INDUSTRY: American Wine Comes of Age

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Wine is hardly a new phenomenon in the U.S. The Spanish missionaries who brought European civilization to the New World also brought European grapes. Before the U.S. was a nation, Franciscan Padre Junipero Serra, founder of nine Spanish missions in California, was making wine in San Diego. After the Gold Rush in 1849, a Hungarian adventurer named Agoston Haraszthy brought 200,000 premium European grapevines to California. In the 1880s an epidemic of the root disease, phylloxera, wiped out nearly all of Europe's vineyards. Thousands of American rootstocks, with their phylloxera-resistant native roots, were shipped over to Europe. Thus most European wine is made from transplanted U.S. vines, and most California wine is made from vines that originated in Europe—a kinship that Californians never tire of pointing out to Francophile wine snobs.

California had its own cataclysm in the 1920s: Prohibition. Many of Haraszthy's precious vines were ripped up. By the time of repeal in 1933, only a handful of vintners were left, turning out spirits supposedly for sacramental or pharmaceutical purposes. Against this dismal backdrop, Ernest and Julio Gallo entered the business.

Born near Modesto, the brothers grew up working the small vineyard owned by their father, an immigrant from Italy's northern Piedmont. "We had a tractor in the barn, but we didn't have enough money to buy gas," recalls Ernest. "Instead, we used four mules and worked the vineyards seven days a week from daylight to dusk." With the first stirrings of repeal, they dug up $5,900.23 in capital and set out to produce their own wine. They rented a railroad shed for $60 a month, bought a $2,000 grape crusher and redwood tanks on 90-to 180-day terms.

There was one nettlesome problem: though they had plenty of experience growing grapes, they did not know how to make wine. In the Modesto public library, Ernest found a pair of two-page pamphlets, one on fermentation and the other on the care of wine. Thus enlightened, he made the rounds of local grape growers and soon had enough grapes to make all the wine that the tanks could hold—but no customers for it. A few days before Prohibition ended, the brothers received a form letter from a would-be wine distributor in Chicago. Ernest Gallo immediately hopped a plane for Chicago and sold the distributor 6,000 gallons at 50¢ each. Emboldened, he continued East and found enough customers to take his entire production. The Gallos' first-year profit was $34,000, all of which was plowed back into the company.

The brothers prospered steadily but were small-time wine makers until 1940, when they acquired bottlers in Los Angeles and New Orleans and attempted nationwide marketing for their early sherries and muscatels. They recruited their own salesmen and instructed them to see that their product gained a prominent position on liquor-store shelves. The salesmen's zeal gave the company a reputation for ruthlessness. Some oldtimers say that teams of Gallo men would stride into a store and tough-talk the proprietor into keeping competitors' wine on less visible shelves. Others insist that Gallo salesmen merely used economic incentives, such as offering a month's free supply if Gallo wine were given good display.