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Gina Gallo: Eleven questions, eleven answers

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SH: What kind of year was 2009 for E&J Gallo?

GG: We came through it, thank goodness, due to the planning of my father [Bob] and [Uncle] Joe. Obviously, international is having a tough time, but when you look at domestic, we’ve never lost focus. So the portfolio being diverse [helped]. Maybe someone wasn’t willing [to spend] on a higher priced wine, but was for Gallo of Sonoma at $14. We certainly saw the high-priced wines slow down. Also, it goes back to the structure of the company. We’re at a good place, and that’s helped tremendously.

What were your strongest performing brands last year?

Louis M. Martini is rocking — the Sonoma [County] you can get for $14. Barefoot on fire. Alamos Malbec [Mendoza]. And Frei Bros. is hot.

Weakest performing brands of 2009?

Some of the hardest sells were the international — Red Bicyclette, Europe, because of the exchange [rate]. McWilliams [Australia]. And our top end Australian, Clarendon Hills Syrah. It gets fabulous ratings, but at $100, tough tough tough.

Any information on whether 2010 will bring improvement?

Before it gets worse, or stays the same? [laughs] That’s the big question. Nothing educated, but we’re going to be riding it a little longer. We’ve seen the percentage of per capita drinking wine [in America] is still growing, so in that regard, we’re supposed to be up 9% this year, speaking in general for the industry. That’s a positive thing. So we’re anticipating good growth in 2010.

Is it a seller’s market or a buyer’s market for bulk wine and grapes?

It’s more of a buyer’s market, although it’s complex with different varietals and regions. In general, there’s more grapes than mouths to feed — that’s just basic supply and demand. Not necessarily in Napa-Sonoma, but in Central Coast you can get decent prices.

Gallo hasn’t purchased any wineries for a while. Anything going on?

There’s nothing to announce. We’re always looking, as you know. William Hill was the last one. So nothing new.

How come the company never went public and will it ever?

Our biggest strength is staying private. We can move faster and invest in the long term, and we’re not accountable to paying back money to elsewhere.

As the family gets bigger, is everyone assured of a decent job?

Well, not everyone wants to work for the business. You’re always looking at who’s the best person for the job, and if it’s someone who’s not a family member, they get it. That’s been drilled into our heads. That’s what we believe and how we work. But it does get more challenging as family gets larger. It takes more planning.

The company has largely depended on MacMurray Ranch for Pinot Noir, in addition to a little from Gallo Family, Frei Bros. and maybe a few others. With Pinot so hot in the market, do you have plans to launch new brands or regions?

Well, MacMurray Pinot could be [about] finding the best pinot in Oregon or Santa Rita, so we want to expand into different areas. Frei is, as you know, about Sonoma County. And we have some small production from Gallo Family.

What wine did you drink last night?

One was [Gallo of Sonoma] Laguna Chardonnay, 1998 …awesome! Russian River ages extremely well. More of that terroir, the acid was still great. And the other one was an old Bordeaux, 1972, Pichon Lalande.

How’s married life? [Ms. Gallo married J.C. Boisset last September]

Awesome! Still smiling.

Gina

  1. Anonymous says:

    72 Pichon-Lalande? 72?? Must be a typo. No one is drinking 72s.

  2. No typo.

  3. And here i was going to question the ’98 Laguna Chard; must have been the last time I was at a Gallo property, and that Chardonnay was a stunner, very surprising for them to make.
    Also the last time I saw Gina Gallo–at that time with a wrench in her back pocket, trying to fix a bladder press. Might say she has come a long way since paying her dues! Steve, are the questions part of a larger piece?

  4. Colin, no larger piece. It is what it is.

  5. Gina comments on a nice $14 bottle of wine, and then mentions
    a fabulous $100 Clarendon Hills Syrah. The money question is, are they selling much $50 wine, or how about $30? $20? Enjoyed the interview, but am curious at what price does EJG find the market won’t buy? We know that the market isn’t at $50 for fine wines, nor is at $40. Where does EJ find the market for fine wine, that consistently sells? If you happen to know, or have an idea, Steve, it would be interesting to know. Locally, $50 is a tough sell. $40 seems to get some interest, but my “impression” is that a fine wine at $25-$30 can sell consistently.

    Interestingly, with the new law change that went into effect Jan 1, wineries can now sell by the glass (not too surprising because most Napa wineries already charged a tasting fee). Here, in the Paso Robles area, some do, many don’t. But the fascinating thing I have as feedback from the upscale eateries and hotels is that whereas a bottle of $50 fine wine won’t sell, a $12 glass of fine wine does sell, and it sells consistently. At 4 glasses/ bottle, that means there is a growing market for $50 fine wine, albeit, sold 1 glass at a time. I am curious if that happens to be your experience, also, Steve…ie, is this a local phenomenon, or is this commonplace up and down the state?

    A final note and that is reports of $50-$80 fine wine “tastes” of 3/4 oz (two sips) for $3 -$3.50 is a very popular way to sell expensive fine wines. I know it is successful at wine tasting bars with tasting machines, (argon gas sits on top of wine in dispenser to keep out air). This has reportedly been successful
    in the Lompoc/Buellton/ Santa Ynez area, and also here, locally. Have you any info that corroborates this, Steve?

  6. Interesting to hear her take on being a privately held company – I work (for the next 12 months, anyway) for a **big** privately held company, and we often cite those same things as giving us additional freedoms in choosing what we want to pursue as a business.

  7. Larry, my impression is this: No winery owner is going to go public with details about sales. So I have to take them at their word. My sense is that $30-$50 is dead. But I suppose certain brands are bullet-proof. And I must say, even in the hard-hit San Francisco area, I still see nightclubs packed, and the lines at Whole Foods — where everything costs 50% more than at Safeway — are irritatingly long. So maybe people are still springing for $40 wines. I understand your question, but I can’t intelligently answer it.

  8. Thanks for the response Steve, but also are you aware of selling $50-$80/bottle wines by the (3/4 oz) “taste” for $3 to $3.50/ “taste”? Recently I have seen it somewhat locally, and just wondered if you have seen that particular method of selling high end wines…by the taste.

  9. Larry, I have seen what you describe. I’m not sure it’s the answer to stockpiles of expensive wines that aren’t selling. A restaurant would have to more an awful lot of glasses to burn through 3-4 cases.

  10. Steve, point well taken, but I suspect the utilization of $3.50 pours of 3/4 oz( 2 sips) would be found more often in wine bars, (and now with the new state law change allowing wineries to sell wine by the glass), I could see wineries selling “tastes” of $50-$80 bottles of wine, 3/4 oz at a time, for $3 to $3.50/ taste. Undeniably, even with recession and hard times, people are still drinking $12 glasses of $50 wine, but they are NOT buying a $50 bottle.

  11. You should have asked Gina how Thunderbird and Night Train Express are doing with the unemployment rate up.

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