Conversations From the Corner Office

FULL INTERVIEW TRANSCRIPT

E.&J. Gallo Winery President and CEO Joseph E. Gallo talks with Kai Ryssdal

RYSSDAL: Joe Gallo, welcome to the program.

GALLO: Thank you.

RYSSDAL: This is an extraordinary place. Tell me where we are and why it's special for you.

GALLO: Well, we're in Sonoma, at the Frei Ranch, and it's a property that my uncle discovered probably around 30-40 years ago. He always liked Sonoma, and he felt that on this side of the valley, as opposed to Napa, is basically a farming community on a much broader scale.

He always liked the people over here — and he also felt that through the weather and the soil and those factors that this was a great, ideal place to grow grapes, and so that's how we settled on this side of the valley, and expanded our operations over here.

RYSSDAL: It's a working vineyard. I mean as far as we can see now there are vines with grapes still on them.

GALLO: That's right. That's right.

RYSSDAL: When's the harvest?

GALLO: Well, the harvest is going now, but with red grapes we try and harvest them as late as possible so we can increase the flavor of the grape.

RYSSDAL: It's a — how do you do that?

GALLO: Do what?

RYSSDAL: How do you enhance the flavor of the grape? How do you make it —

GALLO: Well, just by staying on the vine longer, the grapes mature, they become less bitter, they get more sugar, and the longer you keep them on the vine before you pick them this time of year, the wine makers think it makes a big difference.

RYSSDAL: We can hear the tractors now. I mean the harvest is going on and people are making wine right now.

GALLO: Exactly right. Exactly right.

RYSSDAL: Give me some idea of the scope and the range of the Gallo Company. We know you guys are big; how big are you?

GALLO: Well, what measure would you want?

RYSSDAL: Let's start with the most basic: how much wine do you make?

GALLO: We sell about 65 million cases a year — 65 to 70 million cases a year.

RYSSDAL: Puts you where in the hierarchy of wine companies?

GALLO: Second.

RYSSDAL: Your name is on the company —

GALLO: That's right.

RYSSDAL: — how important is that to you? How much does that influence what you do?

GALLO: I don't think about it very much. I just get up every day and try to do the best job I can. I'm obviously proud of the fact that my name is part of the family. I'm part of the family. But I focus on trying to do as good a job as I can in running the company.

RYSSDAL: You're a wine drinker?

GALLO: Oh, yes.

RYSSDAL: What's your favorite kind of wine?

GALLO: Depends upon the day. There are an awful lot of selections and it depends upon the day, what we're having for dinner, and so it just — there's so many varieties, as you know, to wine. So many varietals, so many different ways it can be made that I feel it's important to continually experiment and change what I drink just like when you eat. You know? You have different — wide range of foods you can choose from, and so depends upon the situation if you like eating one food more than the other.

RYSSDAL: Do you consider yourself an ordinary wine drinker?

GALLO: Yes. Yes.

RYSSDAL: Sixty-five million cases; that's about, based on what I read, about one in every four bottles of wine sold.

GALLO: More or less. More or less.

RYSSDAL: Does that make you aware, does it give you a sense of responsibility for your role in the wine industry?

GALLO: We feel a big responsibility. We feel a big commitment — huge commitment to this industry. The industry has treated us very well. We think that it's often a great service to the American people and we strive to continue to improve and do what we're doing better.

RYSSDAL: One of the things Gallo is known for is really not being known at all. It's a very private privately-held company.

GALLO: It's privately owned.

RYSSDAL: Is that a liberating thing for you?

GALLO: In what respect?

RYSSDAL: This is your company. Yours and your family.

GALLO: Yeah.

RYSSDAL: You don't have to answer to Wall Street; you don't have to answer to anybody. You can do what you want. How does that effect what you do every day?

GALLO: Well, I think that the best way to answer that question is that being a privately owned company allows me to think long-term. We don't have to worry about quarterly earnings; we don't have to worry about, you know, the vagaries of Wall Street, analyst's perceptions and opinions.

And so we focus on do the best we can, to run the company as best as we can in terms of satisfying the needs of the consumer, properly responding to the desires and aspirations of our employees, so we can spend our time focusing on doing what we think is the right way to run things long-term.

