The Big Brands 3: Gallo

Once the biggest producer in the world but now running 2^nd to Constellation. The only good thing to say about Gallo is that, unlike Constellation, they are at least based in wine country.

A lucky break?

Earnest and Julio grew up working in the vineyards owned by their immigrant father who had moved to America from Piemonte in Italy. In 1933, the ambitious boys could see the opportunity presented by the end of prohibition. With a small, but opportune, inheritance of $5,900 they set up their first winery in a ramshackle shed with a book borrowed from the local library. They made $30,000 in their first year by producing ordinary wine for 50c a gallon; ½ the price of their competitors.

Their company now sells around 900,000,000 bottles of wine a year under 40 different labels. Only recently deceased, the brothers were renowned for being shrewd, aggressive and secretive. Former associates suggest the reason they shunned publicity was the nature of their parents’ deaths. Fresno County records say their father, Joseph, shot their mother, Susie, to death in June 1933, then killed himself. That was just two months before the boys founded the Gallo winery.

The environment

When Gallo expanded winegrowing operations in Sonoma County, its environmental record was terrible. It paid $500,000 to settle a multi-agency lawsuit for damage to a Russian River tributary at its controversial Russian River/McMurray Ranch vineyard development. In 2001 a Gallo subsidiary working on the same property was ordered to pay $95,000 to settle a Clean Water Act suit for dumping fill in a wetland and improper creek drainage excavation. In another hearing Gallo’s Sonoma neighbours complained of many similar incidents that have gone unpunished. As one local newspaper in Sonoma County put it, “the company put profits and expediency above the environment.”

In a vineyard expansion plan Gallo proposed to cut down 320 irreplaceable mature native oaks, a protected species. At the time UFW National Vice President Efren Barajas, the union’s regional director for the Central Coast said, “Gallo can’t be trusted to do the right thing.”

Workers rights

On Tuesday, June 14, 2005, the Cesar Chavez-founded United Farm Workers asked North American wine consumers to join a new international boycott of the Gallo winery. A noon rally at San Francisco's City Hall was attended by hundreds of vineyard workers and supporters who kicked-off the UFW's first major nationwide boycott in more than 20 years. UFW Union President Arturo Rodriguez premiered boycott posters, buttons and bumper stickers spotlighting Gallo’s exploitation of its Sonoma County vineyard workers, 75% of whom are denied any benefits or job protections. "The Gallo’s abuse, cheat and deny the majority of their workers benefits, job protections and humane living conditions in the heart of California's fabled wine country," he noted. "The Gallo’s deny responsibility for what is being done to farm workers on their behalf, on their land, to produce their product and to help make their money. Through this boycott people of goodwill can say, 'No Gallo!'"

The following scandal was widely reported early in 2010.

E&J Gallo bought 17 million bottles of wine from the south of France which they sold as "Red Bicyclette Pinot Noir", cashing in on the demand following the film "Sideways". Over a 2 year period no-one from Gallo spotted it was not Pinot Noir - Neither did their consumers. You would have thought that a company as big as Gallo would have realised that: 1) They were paying well below the market rate for Pinot Noir, 2) They had chosen to buy it from a southern French area not known for growing Pinot Noir, 3) They were buying well in excess of the total possible production for the entire region and 4) any routine test would have shown that it wasn’t Pinot Noir.

The fraud was spotted by a French agricultural auditor. The French perpetrators were fined a fraction of their additional profits. Despite having been conned, Gallo continue to remain silent.