Tag: Gallo

Vol 4 No 6 What’ll you have? Red, White…or?

Oldtimers like TB recall Boone’s Farm which probably got more people interested in wine than anything else. Credit Ernest and Julio, Gallo that is, for that. Then they came up with Madria Madria Sangria. Nobody had had sangria at that time and suddenly it was all the rage. But here’s the thing: Cesar Chavez was leading the farmworkers protests at the time, so what did Ernie and Julio do? They ran commercials with a latina spouting on the wonderful sangria “my hussband and his oncle” made.  One has to wonder how many people who supported the farmworkers were duped into buying it.

One year, watching the World Series, I saw several commercials for Carlo Rossi Wine. Huh? Never heard of it…how can they afford to do it. Well…Carlo was a distant cousin and voila! Gallo paid for the commercials and of course owned the winery (?) – probably made at the Gallo winery.

Lastly, they came up with Bartles & Jaymes wine coolers. They even had a phone number you could call and hear the boys talking to one another…and a house with a sign out and two guys rocking on the porch. At the time, Gallo owned the largest intra-state trucking company.

They were nothing if not innovative and once you got past the ‘pop’ wines, dollar for dollar they made the best wine in the U.S., dollar for dollar. Hearty Burgundy was the best of the bunch…even though it contained no burgundian grapes!

Then Julio died in 1993 in an accident when a vehicle (jeep?) he was driving veered off a farm road leaving it all to Ernest to run the company. About this time, Gina Gallo bought land in Dry Creek Valley and wanted to make a premium wine. The catch was she had to use the Gallo name. Now imagine an enophile having a dinner with a bottle of Gallo on the table! BUT, she overcame that and produced a respectable table wine.

What next? They decided to buy up wineries around the world. Do you like Albarino? Martin Codax. Rather than list them all consider Apothic, Edna Valley, William Hill, and a flock of others. Here is a link: Gallo portfolio You will be amazed as TB was. They are now the largest wine producer in the world.

Now back to the winery. The great Andre Tchelistcheff’s son, Dimitri, went to work there. Why? Because he couldn’t stand the way Madame treated his father at Beaulieu Vineyard. He then hired Richard G. (Dick) Peterson as a chemist, introduced him to Andre and eventually Dick left to work under Andre. Then, when Heublein bought B.V., Dick ascended to being winemaker with Andre leaving to become a consultant. Note that Heidi Peterson Barrett, his daughter, became one of the top winemakers in America.

TB refers back to his early comment that Gallo made the best wine in America, dollar for dollar. Don’t underestimate them…many have and were proven wrong.

So why all this about Gallo? Because they were single-handedly responsible for introducing young people to wine coolers, pop wines, and finally table wines. Finally, we are back to the title of this edition. There has always been, and continues to be a ‘logical’ (?) progression from sweet white wines to dryer whites, to rose’s and lighter reds to full-bodied reds. Here is a link to a new study that confirms this:  WineBusiness.com   Note that the study also shows a preference for organic, sustainable, and biodynamic wines but a willingness to pay a few dollars more for it.

TB has to end this now…off to a tasting of organic, sustainable, biodynamic wines!

(c) traderbillonwine.com 2018

Vol. 2 No.3 Bigger is better in Wine

…or is it? Got you there because you thought TB had caved to the big guys. Bigger is decidedly not better. For instance, who is the largest wine company in the world? Who owns the most vineyard land in California? Will China (biggest country) become the biggest wine consumer and/or producer? What is the fastest growing price segment of American wines?

Most definitely, TB does not have the answer to these questions or many others but he can shed a little light.

Who (i.e. which corporation) is the largest wine company in the world?

If you said Gallo, you would be wrong but they are in second place. Also, they are not just the producers of Hearty Burgundy and other inexpensive but good quality for the price) American wine but have diversified into premium wines. Years ago they were the largest in California and had the largest intra-state trucking company (to move the wine of course!). But they are number two to Constellation Brands.

However, there are big changes going on in the wine industry, just as in brewing. In 2014, the U.S. became the biggest wine consuming nation overtaking France. Late last year, AmBev which owns Budweiser and is the largest brewing company in the world, began an acquisition of number two SABMiller for $108 BILLION. How could the U.S. and EU allow this to happen? All TB knows is that if the deal didn’t go through – for any reason – there was a breakup clause of $5 BILLION. Now ask this: would anyone in their right mind risk $5 billion when there are huge anti-trust questions? To TB, the answer is NO! The gears must have been greased with the EU…but what about the U.S.? It appears that the only concession that must be made is that they can’t sell BOTH Miller and Bud in the same bars. Big deal! Not sure if that applies to their super premium brand, Stella Artois.

