Italian Swiss Colony at Asti, we would be very much interested in including photographs documenting work and everyday life at the Colony, in particular from the period between its foundation (1881) and the early 1920s.
Since I learnt the photographic collections at The Healdsburg Museum & Historical Society contain photos of many northern Sonoma County wineries, we would much appreciate if you may provide us with any relevant information re the possibility to order reproductions of photographs of the Italian-Swiss Colony and publish them into my book.
Needless to say, I will be more than glad to provide any further information you may want to receive on my book, its intended audience, and projected uses.
I will be looking forward to hearing from you soon. Thank you for your attention.
Best regards,
Simone Cinotto
From: "Daniel Murley" healdsburgmuseum@sbcglobal.net
Date: Mon, March 26, 2007, 8:36 pm
Greetings Simone,
We at the Museum do have many photographic images of the wine industry and some of Italian Swiss Colony.
The number is prohibitive to send you all.
If you could check our website: http://www.healdsburgmuseum.org/ there are some examples. You could also be specific in topical representaion in the images ie. picking, crushing, buildings, people, equipment etc ?
I look forward to hearing from you and hopefully we can supply you with the images you need.
Sincerely,
Daniel
Daniel F. Murley
Curator
The Healdsburg Museum
Healdsburg, CA 95448
(707) 431-3325
Simone Cinotto
Dear Sirs/Madams,The writer is an Italian historian teaching at the Universities of Turin, and specializing in Italian American Studies. My complete vita with publications is online at http://simonecinotto-cv.blogspot.com/
My current research project is an exploration of the presence of Italian immigrants in California's winemaking before and after Prohibition. I am especially interested in detailing the function of ethnicity in the labor and entrepreneurial experiences of Italian American winemakers. The project has been funded by the local administration of Piedmont (the wine region in the Italian northwest) and its end result will be a book published in both Italian and English.
I spent the whole month of December 2006 doing research in California, visting libraries and archives such as the Bancroft Library of UC at Berkeley, the Shields Library of UC at Davis, the San Francisco Public Library, the Sonoma County Regional Library at Healdsburg, the University Library of California State Polytechnic University, Pomona, and the Charles E. Young Research Library of UCLA. Unfortunately, during my stay, I was unable to visit the Healdsburg Museum & Historical Society. Now I am in the process of writing the book.
The purpose of this letter is the following: we wish to include a photographic section into the book. We have a modest amount of funds we can devote to cover the expenses of reproduction and, if applicable, rights or other fees. Since the book will deal at length with the case study of the Italian Swiss Colony at Asti, we would be very much interested in including photographs documenting work and everyday life at the Colony, in particular from the period between its foundation (1881) and the early 1920s.
Since I learnt the photographic collections at The Healdsburg Museum & Historical Society contain photos of many northern Sonoma County wineries, we would much appreciate if you may provide us with any relevant information re the possibility to order reproductions of photographs of the Italian-Swiss Colony and publish them into my book.
Needless to say, I will be more than glad to provide any further information you may want to receive on my book, its intended audience, and projected uses.
I will be looking forward to hearing from you soon. Thank you for your attention.
Best regards,
Simone Cinotto
Friday, April 06, 2007
Photographs -- The San Francisco Museum and Historical Society
Thu, April 5, 2007, 11:39 pm
Subject: RE: Information Request: Historical Photographs of the Italian-Swiss Colony, Asti, CA
From: "danika mckenna"
Dear Ms. Cinotto:
Thank you for your inquiry. Currently, the San Francisco Museum and Historical Society is planning for the new Museum of San Francisco to be located in the Old Mint building (opening tentatively scheduled for late 2010). Unfortunately, we do not have our research staff and facilities yet in place and are therefore unable to provide you with much assistance regarding your request. Our very limited collection is not publicly accessible at this time and I have found no reference to the photograph collection you have described below in our archives.
The San Francisco Public Library can offer some resources to you regarding research and/or exhibit partnerships. The telephone number for the Public History room is (415) 557-4567 and their website is http://www.sfpl.org/librarylocations/sfhistory.htm. Or you can re-reference the additional resource section of our website for other organizations which may be of assistance http://www.sfhistory.org/index.php?pageid=44.
Good luck!
Sincerely,
Danika McKenna
Deputy Executive Director
San Francisco Museum and Historical Society
---------- Forwarded message ----------
From: Simone Cinotto <simone.cinotto@unito.it>
Date: Mar 26, 2007 3:13 AM
Subject: Information Request: Historical Photographs of the Italian-Swiss Colony, Asti, CA
To: info@sfhistory.org
Dear Sirs/Madams,The writer is an Italian historian teaching at the Universities of Turin, and specializing in Italian American Studies. My complete vita withpublications is online at http://simonecinotto-cv.blogspot.com/
My current research project is an exploration of the presence of Italian immigrants in California's winemaking before and after Prohibition. I am especially interested in detailing the function of ethnicity in the labor and entrepreneurial experiences of Italian American winemakers. The project has been funded by the local administration of Piedmont (the wine region in the Italian northwest) and its end result will be a book published in both Italian and English.
I spent the whole month of December 2006 doing research in California, visting libraries and archives such as the Bancroft Library of UC at Berkeley, the Shields Library of UC at Davis, the San Francisco Public Library, the Sonoma County Regional Library at Healdsburg, the University Library of California State Polytechnic University, Pomona, and the Charles E. Young Research Library of UCLA. Unfortunately, during my stay, I was unable to visit the San Francisco Historical Society. Now I am in the process of writing the book.
The purpose of this letter is the following: we wish to include aphotographic section into the book. We have a modest amount of funds we candevote to cover the expenses of reproduction and, if applicable, rights or other fees. Since the book will deal at length with the case study of the Italian Swiss Colony at Asti, we would be very much interested in including photographs documenting work and everyday life at the Colony, in particular from the period between its foundation (1881) and the early 1920s.
My sense is that the Alfreda Cullinan Collection at the San Francisco Historical Society is the richest repository of photographs on the early days of the the Italian Swiss Colony, including portrays of some of the most influential protagonists of its early development.
I got this impression from publications such as the reprint of the autobiography of the Colony's founder, Andrea Sbarboro, on the special issue, n. 2, Vol. 7, Winter1996-1997, of "The Argonaut" and from Jack Florence's book, "Legacy of aVillage: The Italian Swiss Colony Winery and the People of Asti, California."
Therefore, we would much appreciate if you may provide us with any relevantinformation re the possibility to get reproductions of photographs in the Alfreda Cullinan Collection--or any other photographs regarding the Italian-Swiss Colony--from the SFHS and publish them into my book.
Needless to say, I will be more than glad to provide any further information you may want to receive on my book, its intended audience, and projected uses.
I will be looking forward to hearing from you soon. Thank you for your attention.
Best regards,
Simone Cinotto
Subject: RE: Information Request: Historical Photographs of the Italian-Swiss Colony, Asti, CA
From: "danika mckenna"
Dear Ms. Cinotto:
Thank you for your inquiry. Currently, the San Francisco Museum and Historical Society is planning for the new Museum of San Francisco to be located in the Old Mint building (opening tentatively scheduled for late 2010). Unfortunately, we do not have our research staff and facilities yet in place and are therefore unable to provide you with much assistance regarding your request. Our very limited collection is not publicly accessible at this time and I have found no reference to the photograph collection you have described below in our archives.
The San Francisco Public Library can offer some resources to you regarding research and/or exhibit partnerships. The telephone number for the Public History room is (415) 557-4567 and their website is http://www.sfpl.org/librarylocations/sfhistory.htm. Or you can re-reference the additional resource section of our website for other organizations which may be of assistance http://www.sfhistory.org/index.php?pageid=44.
Good luck!
