The scale of E. & J. Gallo’s operations is so staggering, it defies comprehension.
Indeed, the man who for 11 years has been the company’s chief executive officer, Joseph E. Gallo, describes it simply as “really complex.” He says that the only way to run it is to “hire the best people and then get out of their way.”
That’s a fine example of the modesty of Gallo, 71. He insists that others deserve credit for the organization’s growth since 2001, when he assumed the top job after 36 years (beginning in sales) in the company that his father, Ernest, and uncle, Julio, founded in 1933. But then, among his “basic values” for running the business are “respect for others” and “humility.”
“This kind of humility and honesty are what make [Joe] such a successful pioneer,” says Nicolás Catena, whose familyowned Don Miguel Gascón and Alamos labels are imported to the U.S. from Argentina by E. & J. Gallo.
An objective evaluation of Gallo’s tenure must note the company’s many achievements:
E. & J. Gallo is the world’s largest family-owned winery and possibly America’s biggest wine company. By some published accounts, worldwide sales are 80 million cases (75 million of those in the U.S.), across at least 60 brands of still, sparkling and dessert wines as well as spirits, with estimated annual revenue of $3.4 billion.
However, these numbers shift often, as Gallo relentlessly adds brands (for example, its Summer Red, introduced in 2011, takes advantage of the trend toward lighter, sweeter red blends).
Gallo also has become a major import and export house, sending products to 90 countries and bringing them in from 14 nations. Gallo’s Carlo Rossi brand of red wines is the top imported wine brand in China, with 2011 sales of approximately 1 million cases.
Under Gallo’s leadership, the company has greatly expanded its portfolio through strategic purchases, mostly in California (Edna Valley Vineyards, on the Central Coast, is a recent example that will boost its Chardonnay presence). The company ventured into up-and-comingLake County when it bought Snow Lake Vineyards.
Gallo also purchased the Covey Run and Columbia wineries in Washington State in 2012, a move Gallo says is “risky,” but gives the company “a foothold” to exploit.
Then there’s Gallo’s Barefoot brand. Acquired in 2005, and with estimated annual case sales of 16 million, it’s the top-selling bottled wine in America—which would make it the top-selling brand in history—with dollar sales as of September dwarfing any other brand.
Perhaps most dramatically, Gallo, aided by his son, Ernest J. Gallo (or, as he would put it, the other way around), made perhaps the most audacious move in the company’s history: a foray into the highly competitive spirits business.
That began with the 2007 launch of New Amsterdam Gin, whose sales rose last year to 700,000 cases. Last year, vodka joined the New Amsterdam lineup. In September, the company announced that vodka sales reached more than 1 million cases, the fastest spirits brand ever to reach that mark.
There’s also Gallo’s Familia Camarena Tequila, launched in 2010, which reached 150,000 cases in its first year. Most recently, Gallo introduced Shellback Caribbean Rum, from Barbados. Coupled with the E. & J. Brandy line—the country’s largest brandy brand by dollars and volume (a reported 4 million cases)—the company has now become one of the leading U.S. spirits producers.
At the center of this storm of activity is Gallo himself, softspoken, preternaturally calm, philosophically inclined, with a probing mind.
“He’s a very curious guy, always trying to figure out how to improve the company,” says his longtime friend, Bill Harlan, of Harlan Estate in California.
Gallo’s motto might be adopted from Winston Churchill, whom he admires and cites: “In nothing great or small, large or petty, never give in except to convictions of honor and good sense.”
And, like Churchill, Gallo has an instinctual sense of timing, knowing when to move forward, when to pause—and almost never to retreat. Yes, there have been brands “that didn’t have the right foundation” and were dropped, he says, but that was in the 1990s.
“We’ve learned a lot more since then about how to market brands and give consumers what they want,” he says.
A good part of this greater understanding comes from the company’s proprietary information technology software, also developed under Gallo’s tenure (although he describes himself as “not computer dialed-in at all”).
But Gallo’s instincts also play a role. Before he comes to work every day, often as early as 7 am, he visits his home gym for an hour or two, “to just think about issues. In the quiet of the early morning, ideas flow.”
These may concern a personnel matter, or a potentially huge new venture—say, into whiskey, a spirits category Gallo says “has potential.”
That means, in all probability, Gallo will jump into the market. And when the company does, the outcome will be big.
As Gallo says, “There has to be a certain minimal scale [to everything we do] or else it doesn’t fit into the plan”.
Knowing when to make his move is key to understanding the man and, hence, the company. Never impulsive, thoughtfully analytic, Gallo waits patiently for his opportunities, then pounces.
“When things come up, you have to move fast,” he says. “And we can make decisions very quickly,” due to the company’s family-owned structure.
Yet knowing when not to move is also essential. The company will never venture into beer, he vows, “because it does not fit our distribution structure.” As he says, “You can only get so many things right.”
“There are opportunities every day,” Gallo says. “The secret is to see them.” The only thing that scares him, he asserts, “is all the opportunities you don’t see.” But you get the feeling that at E. & J. Gallo, very little goes unnoticed.
John A. DeLuca, Ph.D., the former president and CEO of the Wine Institute, says he was often asked what would happen to the Gallo company when Ernest and Julio passed on.
“I always said, ‘Not only have Joe and [cousin] Bob [co-chairman of the board, and Julio’s son] already answered that question in a positive way, they will bring to Gallo an incredible outreach that is global in scope and beyond what even those great founders have accomplished,’” he says.
Under Gallo’s executive leadership, that prophecy has become reality. That E. & J. Gallo, which will celebrate its 80th anniversary in 2013, continues to be at the forefront of the world’s wine and spirits industry is a feat of business prowess matched by few companies, in any field.
For these reasons, Wine Enthusiast is pleased to recognize Joseph E. Gallo as our 2012 Person of the Year.