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.
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