Gallo buys Clos du Bois, Black Box, Estancia, Mark West, Wild Horse, Franciscan, Ravenswood + 23 more!

[Tom_DeBiase]

Just wondering if Gallo wrote a check? I’ve been ITB for many many moons and in my experience no one can beat Gallo when it comes to marketing.
For $1.7B - IMHO Gallo made out like a bandit.

This. Have worked with Gallo for many years, they are patient and fanatical about quality. No, they are not trying to have one of their inexpensive wines upstage a 1st growth but every Gallo wine in every category, from jug wine on will beat their competition in sensory panels. That is where the patience (and marketing) pays off.

Tom

[John_Morris]

Since a lot of these people were my customers I find all of this interesting. Wild Horse was founded by the reggae promoter Ken Volk, who sold out some time ago.
Clos du Bois was started by our then retail customer Frank Woods and various investors. In the early 70s, When everyone else was planting cabernet, he decided to plan hundreds of acres of chardonnay and this served him well. Then he sold out to Hiram Walker, which got bought by Allied Lyons, and didn’t that turn into a Jim Beam brand for a while. Or maybe it didn’t…Finally Constellation got it and sold it to Gallo. There’s an MBA thesis in there somewhere.

Tom Reed was also a co-founder, wasn’t he? And perhaps a majority owner? As a young lawyer in the 80s, I worked on the defense team for him when he faced insider trading charges. He was still an owner and quite involved then. (FYI, we got him acquitted.)

[Brian_G_r_a_f_s_t_r_o_m]

Genuine question: why does this matter?

[Mark_Mason]

I think I’ve enjoyed the Las Rocas. Is that the Grenache?

[Chris_Seiber]

Gallo does now own the Monte Rosso Vineyard. I guess Joel can continue to make wines from that vineyard now, unlike all the others who have lost their access?

[ericleehall]

Genuine question: why does this matter?

Well board members may not drink these wine brands, but as the putative biggest winery deal ever, it does seem relevant to industry discussions.

[John_Morris]

Did anyone provide solutions?

The omission of that was a terrible oversight.

[Brian_G_r_a_f_s_t_r_o_m]

What do you mean by industry discussions?

I’m just surprised anyone here, except some ITB’ers, cares.

[Mel_Knox]

Brian,
Many of us are in the business. Hard to believe I know. We failed at getting into labor law.

John,
You were employed??

[jcoley3]

Did anyone provide solutions?

The omission of that was a terrible oversight.

Still my favorite press release/corporate-speak turn of phrase.

Somewhere on my computer I think I still have the Word Doc of the prospectus a consulting firm sent to the tech company I worked for during the Internet 1.0 era, before I got into the wine biz. I loved those things. I’m sure the style has evolved considerably since then.

[Thomas_Keim]

Just wondering if Gallo wrote a check? I’ve been ITB for many many moons and in my experience no one can beat Gallo when it comes to marketing.
For $1.7B - IMHO Gallo made out like a bandit.

This. Have worked with Gallo for many years, they are patient and fanatical about quality. No, they are not trying to have one of their inexpensive wines upstage a 1st growth but every Gallo wine in every category, from jug wine on will beat their competition in sensory panels. That is where the patience (and marketing) pays off.

Tom

So true, and I am not sure many people (especially on this board) realize this. One look at the Martini Cabernet program should be proof enough.

[mmarcellus]

Interesting move and interesting timing. Richard Sands is completing the elimination of the market segment his father Marvin built the company on, most notably with Wild Irish Rose. Word is that Constellation was looking for 3 billion but had to settle for much less. I agree that Gallo has made a savvy pickup. The low end wine market may not be doing well right now, but Gallo is betting that in the long run this market will serve them just as well as it has ever since the end of Prohibition. Meanwhile, Constellation plans to use this money to finance their expansion into the THC consumables business through their alliance with Canopy. We’ll see how that works out. I will say that if Gallo were a public company I would buy them at anything approaching a reasonable price, meanwhile I’m not buying Constellation.

[PeterJ]

Gallo does now own the Monte Rosso Vineyard.

Several online sources say they do… at least ‘did’. Curious as to who does and documentation of it.

[TomHill]

Gallo does now own the Monte Rosso Vineyard.

Several online sources say they do… at least ‘did’. Curious as to who does and documentation of it.

That came w/ the purchase of the LouisM.Martini brand, who were the owners. Gallo continued to sell MR
grapes to some long-time customers, but stopped that several yrs ago.
Tom

[larry_schaffer]

This is really interesting indeed - and I agree that Gallo seemingly has made out quite well with this. As others have said, with their recent vineyard purchases, they will need additional labels to put these wines into, and this certainly helps. I can’t believe that they’ll keep all of the winery production facilities purchased in the deal - watch for some of these to be dealt. This also buys Gallo LOTS more space on grocery store shelves without taking anything away - definitely the ‘General Mills’ of wineries, and so darned smart . . .

Cheers.

[Hank_Victor]

I wonder how much of the US wine market share is Gallo.

20%?

[Brian_G_r_a_f_s_t_r_o_m]

Brian,
Many of us are in the business. Hard to believe I know. We failed at getting into labor law.

Not sure why the snark is necessary, Mel. If you read my posts, I (1) said my question was genuine (as opposed to critical or condescending), and (2) said "except some ITB’ers. This might be the first time anyone has ever come at me for inquiring about something in which they’re interested.

I’m still confused as to why folks find this interesting, and am curious to hear good faith answers. My working hypothesis is that “fans” of the wine industry care about this the same way a sports fan would care about the sale of a sports team. But that still doesn’t seem like it’s necessarily a good analogy.

[Kris_Patten]

Brian,

It is completely useless info to 99.99% of this board. For the wine industry it’s a big move.

You are correct you shouldn’t care.

[larry_schaffer]

Alright folks . . .

There are so many posts on this board that don’t apply to everyone but may be of general interest. Don’t drink high end Burgundy? No problem - those posts may not be for you. Have no interest in Ray Walker? Same thing.

This is a near $2 Billion deal involving 2 major names in the wine business, and it’s a complete change of pace for Constellation to move away from less expensive wines to concentrate on higher priced ones - not something most would have expected just a few years back.

Cheers!

[Brian_G_r_a_f_s_t_r_o_m]

Thank you, Kris and Larry.

Larry, your posts in this thread have been the most illuminating for me. Thank you.

… I still don’t think some folks understood where I was coming from, but whatever … I’m moving on.