And this business is very, very suited towards the long-term.

RYSSDAL: It takes years to make good wine.

GALLO: Absolutely.

RYSSDAL: Why is the —

GALLO: Beyond — I'm sorry.

RYSSDAL: Go ahead.

GALLO: Beyond just making good wine, it has to do with long-term, it has to do an awful lot with — not only in terms of the capital investments it takes in terms of vineyards and wineries and things of that sort, but the industry also requires long-term thinking in terms of brand building. It takes long-term thinking in terms of research and development, which we think is essential.

But also long-term in terms of developing relationships, you know, with our employees, with our customers, with our retailers and with the wholesalers.

RYSSDAL: Wine is such an emotional thing, though. Doesn't it sort of take a little bit of the romance out when you quantify it like that?

GALLO: Well, its — I don't think that — I think first of all it's a fact, what I just said, in my opinion. Number two, I think that there's room to have romance in addition to developing a company long-term.

RYSSDAL: How do you keep the romance in wine, then?

GALLO: Well, I think that that's a great question, and let me answer it this way. I think that one of the biggest problems in this industry historically has been this market is too much of an elitist romantic industry. And — as opposed to an everyday beverage.

You go to other parts of the world and, sure, there's room for the romantic aspect of wine, depending on the situation, a candlelight dinner and all that sort of thing, or getting involved in esoteric wines and how it tastes but we think that what's really important is to introduce the wines to the large-scale manner in terms of the average American.

And I think one of the biggest problems historically is that wine's been, as I said, has been marketed as an elitist beverage which turns off an awful lot of Americans, and I think that as that starts to break down it'll go a long ways towards making the wine a much more appealing product to the average American.

RYSSDAL: Do you think, a little bit, the average American can't understand it or is just intimidated? I mean what do you think it is?

GALLO: I think there's — I think that the industry has come a long ways, still got a long ways to go. One of the most intimidating aspects of this business is when you go to a wine shelf and you see a thousand bottles on the shelf and you try to make a decision as to what you should drink and what you should not. And the research tells us that when people have a wider range of decisions and get confused, oftentimes they don't make the decision, they just walk away.

So the wine shelf itself is a tremendous barrier, I think, towards people drinking wine. Number two is the problem that wine historically it has been marketed as an elitist beverage and people are afraid of making a social mistake and we feel that its important to break down those barriers that its okay to have a wine because you enjoy it; don't have to get involved in understanding the vintages or where it comes from — its do you like it or don't you like it?

RYSSDAL: So here's what people do; this is what I do. You go and you find a label you like and you say oh, I'll try that one.

GALLO: Yeah.

RYSSDAL: And maybe it works and maybe it doesn't, but then you go back the next time and you don't pick the same kind of wine, you pick the next prettiest label.

GALLO: That happens very often.

RYSSDAL: How do you fix that problem, though?

GALLO: Well, that's where brands come in. See? Brands come in because to me a brand is basically a promise to the consumer. Promise in three areas. One has to do with the quality, two has to do with the image, and three has to do with differentiation, and so we feel that brands are very important in this mass confusion on the wine shelf to help the consumer make the decision what to buy.

RYSSDAL: Interesting you talk about brand so much, because if you think about the Gallo brand over time you have one of the great names in the industry, but the evolution of that brand from things like Thunderbird to things like Turning Leaf and the Coastal Reserves and now eventually Gallo Family Vineyards — I mean, its an interesting strategic process that you guys have gone through in 50 or 70 years.

GALLO: That's right. We feel that basically you have to reinvent your company every 10 years. There's so much change going on that you just can't stand still, and you have to really be focused on the consumer needs and respond to consumer needs.

RYSSDAL: Do you reinvent your wine every ten years, or just the company and the way you do business?

GALLO: The company. The company.

RYSSDAL: So how have you changed?

GALLO: Oh, my goodness. We've spent an awful lot of time trying to improve our quality. Enormous amount. We look in terms of how we can become more efficient. We've evolved our marketing tremendously. We've evolved our organization in terms of our procedures. We've evolved the organization in terms of the types of wine we make, the varietals, where they come from.