Sincerely,
Danika McKenna
Deputy Executive Director
San Francisco Museum and Historical Society
---------- Forwarded message ----------
From: Simone Cinotto <simone.cinotto@unito.it>
Date: Mar 26, 2007 3:13 AM
Subject: Information Request: Historical Photographs of the Italian-Swiss Colony, Asti, CA
To: info@sfhistory.org
Dear Sirs/Madams,The writer is an Italian historian teaching at the Universities of Turin, and specializing in Italian American Studies. My complete vita withpublications is online at http://simonecinotto-cv.blogspot.com/
My current research project is an exploration of the presence of Italian immigrants in California's winemaking before and after Prohibition. I am especially interested in detailing the function of ethnicity in the labor and entrepreneurial experiences of Italian American winemakers. The project has been funded by the local administration of Piedmont (the wine region in the Italian northwest) and its end result will be a book published in both Italian and English.
I spent the whole month of December 2006 doing research in California, visting libraries and archives such as the Bancroft Library of UC at Berkeley, the Shields Library of UC at Davis, the San Francisco Public Library, the Sonoma County Regional Library at Healdsburg, the University Library of California State Polytechnic University, Pomona, and the Charles E. Young Research Library of UCLA. Unfortunately, during my stay, I was unable to visit the San Francisco Historical Society. Now I am in the process of writing the book.
The purpose of this letter is the following: we wish to include aphotographic section into the book. We have a modest amount of funds we candevote to cover the expenses of reproduction and, if applicable, rights or other fees. Since the book will deal at length with the case study of the Italian Swiss Colony at Asti, we would be very much interested in including photographs documenting work and everyday life at the Colony, in particular from the period between its foundation (1881) and the early 1920s.
My sense is that the Alfreda Cullinan Collection at the San Francisco Historical Society is the richest repository of photographs on the early days of the the Italian Swiss Colony, including portrays of some of the most influential protagonists of its early development.
I got this impression from publications such as the reprint of the autobiography of the Colony's founder, Andrea Sbarboro, on the special issue, n. 2, Vol. 7, Winter1996-1997, of "The Argonaut" and from Jack Florence's book, "Legacy of aVillage: The Italian Swiss Colony Winery and the People of Asti, California."
Therefore, we would much appreciate if you may provide us with any relevantinformation re the possibility to get reproductions of photographs in the Alfreda Cullinan Collection--or any other photographs regarding the Italian-Swiss Colony--from the SFHS and publish them into my book.
Needless to say, I will be more than glad to provide any further information you may want to receive on my book, its intended audience, and projected uses.
I will be looking forward to hearing from you soon. Thank you for your attention.
Best regards,
Simone Cinotto
Monday, March 19, 2007
Tuesday, March 13, 2007
Ernest Gallo - Obituary
March 07, 2007
He turned $5,900 and a recipe from a public library into the world’s largest winemaking empire
March 18, 1909 - March 6, 2007
Ernest Gallo, with his younger brother, Julio, created the largest wine-producing company in the United States. At its height the Gallo wine company made more wine than Chile, and aside from the wine they bought from other growers in California, the brothers owned 3,000 acres of the prestigious Napa and Sonoma Valleys. At Ernest’s death, E. & J. Gallo employed 4,600 people and produced more than 900 million bottles of wine a year. The company was private, and the man himself was addicted to secrecy. Ernest Gallo was one of the richest men in America.
Gallo was born 80 miles east of San Francisco, in Jackson, California, in 1909. His parents were poor peasants who had emigrated from Piedmont in Italy. He was not an impressive schoolboy and he liked to relate in later years that his teacher had told him he was the stupidest boy she had ever taught.
The Gallo empire was made by Prohibition: Ernest and Julio seized on a loophole in the law which allowed for the sale of grapes and wine kits for home production. In the Gallo household wine had always been made that way. Ernest assumed the role of the sales and marketing man, while Julio gravitated towards the winery when it opened in nearby Modesto. He learnt how to make wine from a pamphlet borrowed from the public library. From the beginning the brothers challenged one another: Julio tried to make more wine than Ernest could sell and Ernest tried to sell more than Julio could make.
For many years Gallo wines were associated with screw-cap concoctions marketed to the bottom end of the American market. One such product was the fortified wine Thunderbird, introduced immediately after the repeal of Prohibition as a means of achieving the brothers’ aim of becoming the “Campbell’s Soup Company of the wine industry”. The beverage, with an alcohol content of nearly 20 per cent, quickly established itself as the chosen palliative for the residents of America’s slums and forged an unsavoury association in the consumer psyche that endured for decades.
Thunderbird was just one of many downmarket wines that sustained the Gallos until recent decades. There were Ripple, Spanada, Gypy Rose, Andre (a sparkler), Carlo Rossi, Boone’s Farm and Bartles & Jaymes. With Hearty Burgundy and Chablis Blanc, Gallo prepared to moved up a notch, creating the American use of “chablis” as a synonym for white wine, much to the fury of the growers of French Burgundy.
The addiction to secrecy bred many rumours and much acrimony. Ernest and Julio’s younger brother, Joseph, claimed that his brothers had cheated him out of his rightful share of the winery and documents from the case formed the basis for Ellen Hawkes’s book Blood and Wine: the Unauthorised Story of the Gallo Wine Empire. In her account the company began in the early days of Prohibition when the boys’ father, an Italian immigrant, began to supply the thirsty US market after discovering a loophole in the anti-liquor laws that permitted home wine-makers to produce 200 gallons of wine a year. According to Hawkes, Julio and Ernest simply carried on the family business after their parents’ death in a murder-suicide shooting in 1933.
This unflattering account prompted the reclusive brothers, who had rarely spoken publicly about their lives, to publish the rebuttal, Ernest and Julio: Our Story. In addition to reasserting their claims to have independently founded their company, the book attempted to clarify negative stories behind their introduction of fortified Thunderbird wine, their treatment of Cesar Chavez and the United Farm Workers during labour disputes in the 1970s and their occasionally fractious relations with marketers and distributors that resulted in disciplinary action by the Federal Trade Commission in 1976.
Ernest worked ceaselessly to promote the brand, taking long sales trips around the country by car, and in 1936 was reportedly hospitalised for six months due to exhaustion.
At a time when wines were often relegated to the bottom shelf in America, he introduced a Gallo display rack and was able to persuade retailers to give it a prominent position on the sales floor. Dispensing with salesmen employed by wholesalers, he created a dedicated Gallo sales force charged with extending market share and, with characteristic attention to detail, even decreed that they dust the bottles at each outlet they visited.
Understanding the benefits of vertical integration, Ernest set up a bottling plant on the winery grounds in 1942, and eventually Gallo controlled every stage of wine production, bottling and shipping with the exception of the growing and cutting of cork. The brothers were also technical innovators, investing heavily in research and development and pioneering the introduction of computers in the blending process and the use of stainless-steel fermentation casks.
By 1975 the company was earning an estimated $335 million in annual revenues and exporting to more than 60 countries. As the company’s success increased, it broadened its range of products in an attempt to rid itself of its association with the bottom end of the market.
Although Julio had long championed the blended “demi-sec” Gallo wine that was consistent in taste from one year to the next, in 1983 the brothers began producing moderately priced varietal and vintage wines. The first was a 1978 Sonoma County Cabernet, the predecessor to the range that is now a ubiquitous presence in every off-licence in Britain.
The Gallos continued to have great success with jug and bag-in-box wines such as Carlo Rossi and Peter Vella but they were anxious to break into the fine-wine market in the 1980s and 1990s. Their campaign was coupled with a lavish advertising campaign and a more-than-generous PR campaign to win over the opinion formers. The Sonoma estate wines were a radical departure for the Gallos. They sold for more than $40 a bottle.
A New Yorker cartoon of the period portraying two wine buffs enjoying a glass of vintage Gallo captured the moment of the transition of the company’s image. The caption read: “Surprisingly good, isn’t it? It’s Gallo. Mort and I simply got tired of being snobs.”
To Ernest, who had long craved critical acceptance of his wines, the drawing was vindication of his work and was prominent on the wall of his office in Modesto, California. With the shedding of its unrefined image the company’s sales soared.
By 1986 the company profits were such that the Gallos were able to give more than $1 million to the campaigns, think tanks and charitable foundations of Bob Dole. In return he introduced the 1986 inheritance tax bill, nicknamed the “Gallo amendment”, which allowed the brothers to bypass the 55 per cent tax on transfers of more than $1 million from grandparent to grandchild, thus saving the brothers an estimated $104 million.
