INDUSTRY: American Wine Comes of Age

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Julio, 62, is in charge of making the wine, and Ernest, 63, markets it. The two are about as similar as Burgundy and vodka. Julio is warm and affable. Ernest is intense, crusty and harddriving. "If you tell Ernest it's a nice day, he'll ask you why," says Louis Gomberg, an industry consultant.

The Gallos' impact on American wine making has been enormous. They were the nation's first wine makers to hire research chemists. Years ago they abandoned wooden fermenting casks for stainless-steel tanks, and because wood casks can breed unwanted bacteria, most of the domestic industry has followed. The Gallos were the first to automate their wineries by, among other things, computerizing the blending process. They also pioneered in pop wines—the sweet and occasionally effervescent drinks that are washing over the country. Last year, producing six of the dozens of entries on the market, Gallo accounted for 90% of the 60 million gallons of pop wines sold in the U.S.

Makers of costlier premium California wines praise the Gallos for bringing new wine drinkers to the fold with their inexpensive wines, even though many drinkers damn the pop wines as an insult to cultivated taste. "Ernest Gallo has done more for the industry than any individual alive," says Joe Heitz, whose small winery turns out some of the state's most sophisticated wines. Though Gallo wines have long been something of a joke among wine snobs, lately oenophiles have been pleasantly surprised. Gallo's Pink Chablis recently triumphed over ten costlier competitors in a blind tasting among a panel of wine-industry executives in Los Angeles. Says Robert Balzer, a wine critic for Holiday and the Los Angeles Times: "Gallo Hearty Burgundy is the best wine value in the country today" (see box, page 83).

The Gallos are the last major entrepreneurs in an industry that is being taken over by large, publicly held corporations. Heublein Inc., a big distiller and food processor, has bought United Vintners (which makes Italian Swiss Colony and Inglenook) and Beaulieu Vineyards. Seagrams controls Paul Masson and Browne Vintners. Brown-Forman Distillers, the Kentucky whisky maker, recently picked up the distributorship of F. Korbel and Bros., the big California champagne producer. National Distillers & Chemical has acquired Almadén. Two months ago the parent company made an offering of Almadén stock at $20 a share; it has since risen to $29.

Breweries are also adding wine lines: Schlitz and Seattle's Rainier companies have moved into the wine business during the past few years. Food-processing companies are heeding the ancient Roman proverb, "A meal without wine is like a day without sunshine": Pillsbury Co., Nestlé and the R.T. French & Co. of mustard fame have recently become vineyard owners. So have Lazard Frères, the Wall Street investment-banking firm; John Hancock, the insurer; and Southdown Inc., the Houston-based conglomerate. Takeover-ripe wineries have become rare, and the bids for them are enormous. The Gallo brothers have spurned an offer from Seagrams of reportedly $150 to $200 million.