We've evolved the challenge of distribution. We have to deal with current trends and what's going on and there's enormous change going on — the industry is growing at a very significant rate and it creates a lot of opportunities and the secret is to capitalize on those opportunities and that created a trap was an opportunity to take some different direction where you have been oftentimes which creates change. And it's reinvent yourself. If you look at our product portfolio today its totally different than what it was 10 years ago and also the quality of our wines are much better. Much, much better.

RYSSDAL: You think so, objectively?

GALLO: Well, it's objective, yes. We do consumer research and we know what we're — in other words, we put an awful lot of work in terms of the vineyards, which cost a lot of effort and money. We get involved in terms of the wineries, how to improve the winemaking process. We do an awful lot of research and development in terms of how to make better wines and so those are the efforts — some of the efforts we put in which has been shown by the — our tracking studies with consumer thinks of the quality of our wine.

RYSSDAL: You know the wine industry is not really known for market research. The way wine works is somebody's been making wine for 55 years, essentially throws some grapes in a vat and whatever comes out the other end, that's what the consumer is going to get. Gallo does it differently, though.

GALLO: A lot of those guys go out of business. They're not keeping up with the times. They don't change. They're not current. They're not dealing with the consumer's needs. We focus on consumer's needs. It's very important. The only reason we feel we have a right to exist is we supply — is we can supply a consumer with a product they want. But they don't — you can see anybody a bottle of wine once; if they don't like it, don't buy it again. It's that simple.

RYSSDAL: With wine being so subjective though how do you figure out what millions and millions of wine drinkers want?

GALLO: Well, it gets down to a lot of factors. One is looking at trends in terms of where the taste profiles are going. Also it gets down to research. Takes a lot of research to understand what the consumer wants.

RYSSDAL: Tasting panels and all that?

GALLO: Tasting panels, uh-huh. Seeing new items sell; decide why that's selling. What is the flavor that they like?

RYSSDAL: When you go into a Safeway, do you go straight to the wine shelf and look and see where the Gallo products are?

GALLO: Oh, sure, without a doubt. Yes. Yes. I do that quite a bit.

RYSSDAL: Do you buy retail or do you get it from the back office?

GALLO: I — it just depends.

RYSSDAL: How is Gallo working on making wine more accessible to the American consumer? I'm thinking of some of the ways that you guys have gone overseas and gotten French wines and Australians wines in here and made them available and accessible to American customers.

GALLO: I don't understand your question.

RYSSDAL: Well, I'm thinking of your Red Bicyclette and that process.

GALLO: Yeah.

RYSSDAL: You went over to France trying to make French wines more accessible and bring it back here. How'd you do that?

GALLO: Well, it began with the feeling that the French — every country has different images, different perceptions, and we felt that the American public liked the countryside of France. They don't particularly appreciate some of the experiences they've had in Paris, so we sort of separate the rest of France from Paris and — but people have great experiences in the countryside of France, and so we developed a marketing effort to try and develop a concept that would be appealing to the American people in terms of what the French countryside means.

As a matter of fact we sent over a team of people and took 1,000 pictures of the French countryside and in fact they put into piles. Into three piles. One had to do with the flowers. The second had to do with the windows and the shutters.

RYSSDAL: Uh-huh.

GALLO: And three had to do with bicycles. And so some bright fellow, by the name of Red Bicyclette, which took a little while for us to comprehend why that would fit with wine, but after we did a lot of studies it sort of made sense, sort of captures to some people the French countryside and so that was sort of the image we used to project the French wine.

Then we went over there with a team of people and tried to find the very best wine we could find in the southern part of France. We sent our winemakers over, helped them with the styles, how it should be made and we put it together to go out in the marketplace here.

RYSSDAL: Putting it together, it sounds really mechanical.

GALLO: What I just said?

RYSSDAL: Yeah. Putting wine together.

GALLO: No, I mean to say put the concept with the wine together. No, it's not mechanical at all. It's very, very — you know it's taking our knowledge and our research as to how to make good wine, plan that technology and that thinking in the winemaking. They're very good winemakers there. There's nothing wrong with that. They're very, very good, but sometimes in terms of styles the American public prefers, we like to share that with them.