According to Wikipedia, the third largest wine company is the Castel Group, which was started by a wine negotiant in Bordeaux.  They own 17 chateaux – none of which you have probably heard of the best being a Bordeaux Superior. Why haven’t you heard of the names? Because most are sold in…CHINA!!! More interestingly, they own a large 1,400 hectares in Algeria, and 1,600 in Tunisia, and Morocco. Those produced 640 million bottles, most sold, and I presume, bottled in France without disclosing it is not French wine – something that is finally becoming an issue there. Later, they added a distribution network by purchasing Nicolas, a wine merchant you can find all over Paris and other large French cities. TB adds this because they also have 25% share of SABMiller – South Africa that is creating some issues with the SAB/AmBev merger…probably will be worked out amicably…with Castel the winner.

But now lets shift to the fastest growing company that you probably have never heard of: Treasury Wine Estates, an Australian Company that has its U.S. headquarters right in Napa, California. Diageo was a big wine company, one of the largest but sold off their wine division to TWE, an Australian Company. In addition, Pernod Ricard, which went on a buying spree in 2014 purchasing Kendall Jackson, Stags’ Leap Winery (don’t confuse with Stag’s Leap Cellars that won the Judgement of Paris tasting that brought California wines to the fore), and makes one of TB’s favorite wines, Petite Sirah – nothing compares to it.

Other California wineries are Acacia, Blossom Hill, Sterling, Beaulieu,and most notably Beringer Estates, which they purchased from Foster’s who also got out of the wine business to focus on beer. In Australia, and New Zealand they have numerous holdings including Penfold’s, Rosemount, Rawson’s Retreat, and more. They also own Gabbiano of Italy.  https://www.tweglobal.com/brands

Think of the beer,wine and spirits game as a game of Monopoly, because that is what it has become, and in the process created an oligarchy, much the way the tobacco companies created barriers to entry through having multiple brands…same as beer.

The big lever today however is China. China, with its love of Chateau Lafite Rothschild, which even at $1,000 a bottle often mix with tea or coke as they do not like tannins. That however, is changing…rapidly…as wealth rises and just as in the U.S., the newbies want to show their worldliness and thus are shifting to wines. Their two largest wineries, Changyu and Great Wall, produced mediocre wines – at best, but the quality is increasing. Here is where TWE comes in. First, they are known in China and trusted and have found ways around the labyrinth of Chinese regulations, which can change as often as daily…or even hourly. Note their copyright laws do not protect the person who came up with the name, but the one who filed first in China…even if the real company has been doing so for years. Generally it is a Chinese filer so he has an edge immediately, and like the scam lawyers in the U.S. who search for old, obscure patents to extort money from major corporations to avoid being sued for patent infringement.

Just last week, TWE announced that demand and shipments to China are way above projections. This company, which KKR and attempted to takeover, yet the man behind it fought them off and won, has two advantages in China: first, proximity: no wine producer is closer to China which dramatically reduces transportation costs; and ssecond, they are a trusted name in China. So for the first time since buying Mondavi stock, and Chalone Group, while discarding Mario Andretti Winery, TB bought some of the stock on Monday.

First, let TB make this clear…he is in no way recommending the stock…just looked like a good buy to him.  It trades in Australia as TWE, and is only available in the U.S. on the Amex pink sheets, symbol TSRYY. It had gone nowhere but shortly before the announcement of the increased demand from China went from $3 to over $6 then settled back to that number which is where TB bought it. It is HIGHLY speculative, but could be a ‘four bagger’ as Peter Lynch used to say.

Finally, what is happening in the beer, wine, and spirits industry is huge transfers of ownership. It went from accumulation to disgorgement (to borrow a wine term). Look at the recent changes: Bordeaux’s main market has shifted to China, decimating sales to England and the U.S., which had been the main market; U.S. overtaking France in wine consumption; corporations doing what they always do: rush into the next new thing and then when it doesn’t produce the results they want, dumping it, as Coca-Cola did with Sterling (now part of TWE), or when they let New York wine company, Taylor, file for bankruptcy, unwilling to wait for the new vitis vinifera wines they had planted to produce.

That is why TB firmly believes in smaller individually or family owned wineries where passion still exists unfettered by the bottom line and therefore producing the highest quality wines. That’s what TB’s talking about…and all about!