Gallo buys J, this is why we can't have nice things!

I’ve always enjoyed their sparkling wines… … Barefoot Sr Now?

Uh oh! The list of Gallo brands includes Brancaia. I own some Brancaia. Will the rest of my cellar catch any diseases from being in close proximity? Do I need to remove it?

PS - I like the Brancaia Il Blu.

My guess is the wines will be better now with Gallo in control. I’ve always found the “J” Sparkling wines to be really up and down in quality. Now the label has bank and a whole platoon of winemakers with masters degrees. Should be very interesting. Especially after their success stories with the Martini purchase.

Good point, Louis Martini wines are better than you would expect… A lot better…

Their upgrading. They made their money on cheap, undrinkable wine to most of us and they see the average wine drinker spending around $20 a bottle so it is a bigger market share.

Picked up Pieropan to…acquisition mode for their fine wine arm. Expect more.

Sorry, not buying it…i’ve had some J sparklers which were pretty nice. Now I am concerned.

Apparently the all the staff was let go with no notice, and asked to reapply for their jobs…

Some pretty bitter comments below this article…

funny (but sad) comments on how the mandatory urinalysis would lead to more firings

Luckily, I won’t still be around when Gallo finally topples K-J for complete control of Sonoma County.

I did some IT contracting for Gallo several years ago. Absolutely the weirdest run company ever. Also, zero trust in their employees. I expect many will choose not to reapply as the job market is pretty good out there now.

That is a pretty common and unfortunate practice in buy-outs. I had a super nice visit at J a couple of years ago and have enjoyed several bottles. I am no fan of Gallo so I don’t see this as a good thing for J or it’s employees.

JD

I think the last Gallo wine I drank was Hearty Burgundy. [cheers.gif]

fwiw, J has been buying a significant amount of Gallo fruit for sometime.

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What does this have to do with an American company, that has stayed family owned, and built brick by brick into an empire, purchasing another winery in Sonoma County? The odds of the product becoming better because of this sale is a no brainer considering said company’s history, so it’s a win/win situation all around.

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My dislike with Gallo has nothing to do with their wine. Though I hardly think they are going to improve J. They filed a friend of the court (Amicus) brief siding with the wholesalers in the Indiana shipping suit. So, they aren’t “wine geek” friendly. Don’t know how they run their company or how they will treat the J employees. However, it has been my experience that when buy outs like this happen it usually doesn’t benefit the employees.

I saw this happen 25 years ago in the wood products industry. Now they are all gone from town.
Then the banking industry.
That was before NAFTA!
Welcome to the new order.
Oh Well! Food carts are king up here! [snort.gif]

I am no big fan of Gallo and I feel bad for any J employees who are adversely impacted, but instead of ranting, I would like to learn from some ITB folks about the reasons why moves like these are happening. Is the business becoming too capital-intensive for smaller/independent wineries? Is it that Gallo, et. al., can get cheap money and can go on a spending spree? Usually there is a root cause for consolidation waves, and I am curious as to what it is. Any experts out there?

This is something that has been going on for generations in the Beverage industry (as in most others I guess). You see it more in the Brewing industry, but here is a classic example.

In the brewing industry, Budweiser (for example) purchases a smaller craft brewery that is highly successful, eventually selling off the assets and laying off the staff of said craft brewery, and ends up producing the craft beer products at one of their main facilities, saving lots of money in the process and builds on the popularity of the brand as they increase production ten fold.

Gallo and Kendall Jackson are doing the same thing, it is faster to purchase an established brand rather than develop and promote one of their own. Gallo did very well with the Martini label, and have build quite a market for the brand, and probably quadrupeled production. Ditto with Mirassou, a one time independent, family owned label that Gallo purchased and turned into their lower priced value brand. When Mirassou was family owned, the probably didn’t produce more than 40,000-50,000 cases of wine a year - now that it is with Gallo - they are producing millions of cases a year.

When people ask me about why little guys are selling out to the big guys, I liken it to the Christmas movie “It’s a Wonderful Life.” George Bailey (James Stewart) is overwhelmed to the point where he contemplates suicide, believing his loved ones would be better off without the burden/debt he has created. Better off dead than alive. For a small business owner, better off sold than trudging on.

Here in the wine business, the value of our land and our businesses are often surpassing our current operating profit levels by huge margins. Many of us would be worth more with the cash in hand from a buyout. Look at the Araujo Eisele sale 2 years ago - rumored to be in the neighborhood of $100 million. Sold to Chateau Latour. What a windfall, to walk away with that kind of financial security. For many of us, good-bye to operating expenses, vintage variation, critics and scores and the joys of shipping (the Goldilocks syndrome: it’s too hot, it’s too cold, rarely just right [wow.gif] ).

When I was out Friday night, I heard well-placed rumors of 2 other vineyards/wineries who may have just sold out to developers of a high-end resort. To me, this is much much worse than getting gobbled up by a larger winery. Our Valleys (Napa/Sonoma) are at risk of becoming a large resort with spas for the rich.

That’s my take on the subject.