RYSSDAL: Critics will say that what you guys are doing is dumbing down wine.

GALLO: Well. Gee, I'm sorry they feel that way.

RYSSDAL: Doesn't bother you too much?

GALLO: I don't agree with it. I don't agree — I think that's part of the problem is that some people feel that you have to make wine as I said an elitist beverage, so that you have to get involved with the very, very esoteric aspect of wine, which the wine experts like, but to the American public that's very, very difficult to comprehend and is really of no interest to them. The only thing they're really interested in is what does the wine taste like and is it good or not and is the image such that I — it goes along with what I'm drinking.

RYSSDAL: It is an amazingly innovative company, Gallo, which is kind of surprising since its been around for so long, but the way you guys have adapted I think is fascinating, and it goes from everything from finding the screw top to market research.

GALLO: Uh-huh.

RYSSDAL: It's not something you think of the wine industry as being — innovative.

GALLO: Well, I feel that the truth of the matter is that nowadays every industry needs to be innovative. There's so many changes taking place, so many new forces at play that basically people have to be open to new ideas and to take their surroundings and figure out how to capitalize upon them, to please the consumer.

And we feel that to the extent that wine has so much potential — if you look at wine as an alcoholic beverage, there is a tremendous number of varietals, there is different ways it can be made, there is different countries, there is — it's just incredible and also as the wine gets better it offers a wide range of tastes that people can choose from. As a matter of fact, some of your listeners who may not drink wine, they might want to consider starting to drink some wine to see what they think about it and experiment as opposed to what else they're drinking because if they get to drinking a little bit of it and start to experiment they might find that it opens up a whole new special aspect of life to them.

RYSSDAL: Did you ever want to do anything else with your life?

GALLO: No. No.

RYSSDAL: Did you ever have a choice?

GALLO: Oh, sure. Absolutely. You know, I think there's two big decisions to make in life. One is what you do and the other is who you marry.

RYSSDAL: Did you do all right on both of those?

GALLO: I think so. I know so. And a lot of people get one right and not the other. Unfortunately some people get neither one right, but if you have both right you're a very fortunate person and I — getting back to the choice of what I wanted to do, I always knew what I wanted to do and I'm very, very happy I chose that direction.

I could have done something else. My dad never encouraged us to go in the wine business if we didn't want to do it.

RYSSDAL: The legacy of this family is so strong in the company and it doesn't happen — I mean, there are all kinds of family-run companies out there but the strength of the family isn't present in many of them the same way it is here.

GALLO: Appreciate the compliment.

RYSSDAL: How did that happen? Was it your dad and your uncle Julio?

GALLO: Well, I think that the — a lot of it was fortunate circumstances. You know you had — I obviously and my cousin and my — and his son-in-law, second generation, have been around the first generation, my father and uncle, for a lifetime. And so we had the benefit of being exposed to their thinking and their values and how they looked at the world and their passion for the company and so as we got involved with them and saw their passion and how they thought, what they did, what they tried — what their goal was, what they tried to accomplish, it became very, very interesting and enthusiastic in terms of what to do with ourselves.

And so I'd have to lay the foundation to whatever success we've had as a family to the founders. Their values and how they inspired us to carry on what they've been doing.

RYSSDAL: Your uncle Julio passed away a number of years ago; your dad's still alive.

GALLO: Yes.

RYSSDAL: Does he still come to work and check up on you?

GALLO: Not any more.

RYSSDAL: Not any more? He's —

GALLO: He's 97. Yeah.

RYSSDAL: Yeah. He still keeps a hand in, though, I imagine?

GALLO: I go — I have lunch with him as often as I can.

RYSSDAL: It's an interesting family tree in that there's so many generations and there's a couple of Ernest's and some Julio's and some Joe's. Do you ever get sort of lost in trying to figure out what's going on in this family and this company?

RYSSDAL: One of the pleasures of a family-run business is that it's a family-run business and you're around the family all the time. Problem happens, of course, when you have a business disagreement, its not like you can up and leave. How do you sort those kinds of things out?