Although the fraternal alliance came to an end in 1993 when Julio Gallo was killed in a car accident, Ernest was active behind the scenes at the company until the time of his death. It remains a family business with 17 of the brothers’ 20 grandchildren working at Gallo Wines, and the younger generation have shifted the focus from “value” wines towards more profitable estate-bottled wines.
One of every four bottles of wine sold in the US now bears the family crest. With more than 50 brands and estimated annual sales of $1.5 billion Gallo is now the largest winery in the world, selling 70 million cases a year and consuming 30 per cent of the annual Californian wine grape harvest.
The Gallos went to great lengths to make sure that only E. & J. Gallo should be allowed to use the name. In 1986 Ernest and Julio Gallo successfully sued their younger brother Joseph for using the family name for his cheese-making business. In 1990 the company successfully sued the Gallo Nero wine consortium of Chianti who had used the word “gallo” (cockerel) on their bottles. Ten years later the brothers took the Chianti wine-makers to court again over their domaine name.
In the meantime they put pressure on a small domaine called Santa Marcellina in Chianti because they had a “Marcellina” trade-mark among the many they had patented. In 1994 they attacked a Mexican company called Pasatiempos Gallo. In 2002 it was the turn of a lady potter in Texas, who used the word “gallo” because she made ceramic representations of roosters. Gallo himself made no excuses for his behaviour, saying: “We don’t want most of the business. We want it all.”
Whatever the truth behind the company’s beginnings it is indisputable that Ernest Gallo transformed a struggling Depression-era vineyard into one of the most successful global concerns in modern viticulture and in so doing profoundly affected the American taste for wine.
Gallo’s wife and a son predeceased him, and another son survives him.
Friday, March 09, 2007
Ernest Gallo - Obituary
Workaholic marketeer who overcame family grief to found the world's largest wine company in California, with his brother
Julio Christopher Reed
Wednesday March 7, 2007
Ernest Gallo and his brother Julio turned their wine company into the biggest in the world. Photograph: AP
As patriarch of a three-generation family of winemakers, Ernest Gallo, who has died aged 97, built the company he ran with his late brother, Julio, into the world's largest producer, and was influential in cementing California's reputation as a premier international vintner.
But the E&J Gallo Winery of Modesto, in central California, won its decades-long leadership by producing a high-alcohol "street" wine called Thunderbird, aimed at poor black Americans. The ethics of Ernest's sales methods - he was the finance and markeeting chief while Julio made the wine - were also questioned, and the Federal Trade Commission investigated the company in the mid 1970s.
In the 1980s, Gallo began producing fine vintages instead of relying on its cheap screwtop table and jug wines, and despite a downmarket reputation, the quality of the select wines eventually persuaded doubters. The change was aided by Gallo's purchases of several California wineries with a history of making fine wines.
Gallo became the world's largest wine company, and only in 2003 did multiple acquisitions by rival Constellation Brands of New York state push that company slightly ahead. But Constellation also sold beer, and although Gallo produced its own brandy, sherry, port, and sparkling wine, it always stayed with the grape.
Ernest was born near Modesto almost exactly one year before Julio - and they resembled twins. A younger brother, Joe, named after his father, was born 10 years after Ernest, and had the loving childhood, denied to Ernest and Julio, who were worked mercilessly by their father, an immigrant from Piedmont, on the family's 70-acre vineyard.
This background might explain an extraordinary court case when, between 1986 and 1989, the older brothers successfully sued Joe Jr over putting the Gallo name on a brand of cheese produced at his prosperous dairy. He also lost a counter-suit claiming he had been denied his rightful share of the estate. Joe Gallo was no longer family.
The legacy dispute arose from a mysterious murder-suicide in 1933, when Joe Sr shot his wife, the mother of their three sons, then turned the gun on himself. The older brothers, who found both bodies at the family farmhouse, never spoke publicly about the incident and the tragedy's cause remained a secret.
The family's winery had begun to succeed when Joe Sr took advantage of a loophole in the anti-alcohol national law by growing and shipping grapes for private consumption (permitted personal wine production). This history was contrary to Gallo's official line that, taking advantage of the end of prohibition in 1933, the older brothers started the winery with a $5,900 loan and a book on winemaking borrowed from the public library. This was two months after the death of their parents.
At first they sold in bulk, but in 1941 they started their own label. Yet despite Ernest's aggressive selling skills, the winery remained behind the leaders in what was at that time a small and unsophisticated US market. Then in 1957 Gallo launched Thunderbird, a mixture of white port and lemon juice, at 21% alcohol, that salesmen noticed was popular among African-Americans. It sold for 60c a quart and was an immediate success.
Although Gallo later denied exploiting black people with cheap booze, an early radio jingle gave them away: "What's the word?/Thunderbird/ How's it sold?/Good and cold/ What's the jive?/Bird's alive/ What's the price?/Thirty twice." Ernest enjoyed telling his salesmen how he had once called to a black man in Atlanta: "What's the word?" He was delighted when the man instantly replied: "Thunderbird."
In the decade following the launch, Gallo, through Ernest, began to transform wine vending in America. Salesmen made frequent, aggressive visits to retailers and insisted on prominent Gallo displays. Ernest also vertically integrated the corporation to save money, and inexpensive table wines of reasonable quality gained popularity in America.
In 1972, Time magazine, undeterred by Gallo's intense press secrecy, featured the brothers on its cover as the wine industry's twin chiefs. Soon their fortunes were estimated at $500m (£259m) each.
Meanwhile, they began financing prominent politicians, including senators Bob Dole of Kansas, a Republican, and the late Alan Cranston of California, a Democrat. In 1978 and 1986, these two helped pass tax law provisions nicknamed "the Gallo wine amendment" that saved the brothers millions in estate taxes.
Gallo's prosperity continued with the acquisition of highly regarded wineries in Calfornia's prime viticulture counties and the company's introduction of generic wines priced up to $50. Ernest encouraged exports and entered business partnerships or made acquisitions in Australasia, and Europe. By 2004 Gallo had 45 brands, compared with 11 in 1980.
Julio's death in 1993 from a driving accident did not diminish Ernest's work obsession and he was assisted by his brother's children. In his 90s, Ernest continued to work at his desk in the imposing "Parthenon West" headquarters he had built in Modesto, in his never-ending quest to improve Gallo's image. He is survived by his son Joseph, chief executive of E&J Gallo. His wife Amelia, whom he married in 1931 died in 1993, and another son, David, died in 1997.
· Ernest Gallo, wine seller, born March 18 1909; died March 7 2007
Thursday, February 15, 2007
Disappearing Act: A Once-Vast Southern California Wine Region Faces an Uncertain Future
November 15, 2000
By Jean T. Barrett
In the Cucamonga Valley, an hour drive east of Los Angeles, a battle is being fought -- urban expansion pitted against rural roots. As the magnificent San Gabriel Mountains come into focus, so do rows of grapevines squeezed between tract houses and strip malls. These gnarled, ancient, dry-farmed grapevines bearing Zinfandel, Carignane, Grenache, Mourvèdre, Palomino and Mission, among other varieties, were once the backbone of the California wine industry. But no more. As is usually the case in contemporary America, the farmers are losing.
During its heyday in the 1940s, the Cucamonga Valley was covered with 40,000 acres of grapes, making it more expansive than the Napa Valley appellation is today. But that acreage has slowly dwindled away to fewer than 1,200 acres, and signs everywhere fly like white flags: "For Sale"; "Available"; "Prime Industrial Acreage." Vines have been uprooted for development, and now this area is fighting for its very survival, even as vintners are producing the finest wines ever made from its grapes.
"The reality of the situation is that most of this land around here is far too valuable to grow grapes on," says Don Galleano. He owns Galleano Winery, a bucolic, 12-acre postage stamp surrounded by the massive warehouses and big-box distribution centers that line the streets of Mira Loma, a community southeast of Ontario International Airport in Ontario, Calif.
