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Shanken: Before 1933, when Prohibition was repealed, did you spend much time in the wine business?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Gallo: I should say a year or two before Prohibition was repealed, starting in about 1930, we did start thinking that if the law would change that we'd like to get involved in the wine business.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.
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