GALLO: Well, I think that that's exactly right. I feel that the — that first of all for a family business that works properly, in my opinion, you have to have unity at the top and you have to have very capable people like any business to operate and if you don't have unity at the top, you don't have capable people, eventually it's the road to ruination.

So I feel that in our case — I feel that in our case that due to fortunate circumstances I have an extremely good relationship with my cousin and his brother-in-law and we surprisingly haven't had an argument in 15 years.

RYSSDAL: And the three of you are co-presidents. You're the CEO but there are three —

GALLO: I'm the president and CEO.

RYSSDAL: You're the president and CEO. But who gets the last vote?

GALLO: Well, in the day-to-day operations, you know, like any CEO, that position has certain parameters or barriers where the person has to make a decision and I do that. We also obviously have a board and we deal with board decisions where the family members sit and we debate strategy, issues of that sort.

There we have sort of a collegial situation; we also have outsiders on the board. And so we discuss things in a professional manner as to what's best for the company. I think what's really the great force that holds things going forward is we have a common vision, which is very simple. What's best for the company? And all of us feel that and we guide our decisions based upon that position.

RYSSDAL: One of the fascinating things about Gallo is the division of labor in this company that goes back to the very beginning. Your dad, Ernest, was the marketing and sales guy when the company started.

GALLO: Right.

RYSSDAL: Your uncle Julio was the winemaker.

GALLO: Exactly right.

RYSSDAL: And that division of labor has followed down in the generations. How come?

GALLO: That's not the case any more.

RYSSDAL: Well, third generation now we're having some overlap, right?

GALLO: Well, quite a bit. Enormous overlap and of course in my position now there is no division. I'm the CEO of the company, of the entire company over all aspects of the company.

RYSSDAL: Why'd they make you the CEO and not your cousin?

GALLO: Well, reason why is probably why — I — first of all, there's a difference of age between us, I'm younger, and I guess the feeling is, first of all, we used to get together a lot, discuss issues in common, had virtual agreement all the time but we came to realize that decision-makings were slowed down because had to get three people together and there were lot of decisions to make.

And so we could not be as responsive as we should be with three people always — and we'd always agree anyway, basically so why shouldn't we just have one person make decisions and move on? And also — I also feel that a lot of it had to do with the fact that I'm younger. And organizations need to have, you know, age is important in terms of going forward with what people do and so that might have been part of it too.

RYSSDAL: Do you consider Gallo an agile company, able to react quickly?

GALLO: Well, I feel that that's relative.

RYSSDAL: To the industry, I suppose.

GALLO: Well, it's relative. I think we react fast but we should always try to act faster.

RYSSDAL: Are you a tough boss?

GALLO: You'll have to ask — you'll have to ask Susan over here. But that goes back to what you're probably wondering is my management philosophy, is that true?

RYSSDAL: Sure we can go with that.

GALLO: Well, I feel that —

RYSSDAL: Let me ask the question; sorry. Well, how do you run the company, then?

GALLO: Well, I feel that — I feel that basically you have to — I start with the philosophy that people are basically good and I also have the philosophy that people — that you should show respect to all individuals regardless of status in life. Station in life.

Now that doesn't mean you can't be, should not be naïve or sometimes you shouldn't be a healthy skeptic, but basically I feel what I said, that way towards people. So after you have that basic view of humanity, if you will, then you go from there and I've been greatly guided by my dad's philosophy in terms of what it takes to be successful in business.

In our company he thinks the first thing you must do is stay independent, stay private, be master of your own destiny. Second thing he felt was you have to hire good people. Third thing he felt was you must always strive for perfection. Fourth is you never should be satisfied. Fifth is don't plan too far ahead. Sixth was have a sense of urgency. Seven is work like hell. And eight is be lucky.

RYSSDAL: Be lucky; that's great — thanks, Dad, right?

(Laughter)

That's a pretty long list of things to keep in mind when you're running a $3.5 billion company.

GALLO: It's not that big.

RYSSDAL: Okay. When you're running a multi-billion company. It's not like you can keep that on the top of your list of things to do every day.