Galleano, whose grandfather founded the winery in 1933, has by far the largest operation of the three remaining vintners in the Cucamonga Valley, farming about 600 acres and producing the equivalent of nearly 150,000 cases annually, much of which is sold in bulk. A few miles north in Rancho Cucamonga is the Joseph Filippi Winery, which opened in 1922 and is now run by the great-grandsons of the founder; it produces about 40,000 cases per year. A third winery, Rancho de Philo, was started in 1974 as a retirement project by the late Philo Biane, former chairman of Brookside Winery; it produces a mere 325 cases of cream Sherry annually.
"There's just a small group of us left," acknowledges Gino Filippi, vice president of sales and marketing for Filippi Winery. "But we feel strongly about the area's history and its potential. At one time, this was the largest and most famous wine region in California. We feel a responsibility to carry on the heritage."
The tide turned against Cucamonga as a wine-producing region during World War II, when industrialization began in the area. Land values increased, as did property taxes, which squeezed the 
farmers' profits.
At the same time, children of winery owners pursued college educations and, in most cases, didn't care to remain in the family business. By the 1970s, too, tastes were turning away from the rustic-style reds bottled in gallon jugs that had been the valley's mainstay. Over a period of several decades, dozens of Cucamonga vineyard and winery owners simply sold out.
One vintner who didn't sell was Frank De Ambrogio. He and his wife, Mary, purchased a Zinfandel vineyard at the corner of Foothill Boulevard (old Route 66) and Haven Avenue just after World War II. At the time, there was nothing but vineyards in the area, but the city of Rancho Cucamonga grew up around those 35 acres, which now sit smack-dab in the center of town directly across from City Hall. Over the decades, Frank De Ambrogio refused numerous lucrative offers for the property. But he died 10 years ago, and the property, now owned by his widow and two daughters, is likely to be developed.
"The irony is that if [the De Ambrogio Ranch] was anything else, it would be a historical landmark," says Galleano. "If it was an oak tree or that pecan tree right there that my grandfather planted ... ." He points out his winery office window to an ancient tree. "But it's a vineyard."
It was the De Ambrogio Ranch that caught Daryl Groom's eye several years ago when Galleano finally persuaded him to visit the Cucamonga Valley. Executive vice president of winemaking for Geyser Peak and a native of Australia, Groom, who used to produce Penfolds Grange, was immediately struck by the similarity of Cucamonga's old vineyards to Grange's Kalimna vineyards in the Barossa Valley.
"Kalimna's vines were 50 to 100 years old, and they were scraggly little vines, low to the ground, in deep sand or hardpan clay. Very unforgiving soils that tended to restrict vine growth and give small yields, but intense flavor," recalls Groom. "When I first went down to Cucamonga and had a look, I couldn't believe the similarity, particularly when my feet were sinking 3 to 4 inches in the sand. I was like a kid in a candy store. All these wonderful old vines that nobody else wanted!"
In 1997, Geyser Peak Winery made a Zinfandel from Cucamonga's De Ambrogio Vineyard, which James Laube rated 91 points on Wine Spectator's 100-point scale, saying it was "brimming with ripe berry, plum and spice flavors that linger enticingly ... has the feel of old vines, with depth and character to burn." Since then, Groom has made a 1999 bottling and has also produced old-vine Cucamonga Grenache and Mourvèdre for a forthcoming Rhône-style blend under the Geyser Peak label. "Being Australian, I was unsure about putting Cucamonga on the label because it sounded so funny," confesses Groom. "But we're so glad that we did because people are recognizing it, and I hope it's helped create interest in that area again."
Groom is hardly the only out-of-area vintner to recognize the distinctiveness of Cucamonga fruit. Up and down the state, wineries including Seghesio, Callaway, Ironstone, Hart, Mt. Palomar, Thornton and Firestone, have produced Cucamonga bottlings or used the fruit to add character to blends. Barry Bergman, winemaker for the R.H. Phillips Wine Company in Esparto, Calif., has been buying Cucamonga grapes for more than a decade. In recent years, he has produced a single-vineyard Cucamonga Zinfandel under the Kempton Clark label from the Lopez Ranch, a 130-acre tract of old vines at the base of the San Gabriel foothills, which is now surrounded on three sides by housing developments.
A sad but familiar sight in the Cucamonga Valley today -- the construction of a mall overruning prime vineyards; only a handful of vintners remain in the area.
Bergman is a fan of what he calls the "Cucamonga character," a taste that he says is born of old vines, low yields and the region's hot, dry climate. "There's definitely a terroir in the Cucamonga Valley, and it's not your typical North Coast fresh-fruit character," Bergman explains. "It's got a barnyardy, minerally, earthy character, with very ripe, jammy fruit. No other appellation in California produces a flavor profile like it."
Ironically, the vintners who are based in the Cucamonga Valley have not, until recently, made much of this unique terroir. Despite the valley's long history, it was only in 1995 that the Filippi brothers petitioned the BATF for a Cucamonga Valley AVA, allowing them and other vintners to state the grapegrowing region on a wine label. This was very late in the game, an indication of how little consciousness there was among local vintners about the importance of promoting the region as an entity.
Since the AVA status was granted, both Filippi and Galleano have begun to produce premium-priced reds that showcase old-vine Cucamonga varietals -- instead of blending them into anonymous jug-reds. In addition to a distinctive old-vine Zinfandel, Filippi produces a Grenache-Mourvèdre blend called Rochelle (named after winemaker Nick Karavidas' daughter) and a reserve Mourvèdre made from a vineyard that had been abandoned for 25 years, which the winery recently resuscitated.
For his part, Don Galleano has invested in modernizing his historic winery, and four years ago, he hired young winemaker Jason R.C. Bushong. Bushong has been responsible for a series of very good old-vine Zinfandels under the "Pioneer's Legendary" designation, as well as some impressive single-vineyard Zins from the Lopez Ranch (also called the San Sevine Ranch).
Happily, these types of wines fit today's taste for robust reds. And most of Filippi's and Galleano's old-vine Cucamonga varietals sell in the $9 to $14 range, reasonable prices by anyone's standards.
But that's the problem. The prices are too low for a property owner to justify keeping an acre planted to grapes in an area where real estate is priced by the square foot.
Making wine in a rapidly growing urban area requires skills they don't teach at enology school. Cucamonga's vintners have become adept at wheeling and dealing with property owners and developers, arranging to farm vineyards until the 11th hour, when it's time to bring in the bulldozers to prepare for the new distribution center, strip mall or tract of homes. Karavidas tells of begging developers to hold off until his picking crew can get the grapes in.
"They won't stop for a million bucks," he laments. "We have some leases where there are no guarantees. We had a situation recently where we pruned and farmed 15 acres of Zin over the winter, and we lost about 10 [that were bulldozed under] just a few weeks before harvestable fruit. It really hurts sometimes."
Local officials are sympathetic to the vintners' plight, but say there's not much they can do. "Legally, you can't tell someone they can't develop their property," says Diane Williams, Rancho Cucamonga's mayor pro tempore. However, city planners now encourage developers to use grapevines as buffers around their tracts. And the vintners have learned to hunt down parcels of land that can't be developed -- such as those in utility corridors or awkwardly shaped "leftover" plots adjacent to a development -- but that can be leased and then planted with grapevines. Karavidas and the Filippis even cut a deal with a Texas firm, Heritage Bag Company, to plant a vineyard on 5 acres in front of the firm's Rancho Cucamonga plant. It's land that otherwise would have been conventionally landscaped. Heritage Bag receives income and the satisfaction of being a good corporate citizen, and the Filippis get their grapes.
But the new vineyards can't replace 80- to 100-year-old grapevines. And both new plantings and old vines are threatened by the recent appearance of the glassy-winged sharpshooter, which carries Pierce's disease. Pierce's is a growing problem in Cucamonga, so the risk of spreading the sharpshooter, and thus the fatal vine-malady, clearly impacts the marketability of local grapes to out-of-area vintners.
These challenges haven't shaken the determination of the Filippi brothers and Don Galleano to stay in the Cucamonga Valley. These vintners are confident they can secure enough grapes to sustain their operations in the future, although they expect to rely increasingly on sources from outside their valley.
For now, at least, these last Cucamonga holdouts are selling a taste of California wine history -- an experience that can be had with the twist of a corkscrew. It's an experience that becomes more tenuous with the passing of each harvest.
Others are moving on. Despite his track record with Lopez Ranch Zinfandel, Barry Bergman didn't buy any this year. "The main reason is the uncertainty of the future of those vineyards," he explains. "There's no long-term guarantee -- other than it will be tract homes or warehouses. It's a great area with a great agricultural heritage, but like many parts of California, it's going away."
An Interview With Ernest Gallo
June 30, 1999
Marvin R. Shanken: It's quite remarkable that you're celebrating your 90th birthday. I'd like to start off by asking you for your first memories, your first recollections of drinking wine. Do you remember when you first had wine?
Ernest Gallo: Yes, I do. I was 5 years old, living with my grandfather and grandmother. It was during the vintage season. My grandfather had a 20-acre vineyard out near Hanford, Calif. He had a small, what he called winery, in the backyard--a shed about the size of a normal room. He had a small tank in there and a wine press. That's one of my first memories. I still can see, today, two men there on the bar of the press, pressing that wine, and they'd stop and rest awhile as the juice ran out the bottom. They had a tin cup. They used to take it and fill the tin cup, take a sip, put it down, rest awhile and go at pressing again.
Shanken: Do you remember what kind of wine it was?
Gallo: A red wine.
Shanken: Did you like drinking wine then?
Gallo: Well, when I saw them doing this, I, as a child, also took the cup of wine and tasted it. It tasted very good, slightly sweet. And I still can remember to this day these two guys laughing, really laughing. Next thing I remember, I woke up in my grandmother's bed. It was my first and last drunk.
Shanken: Before 1933, when Prohibition was repealed, did you spend much time in the wine business? What did wine mean to you growing up?
Gallo: During my teenage years, during Prohibition, a family was permitted to make 200 gallons of wine for their own use. And so my father used to make a barrel or two of wine every year. We used to help him. In those days what you did was you put the grapes in a tub, and with your bare feet, squeeze it and press it. That was the extent of the experiences for my brother and me. Later Julio and I worked in the vineyards. We worked in the vineyards until the Prohibition.
Shanken: Were you waiting for the end of Prohibition to start your company? You and your brother working together, was it always your adult idea--dream--to start a wine company?
Gallo: I should say a year or two before Prohibition was repealed, starting in about 1930, we did start thinking that if the law would change that we'd like to get involved in the wine business.
Shanken: Was there a time in the early days when you and Julio sat down and talked about building a wine company? I can't imagine that you talked about creating something of the magnitude that you've created. What kind of dreams did you have?
Gallo: I really can't describe them as dreams. In the last two or three years of Prohibition, my father sent me and Julio to Chicago to sell our grapes to home winemakers. What happened is, in 1932 there was no production, a disastrous market. My father lost very heavily. In fact most shippers lost everything they had, and my father passed away in May of '33. Prohibition, it had been announced, would be repealed on Dec. 5 of '33. But my father left these small vineyards hopelessly in debt. Like everyone else, we were in danger of losing them. And at that time, the price of grapes was only $8 a ton. That would not have made enough money to pay off the debts that my father owed. And we thought that our going into the wine business, taking the crop, converting it into wine when the law permitted, would probably yield enough profits to save the property, and that's what we did.
Shanken: How long did you struggle before you realized that you were building a successful company?
Gallo: From the day we went into the wine business we never thought there was any such thing as failing. It was just another day's work. Shanken: How did it come about that Julio was in charge of production and you were in charge of sales and marketing?
Gallo: Julio always preferred gardening, raising things, being in the field, and he nicely gravitated toward planting vineyards and taking care of them. I, on the other hand, gravitated toward getting to know the retailer, getting to understand marketing, and I spent my time doing that.
Shanken: You make it sound very simple. Many people consider you the father of the modern wine industry. And from a sales and marketing standpoint you were clearly a giant and a leader ahead of your time, yet you've had no formal training. How did you develop the expertise in sales and marketing without having gotten it from schooling or work experience--how does one do this?
Gallo: In the first place I think it's an overstatement to say that--whatever word you used, the reference to me--the fact is that when we made the wine then, of course, the next thing was to sell it, using common sense as far as I was concerned. Go and call the retailer, look his shop over and talk to him. From that, decide what would make good common sense to get him to buy my product. In those days, 1933 and '34, there was very little advertising, and the consumer depended upon the recommendation of their retailer, but the retailer had hundreds of brands, so it was impractical for me to expect him to recommend my brand. But it didn't take much to reason that if I could get the best spot in the store with my product, that, in fact, was a silent recommendation from the retailer. So we struggled and planned how to get a good spot on the shelf and also on the floor.
Shanken: There's a story that goes around and around that Julio always wanted to make more wine than you could sell, and you wanted to sell more wine than he could make. Is this a true story?
Gallo: We kidded a lot about that. With it all, we felt that every year we wanted to sell more wine. And that meant making better wine, constantly better, and with that we did increase our volume continually, then expanded our distribution.
Shanken: In an article in 1986 in Wine Spectator, it was said, "There's almost a feeling of immortality about Ernest. Nothing stands in his way." You're 90 years old. In recent years, you've lost your wife of 62 years, Amelia; a son, David; and a brother, Julio. How do you feel about your own mortality?
Gallo: It's tragic. They were all such great people, all so unfair that they had to leave when they did. Shanken: In another interview eight years ago, when we talked about the future of Gallo and Sonoma, you said to me, "It's the last mountain to climb."
Gallo: (Laughs)
Shanken: Remember that?
Gallo: Yes, I do.
Shanken: Today we went on a tour, a helicopter ride to see the vineyards, visited the winery, saw the barrel-aging room and so forth. Are you at the top of the mountain?
Gallo: No.
Shanken: Why not?
Gallo: There's still so much to do.
Shanken: Look at what you've accomplished with the help of your family, your friends, your employees. It is almost beyond comprehension, what you've achieved. And yet you're not satisfied. Even when we walked around and tasted wine, there wasn't one wine you were happy with; you found a fault with every wine. Is that a good trait or a bad trait?
Gallo: You may be a better judge of whether that's a good trait or not. Either properly or improperly I've always tried to get my people to strive for perfection. We never achieve it. But by trying, we generally improve.
Shanken: So there has never been a moment in your life when you have taken a deep breath and said, "I've done it."
Gallo: I've never done anything that's come close to being perfect. Shanken: What are your important concerns today? Regarding the family business, regarding the future of wine in America, whatever subject--what bothers Ernest Gallo?
Gallo: What bothers me is that our industry has not achieved the status that it really deserves.
Shanken: In terms of the size of the market? In terms of the number of drinkers?
Gallo: In all of those; I think that there's considerable room for making a product that is more generally accepted than it is. What we make is considered very good. In fact, we think there in Sonoma we make probably the best wines in the world, but still, that's judged by what you'd call responsible wine drinkers, experienced wine drinkers. But we think the market's potential is much larger than that. And we should have something that would appeal to a broader spectrum than what we have today. That not only goes for us but for the industry.
Shanken: Has Ernest Gallo slowed down much in recent years?
Gallo: What do you mean by slowing down?
Shanken: Well, what is a typical day? What time do you wake up in the morning?
Gallo: 7 o'clock.
Shanken: And then, what's your day like?
Gallo: Then I go out and exercise. I walk during weekdays--briskly walk a half hour. Saturdays and Sundays I walk an hour, then I'll have breakfast. During weekdays I go to the office, work through lunch, leave the office around 6:30, come home and have dinner. After dinner I put in about three hours--homework that I bring from the office. Saturdays and Sundays, I'll finish up what I didn't have time to do during the week.
Shanken: It doesn't sound like you're taking advantage of your old age very much.
Gallo: I think I am. I think I am.
Shanken: Is the organization pretty much geared to run without you at this point?
Gallo: Yes, it certainly is. We have great people, really great people.
Shanken: Is there an Ernest Gallo in the wings waiting to take over?
Gallo: Oh, there's several of them. Several of them.
Shanken: So you're comfortable in terms of the future leadership of the company?
Gallo: Yes, it may be a better company after I'm gone than it is now.
Shanken: The California wine industry has had, really, in the last 50 years, two leaders: you and Robert Mondavi. Who is going to lead the California wine industry after you and Robert are gone? Is there another generation--a next generation--of leadership?