GALLO: Well, it's sort of instinctive. It's sort of instinctive. After I've been around him now for — in the business world for over 50 years, I've seen him in every situation where he's dealt with countless issues and seeing him react and how he thought and what he did and these are basically instinctive of what you do. Stay independent, hire good people, you know, and the other factors I mentioned.

RYSSDAL: As important as this company is now, having stayed private, do you think you could have been bigger and more important had you at some point in the last 70 years gone public?

GALLO: Well, I think depends what you want to do with the company. You know our objective is not to see how big we can become a financial institution. Our objective is to try and focus on the wine business and keep on trying to do a better job, trying to figure out how we can better satisfy the needs of the consumer and that's where we've spent our time thinking about. Now if we wanted to just make money, maybe some bright guy could have taken it in a different direction, but that's not our objective. Our objective is to do the best we can to improve the industry, to make our little bit of a contribution towards improving the industry by giving a better product to the consumer.

RYSSDAL: Let me talk about that getting lucky thing for a minute. A number of years ago you guys made a heavy investment in pinot noir grapes. And then this movie comes out.

GALLO: Yeah.

RYSSDAL: That's all about pinot noir, called "Sideways." You can't ask for something better than that.

GALLO: We were lucky. We were lucky.

RYSSDAL: Sometimes it's better to be lucky than smart, right?

GALLO: I've heard that oftentimes.

RYSSDAL: Where's this company going to be in 15-20 years?

GALLO: That's a long ways to look out.

RYSSDAL: Well, that's long-range planning, right? That's the wine industry.

GALLO: One of my dad's points was don't plan too far ahead.

RYSSDAL: Maybe we should get your dad in here.

GALLO: Well, I feel that the — I feel that I can probably predict maybe ten years out. I think the industry basically will double in ten years.

RYSSDAL: Double?

GALLO: Yeah.

RYSSDAL: That's a lot of wine.

GALLO: Well, it is and it isn't. You know the industry per capita consumption is not that big compared to other countries. The industry is only probably around four or five liters per capita. Go over to England it's probably 15 or more. And so I feel that the industry is starting to grow now pretty well and I feel that as it continues to grow it can keep on multiplying based upon its volume, on its base and so if it grows at the rate of — if it doubles in ten years I would hope we could at least do that.

RYSSDAL: It's not all been happiness in the Gallo family. You and your dad and your uncle had some falling out with your uncle Joe.

GALLO: Yeah, that's right.

RYSSDAL: They took each other to court. It can get unpleasant when family members disagree in a company.

GALLO: Well, he wasn't in the company. RYSSDAL: And I think that said something.

When you get up in the morning, what are you thinking about for the company?

GALLO: What am I thinking about for the company? I'm thinking about what I can — how I can maximize my day to make it most productive; how I can make a contribution, make a contribution that's meaningful during that day.

RYSSDAL: Who's going to take over when you're not around any more?

GALLO: Well, we have a succession plan but that's confidential. I must say though we have a — in my opinion we have a very dedicated management group. They're all very qualified in what their respective areas are and I feel that as time goes on, you know, we'll finally make a decision.

RYSSDAL: When are you going to feel you've done for the company what you can do and it's time for somebody else?

GALLO: Well, that's a very good question. I feel that I evaluate that year by year.

RYSSDAL: We're here in Sonoma County. It's reasonably early in the morning. You've got a full day ahead of you. I understand you're heading down to Modesto later on today to the main Gallo Center down there?

GALLO: Right.

RYSSDAL: What's the rest of your day going to be like?

GALLO: Well, I have lunch with a distributor from Africa. Then I have dinner with a distributor — our distributor from South Korea. Then I have a few hours in between to do some other things.

RYSSDAL: What do you do to relax?

GALLO: I have different interests. I like to read. I fly fish quite a bit.

RYSSDAL: Where? Up here?

GALLO: No, outside the state. I just came back from Montana. I — when I have the time I play golf with my wife.

RYSSDAL: You know for a lot of people having a couple of glasses of wine and walking through a vineyard like this would be the vacation of a lifetime but —

GALLO: It's like going through a garden, that's right.