Gallo: Well, that's a real tough question. Real tough question. Shanken: I know how much the California wine industry means to you, and I know how hard you've worked for many, many years trying to change and upgrade a lot of the state and local regulations, which have tried to strangle the wine industry across America. Won't there be a vacuum after the two of you are no longer here? Will that be a serious problem?
Gallo: Not at all.
Shanken: No?
Gallo: Not at all. Not only in my organization, but in others there are some very capable people. Very capable--in some respects even more than Bob and I. I think that some of them drive this industry far beyond what it is today. No question about it.
Shanken: How do you tell a stranger about what you've accomplished in Sonoma? How do you describe what you've created there?
Gallo: I don't try to talk about it. I don't have that talent or ability.
Shanken: Well, when I was talking to Gina and Matt earlier today, they told me that they were able to buy the best vineyard land and equipment that the world had to offer without compromise in order to produce world-class wines. And they were very grateful, because it's allowing them to make such great wines. Did you--I know you're going to say no, but I'm going to ask you anyway--did you ever have any doubts, any fears that you would be unsuccessful in Sonoma?
Gallo: Never.
Shanken: In other words, in your mind you were going to do it; you were going to do it right, it was going to be a success and there was no possibility of failure?
Gallo: That's absolutely right. In nothing that my brother and I ever undertook did we have the slightest doubt it would be successful. Shanken: That gene, that attitude, where did you get it? Where did you get such self-confidence that you can do the impossible and do it calmly?
Gallo: We didn't do the impossible; we did the obvious.
Shanken: Why was it that you were able to do it and most others weren't?
Gallo: I'm not so sure that others didn't. In fact, I'm sure they have. There's many people in the wine business that started with handicaps equal to ours, if not greater, and have done extremely well and deserve an enormous amount of credit.
Shanken: Eight years ago, we talked about what you were going to call the wines that you were going to make in Sonoma. I and many others thought the last thing you should call it was "Gallo," because the brand name was associated with inexpensive wine. You were very determined to use the Gallo name. It turns out that you used the Gallo name, and it worked. But what was the logic at that time, because it seemed so risky, as opposed to starting new and fresh with a new name or an acquisition?
Gallo: I am really surprised that you felt it'd be risky. Some of the others felt the same way. But again, to me it was crystal clear that the Sonoma winery would be very successful providing we turned out the quality of wine for people to judge as the best in the state. And Gallo-Sonoma--the name--succeeded because we were successful in making the best wine in the state. When you make the best wine in the state, you can call it almost anything--people will accept it. Does that answer your question?
Shanken: Yes, but you were surrounded by people inside the winery and outside the winery that thought you were crazy. Yes or no?
Gallo: Yes.
Shanken: And I remember when I said that in most classic marketing situations brand marketers build from the top down, using the image and reputation at the top to build volume underneath it--as with Robert Mondavi, Inglenook, Beringer, Beaulieu and others. You said that they were depreciating the value of their image by doing that, and that by your going into the premium end using your own name, you were increasing the value and the image of your brand name.
Gallo: That's one. Aside from that, it's so much more fun doing it the way I did it.
Shanken: I think you called yourself a builder, not a buyer.
Gallo: That's right. It's so much more fun to build something than just go out and buy something. There's more satisfaction in building.
Shanken: Will premium wine ever become the largest part of your business?
Gallo: It'll become the largest part of our wine business, but we're in other things, as you know, like brandy and liquor and carbonated wine, which are units in themselves. As far as table wine's concerned, it's going to become very significant. I'm not going to say it's necessarily the biggest, because there are other areas in the table wine business that have great potential in the way of new products.
Shanken: In Gallo of Sonoma you have acquired some masterful pieces of real estate for vineyard development. Why not some day, Gallo of Napa, Gallo of Mendocino--wherever quality grapes are grown?
Gallo: Well, like you said a little while ago, I like to start from the bottom and work up. Some people think Napa has a greater reputation. I'd hate to go there now after we've already established that Sonoma's so much better.
Shanken: Do you rule out the possibility of going to other fine wine regions of California in the future?
Gallo: Not at all. Not at all. It depends entirely on what we find there, to go in that area and do something there particularly noteworthy. Otherwise, why should we go?
Shanken: When did you and Julio make the final decision to aggressively expand in Sonoma? I know that you've been buying grapes from the Frei Brothers winery for decades, and I am told that you started buying an interest in the winery in 1970, with formal ownership of your first vineyard there in 1977. But at what time, before or after 1977, did you and he agree that this would be the next big push for Gallo?
Gallo: It must've been around that time. It's something that we felt would happen as the opportunity developed.
Shanken: You used to tout Gallo's Hearty Burgundy over first-growth Bordeaux. Now that you're in the premium end of the wine business, have your tastes changed?
Gallo: I haven't tasted first-growth Bordeaux in years. Some day I'd like to taste it against our Gallo-Sonoma and see how it rates. Where wines of all over the world are in competition, we have done exceedingly well.
Shanken: Tell me about your new campaign, in which for the first time you're using younger family members as spokespeople and in your advertising. What made you decide to go in that direction, which is most unusual for your very private company?
Gallo: The third generation has become increasingly active and responsible for our winemaking, our grape-growing and now even in our sales. And I think it's proper and timely for us to recognize that.
Shanken: You and Julio have 20 grandchildren, of which 17 are in the company today. I imagine that pleases you very much.
Gallo: Yes. I'm very happy to see them participate so effectively. Shanken: What do you think of the future for California wine exports around the world?
Gallo: I wish that we would have a level playing field. I'd like to see an equalization of the tariffs. In every country outside of the United States the tariffs are much higher than the tariffs of wine coming into the United States. If those tariffs were harmonized with ours, I think we'd have a great opportunity because of the quality of our products, even though our labor costs generally are much higher than wines in Chile and Argentina and other parts of the world. Also our land costs a lot more. Still, even with those handicaps, if tariffs were harmonized, I think we'd get a very appreciative share of the world business. Our quality is really constantly being improved and being recognized.
Shanken: You have always paid a lot of attention to your diet, to exercise and to drinking wine every day. Do you believe that wine is one of the main reasons that you not only lived to 90, but that your mind is as sharp as it was 30 years ago?
Gallo: Well, I'm not sure. But I do take very good care of myself in that I eat what everybody knows now is a proper diet. As far as wine's concerned, it's true that I drink two glasses of wine a day: one for lunch and one for dinner. I read quite a few research reports that found--or they state they have found--that wine is good for the heart, extends life and all things of that type. Whether that's true or not, I don't know enough about it to comment on it. I do know that some people shouldn't be drinking at all. And no one, if they're not drinking wine now, should start drinking wine unless they talk to their doctor and see if they can handle it without risk.
Shanken: What was the biggest challenge that you faced in building Gallo?
Gallo: That when I wanted to get started, I went to some of my relatives. I wanted to borrow $5,000. They told me they had no money to lose.
Shanken: The landscape of the California wine industry 50 years ago included such giant wine companies as Italian Swiss Colony, Roma, Petri, among others--big, strong wine companies, none of which are in existence any more. Obviously, you did things differently than they did. What was your strength? What was their weakness that they couldn't survive?
Gallo: I'd say two things. One, I went into retail stores. And two, we made better wine.
Shanken: When you said you went into retail stores, what I assume you're really saying is you wanted to see what consumers were buying. Now we're up to the 1980s. What was your reaction when it was announced that Coca-Cola was going into the wine business, which at the time was headline news because Coca-Cola was the giant of the soft drink industry. Did you ever feel threatened by it?
Gallo: Not at all. Not at all.
Shanken: They say that Pepsi is better because of Coke. Were there things that you did to adjust? It would seem to me that you had, up until then, eliminated your competition, and now comes along one of the great blue-chips of America, Coca-Cola, to be in the wine business. It had to concern you. Didn't it?
Gallo: At that time, we did not feel that we had eliminated competition. The wine business had been very competitive from the very start. In fact it's as competitive today, or maybe more so. As far as Coca-Cola's concerned, they, without question, are experts in selling soft drinks. Selling wine is obviously different. All we did when they came in was continue doing what we were doing, but doing it better.
Shanken: Do you have any regrets, or are there any things you would like to have done differently in your business?
Gallo: No.
Shanken: Or that you didn't do, and wish you had?
Gallo: No.
Shanken: Do you see per capita consumption of wine in America growing?
Gallo: It will.
Shanken: Because?
Gallo: New products.
Shanken: It's 50 years from now. It's 2050, and there's a big, fat book on your great-grandson's desk that says, "Encyclopedia of Wine." He turns to page 172, and it says "Ernest Gallo." What would you like it to read?
Gallo: He was here.
Shanken: Seriously, what do you feel is your lasting contribution to wine? I know it's hard because you don't like to speak of yourself, but is there something you can say?
Gallo: Not really.
Shanken: Not for me, but for your grandchildren?
Gallo: Neither for them. I mean, nothing that I've done is outstanding, deserves to be put down in stone.
Shanken: I have one last question: In a number of months, we're going to be reaching the new millennium. Have you thought about what you'll be drinking that night?
Gallo: (With a smile) Gallo-Sonoma.
Monday, January 29, 2007
Capitale sociale e capitale culturale
Pavese
Il libro si propone di verificare la narrazione di successo che accompagna la vicenda dei vinicoltori piemontesi in California e di spiegarne le dinamiche.
Capitale sociale e capitale culturale (The Economic Sociology of Immigration)
Ciclo dell'integrazione economica dei gruppi immigrati? (Razza -- La questione della forza lavoro nell'agricoltura californiana eil ruolo di cinesi, messicani e italiani)
Il fatto che la California raccogliesse l'elite dell'emigrazione italiana negli Stati Uniti, per quanto riguarda il capitale tanto finanziario quanto di conoscenze e capacità, possiede una base oggettiva sul fatto che la lunga distanza richiedeva un investimento significativo e rendeva difficoltosi soggiorni temporanei finalizzati a un veloce accumulo di denaro da investire o spendere in patria. Un'altra conseguenza di questo dato di fondo fu il costituirsi di una minoranza italoamericana di gran lunga meno numerosa, in termini assoluti e percentuali, di quanto si verificò nelle aree urbane dell'est degli Stati Uniti. La qualità occupazionale differì di conserva. Gli italiani che trovarono occupazione non qualificata nella manifattura e nell'edilizia furono relativamente meno in California che negli stati orientali dell'Unione. L'agricoltura attrasse invece percentuali molto più significative di italiani in California che all'est.
Infatti, classe e capitale furono fattori sinificativi nell'esperienza "fortunata" degli immigrati peimontese in California. I principali protagonisti delle vicende narrate nel libro non erano contadini privi di terra, conoscenze tecniche e capacità imprenditoriali. Il futuro presidente dell'Italian-Swiss Colony, Pietro Carlo Rossi (1855-1911), era il rampollo di una agiata famiglia di Dogliani. Le condizioni economiche e sociali della sua famiglia gli consentirono di frequentare e terminare billantemente gli studi presso la Facoltà di Farmacia dell'Università di Torino. Fu la sua ambizione personale, unita ai contrasti con la matrigna, con la quale il padre si era risposato alla morte della madre, a spingere lui e il fratello -- anch'egli farmacista -- a considerare l'avventura americana. Secondo Guasti era ugualmente figlio di una famiglia possidente di San Secondo, in cui il apdre era già versato nell'emigrazione transoceanica. I fratelli Gallo provenivano da una famiglia di ristoratori (?)
Capitale sociale: i piemontesi "fanno gruppo"; strategie matrimoniali dettate dalla riuscita di progetti imprenditoriali attraverso la vitivinicoltura (P.C. Rossi sposa la figlia del mercante di SF, i fratelli Gallo sposano le figlie del proprietario piemontese della vineria di Oakland, Seghesio sposa la figlia di Vasconi ecc.); accesso al credito; ethnic market; presenza di un'ampia forza lavoro discriminata e sottopagata (asiatici) permette ai proprietari di sottopagare la manodopera italiana (v. Dillingham Commission Reports); il Proibizionismo crea una nicchia semilegale o illegale in cui i piemontesi sono sovrarappresentati; Asti e Guasti = la Chiesa
Capitale culturale: importanza e fiducia nel tradizionale investimento nella terra, come bene primario e durevole, sospetto verso le funzioni di mediazione e commercio, integrazione di queste ultime nell'attività produttiva (verticismo); la specializzazione nel vino origina in Piemonte ma si affina ampiamente in California (nuove tecnologie)
Il libro si propone di verificare la narrazione di successo che accompagna la vicenda dei vinicoltori piemontesi in California e di spiegarne le dinamiche.
Capitale sociale e capitale culturale (The Economic Sociology of Immigration)
Ciclo dell'integrazione economica dei gruppi immigrati? (Razza -- La questione della forza lavoro nell'agricoltura californiana eil ruolo di cinesi, messicani e italiani)
Il fatto che la California raccogliesse l'elite dell'emigrazione italiana negli Stati Uniti, per quanto riguarda il capitale tanto finanziario quanto di conoscenze e capacità, possiede una base oggettiva sul fatto che la lunga distanza richiedeva un investimento significativo e rendeva difficoltosi soggiorni temporanei finalizzati a un veloce accumulo di denaro da investire o spendere in patria. Un'altra conseguenza di questo dato di fondo fu il costituirsi di una minoranza italoamericana di gran lunga meno numerosa, in termini assoluti e percentuali, di quanto si verificò nelle aree urbane dell'est degli Stati Uniti. La qualità occupazionale differì di conserva. Gli italiani che trovarono occupazione non qualificata nella manifattura e nell'edilizia furono relativamente meno in California che negli stati orientali dell'Unione. L'agricoltura attrasse invece percentuali molto più significative di italiani in California che all'est.
Infatti, classe e capitale furono fattori sinificativi nell'esperienza "fortunata" degli immigrati peimontese in California. I principali protagonisti delle vicende narrate nel libro non erano contadini privi di terra, conoscenze tecniche e capacità imprenditoriali. Il futuro presidente dell'Italian-Swiss Colony, Pietro Carlo Rossi (1855-1911), era il rampollo di una agiata famiglia di Dogliani. Le condizioni economiche e sociali della sua famiglia gli consentirono di frequentare e terminare billantemente gli studi presso la Facoltà di Farmacia dell'Università di Torino. Fu la sua ambizione personale, unita ai contrasti con la matrigna, con la quale il padre si era risposato alla morte della madre, a spingere lui e il fratello -- anch'egli farmacista -- a considerare l'avventura americana. Secondo Guasti era ugualmente figlio di una famiglia possidente di San Secondo, in cui il apdre era già versato nell'emigrazione transoceanica. I fratelli Gallo provenivano da una famiglia di ristoratori (?)
Capitale sociale: i piemontesi "fanno gruppo"; strategie matrimoniali dettate dalla riuscita di progetti imprenditoriali attraverso la vitivinicoltura (P.C. Rossi sposa la figlia del mercante di SF, i fratelli Gallo sposano le figlie del proprietario piemontese della vineria di Oakland, Seghesio sposa la figlia di Vasconi ecc.); accesso al credito; ethnic market; presenza di un'ampia forza lavoro discriminata e sottopagata (asiatici) permette ai proprietari di sottopagare la manodopera italiana (v. Dillingham Commission Reports); il Proibizionismo crea una nicchia semilegale o illegale in cui i piemontesi sono sovrarappresentati; Asti e Guasti = la Chiesa
Capitale culturale: importanza e fiducia nel tradizionale investimento nella terra, come bene primario e durevole, sospetto verso le funzioni di mediazione e commercio, integrazione di queste ultime nell'attività produttiva (verticismo); la specializzazione nel vino origina in Piemonte ma si affina ampiamente in California (nuove tecnologie)
Sunday, January 28, 2007
Tuesday, January 23, 2007
A New Wine Country Rose from the Ruins
W. Blake Gray, Chronicle Staff Writer
Thursday, April 13, 2006
San Francisco was the hub of the wine business until the quake destroyed tanks and barrels, spilling Zinfandel into the streets. It also prompted the industry to move closer to the vines.
As part of The Chronicle's 10-day 1906 earthquake anniversary series, this is the Earthquake and Wine story.
"What story?" you might ask. What possible impact could an earthquake in the city have had on Wine Country?
It turns out that in 1906, San Francisco was Wine Country. In fact, it was its epicenter, at least in California.
Although few if any grapes were grown in San Francisco, 100 years ago, the city was the undisputed capital of California's wine industry; it was to wine what Hollywood is now to the movie industry -- the storage, marketing and business headquarters, even if production was often done elsewhere.
The quake changed that forever. With their headquarters and most of their wine destroyed, wineries moved their operations closer to the grapes, and thus what we now think of as Wine Country was also changed forever.
San Francisco had its day as the Hollywood of wine, according to wine historian Charles Sullivan of Los Gatos, because merchants were king, and they were here, close to shipping and railroad lines.
Monopolistic control
The powerful California Wine Association, created in 1894 and based in San Francisco, held a near-monopoly on the state's wine.
"Most of the wine produced in Northern California was industrial," Sullivan says.
As an example, Gundlach Bundschu Winery is today a small family business in Sonoma, making 40,000 cases of wine per year. But before the quake, Gundlach Bundschu was based in San Francisco, had an office in New York and cranked out 250,000 cases per year, much of it fortified wine.
Although it was not a member of the CWA, Gundlach Bundschu was able to compete because the company owned its own large vineyard in Sonoma Valley; ironically, the vineyard was then considered the least important part of the business.
"It was a classic bulk wine operation," says Jeff Bundschu, whose great-great-grandfather, Charles Bundschu, lost his home in the quake and -- not foreseeing the strength of his descendants -- thought he lost his business also (See "A brand renewed").
Regardless of the plonk in the bottle, California wines of 1906 often had fancy fake French labels. The Pure Food and Drug Act passed by Congress that year would eventually eliminate the practice, but it wasn't yet being enforced.
How did the wines of 1906 taste? We don't know for sure; tasting notes were different then. Or maybe citizens of the time didn't care about the distinction between blackberries and blueberries.
But we can guess by the way wine was produced -- Zinfandel-Cabernet Sauvignon blends were common -- and stored -- refrigeration was unusual -- that enophiles of 1906 required tolerant palates.
"You do get a sense that the red wines were pretty good," says Sullivan, though he adds that because of their industrial production, the best reds from the mid-1900s weren't considered as good as the best red wines from the 1880s and 1890s. "In California, you would find Zinfandel as a varietal. It was not anything like these monsters that are coming out now. It was comparable to a French claret, with 12 percent alcohol."
Some 1906-era brands still exist today, including Almaden, Beaulieu Vineyard, Beringer Vineyards, Charles Krug and Concannon Vineyard. Gundlach Bundschu and Livermore's Wente Vineyards stand out because they are still owned by the same family.
Sullivan says in 1906, sparkling wine, both from France and domestic producers Paul Masson and Korbel Champagne Cellars, was far more popular than it is today.
But he says: "The white wines weren't very good." Modern refrigeration techniques weren't much in use, and long barrel fermentation was popular, probably giving most white wines an oxidized flavor with little fresh fruit character.
Most of what we now consider Wine Country was not hit as hard by the quake as San Francisco, though Santa Rosa had serious fires and buildings were damaged in the city of Napa.
Also, because San Francisco was the storage center, the majority of the state's oak barrels were destroyed, forcing wineries to use redwood -- a practice that continued in many places until the 1970s.
But to put it in context, the earthquake was a tiny bump on the wine industry's drive of progress.
"By 1908, everything was pretty much back," Sullivan says.
Prohibition crushes industry
Prohibition, not the quake, was the real roadblock for most of California's wine industry. When the nation outlawed the manufacture, sale and transportation (but not consumption or home production) of "intoxicating liquors" from 1920 through 1933, the wine industry was so thoroughly crushed that most prior events (save for the planting of some now-treasured Zinfandel vineyards) became inconsequential.
Indeed, the years between 1900 and 1919 are not as celebrated by the California wine industry as the 1880s, when California wines earned their first medals in Europe and when -- after the outbreak of phylloxera in France -- they briefly became the entire world's hope for the future of wine.
The early 1900s were dominated by the CWA. Sullivan wrote that in 1906, the CWA had direct or indirect control of about 75 percent of the commercial wine stored in San Francisco, much of which it lost in the fire that destroyed its Third and Bryant headquarters. Historian Thomas Pinney wrote that the CWA lost 10 million gallons of wine -- the equivalent of more than 50 million of today's standard 750-ml bottles.
The online records (1-22infantry.org/history/friscopagewo.htm) of the U.S. Army's 1st Battalion 22nd Infantry read: "During the first day of the disaster, liquor could be obtained from deserted saloons, and on one street from rivers of wine running down the gutters from the bursted vats of the California Wine Association. Many cases of incidental trouble occurred."
Historian William Heintz grabbed headlines in the mid-1980s by telling the Associated Press that the CWA could have saved its building and many others by dousing the fires with wine.
Fighting fire with wine
In his book "California's Napa Valley: One Hundred Sixty Years of Wine Making," Heintz wrote that a Chinese laundry across the street from the CWA caught fire and within an hour the entire block was burning, with firefighters helpless to put it out because the city's water mains were broken.
"Why wasn't wine used, given the extreme urgency of the situation?" Heintz wrote, saying that firefighters could have simply dropped a hose into one of the CWA's many tanks of wine. "Almost exactly 10 years earlier, wine had put out a major fire at the Korbel winery in Sonoma County. ... It would have been a poignant footnote to history had the CWA's 10-year-old Clarets been used to save the city."
Of course, by the time Heintz asked the question, no firefighters survived to answer it.
As for the CWA, the quake was a blip: the organization was so powerful that it simply relocated to the East Bay, building Winehaven, an even larger facility on Point Molate west of Richmond -- now the site of the proposed San Pablo Bay casino.
Moreover, the CWA didn't even lose all of its wine.
Sullivan writes that after the CWA's cellars were cleared, workers found as many as 35,000 bottles of wine that had not been destroyed.
"The company's public relations people spread the word that the super-heating and cooling had produced a strangely high-quality wine," Sullivan writes. "They announced to the press, 'Of course, this is a very expensive way to produce fine wines, and the Association will certainly not endeavor to repeat their success.' These wines were supposedly cased with a special label as a souvenir of the disaster."
Considering how everyday wine must have tasted in 1906, the CWA's special Smoky Reserves could very well have been a treat. (See "Liquid smoke") Again, we'll never know; Sullivan writes that he's never seen a label of one of these unusual products.
The CWA's main rival was the Italian Swiss Colony at Asti, which had led a grapegrowers' group called the California Wine Makers' Corp., formed to stop the CWA from dictating prices.
"By 1897, (they) were engaged in full-scale war in the major markets of the country," Pinney wrote.
But by 1899, the war was over; by ruthlessly cutting prices, the merchants' group had won. The growers' group was dissolved, and the CWA absorbed the losers, including the still-powerful Italian Swiss Colony into its organization.
Yet in 1906, the ISC still had its own 2-million-gallon warehouse in San Francisco, on the corner of Battery and Greenwich streets, and it had a markedly different fate than the CWA's.
The ISC warehouse had a natural spring underneath it, according to "Andrea Sbarboro: An Early American Success Story," a memoir by the organization's managing secretary.
The Army dynamited most of the buildings in the neighborhood in an attempt to contain the fire, but ISC founder Pietro Carlo Rossi persuaded soldiers to spare the ISC building for its water supply.
"After the fire was over, our spring was one of the few sources of fresh water in the city," Sbarboro wrote. "People came from all parts with buckets and barrels."
Then as now, San Francisco had a large Italian-American presence, and Sbarboro wrote that their love of the fermented grape saved some of their houses.
"Several residences on Telegraph Hill belonging to Italians, who always keep a few tanks of wine in their cellars, were saved by saturating blankets in wine and using them to cover the roofs of their homes," he wrote.
So the lesson from 1906 is: Keep plenty of wine at home. It might save your dinner tonight, and your house tomorrow.
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