RYSSDAL: Right. And this is yours. You can do that whenever you wanted to. You ever sit back and say this is unbelievable what my family has done?

GALLO: Not really. I don't look back too much.

RYSSDAL: Not healthy?

GALLO: I prefer to look forward. Too many opportunities out there. I want to focus on the future, how to capitalize on opportunities. There's so many opportunities that what scares me is when days go by that I don't see them.

RYSSDAL: You can't see them all, though.

GALLO: That's exactly right.

RYSSDAL: Why wine? In 1933 when your dad and your uncle started this company? Why not —

GALLO: Well, its sort of — that's a good question. I — my dad grew up on a ranch. In Modesto. And they grew grapes during prohibition and it was legal to ship wine grapes east for home wine consumption. In those days in the ethnic areas like Croatians, Italians, French, etc. in Chicago he used to go back on the train and they shipped wine grapes back there so they could take and make homemade wine. So when prohibition was repealed it just sort of logical for them to go into the winemaking business.

And you've probably heard this story how they did it.

RYSSDAL: Go ahead and tell me.

GALLO: Well, they basically didn't know much about making wines; my dad went to the library, got a four-page pamphlet on how to make wine, didn't have any money so he figured out how to go to the growers and say look, you can't sell your grapes you can get 160 gallons out of a ton of grapes. I'll make the wine, I'll give you 20 percent of it, I'll take the rest or some sort of formula and if you'll — and I'll pay you after I sell the wine and that sort of creative thinking.

And my uncle was involved with all of those decisions and they made a profit the first year and have been making a profit thereafter and just sort of did what made sense. They're very practical people. They would see opportunities, they would capitalize on it, they worked together very well — together they could discuss things and have a healthy debate and out of that came a consensus direction to go in. That's sort of what they got involved in.

RYSSDAL: When you think about how people perceive the Gallo name, and the Gallo brand, that you have built, what is important that they keep in mind?

GALLO: Well, we hope that we do a — brand is an evolving image and we feel that what we strive to do is first of all to continue to try to improve the quality of our product. We feel very, very committed to do the very best we can to make a great product and so we hope that as time goes on we can better communicate to the public that we're making a great bottle of wine for the price, that the family is involved in virtually every detail, ensuring that the family passion and commitment to making a great bottle of wine is what we try to do.

And that we want to deliver it to the American public, the best possible wine, at the most reasonable price.

RYSSDAL: You know, you can go to the store shelves and see a bunch of wines that are Gallo but nobody would know it.

GALLO: Right.

RYSSDAL: Rancho Zabaco and Mirassou and other names like that. How does that contribute to the Gallo brand I guess is the question?

GALLO: Well, we think brands have to stand for something. And we feel that the Gallo brand stands for a family, as I said, committed to making a better product, but there's other images out there, there's different market segments that people also want. Some of the brands, for example, are varietal-centric. They stand for basically one varietal. Such as Louis Martini. Where people want to focus on maybe Napa as opposed to say Sonoma or California, so every brand has its own positioning

RYSSDAL: By and large when you make wine, when Gallo makes wines, you take grapes from these vineyards that we see right here and others that you have around and you blend them and then come out with something at the end that's acceptable across the public range of tastes? Is that how you guys think about it?

GALLO: Well —

RYSSDAL: What are the mechanics, I suppose?

GALLO: Well, the winemakers have final say, and so —

RYSSDAL: Interesting point, the winemakers have final say in how the wine comes about?

GALLO: Yeah, yeah. We believe in hiring very good winemakers and giving them the proper winery equipment so they can make good wine. The winemakers, for example, decide when the grapes should be picked. They get involved in the agriculture practices so they have the ultimate responsibility for what the wine should taste like.

RYSSDAL: But then when they're ready to go with a particular year or vintage, do they come and have a little sit-down in your office and say hey, Joe, what do you think of this one?

GALLO: No.

RYSSDAL: What would happen if you picked up a bottle of Gallo wine and you poured it and you didn't much care for it?

GALLO: Well, it hasn't happened.

(Laughter)

RYSSDAL: Might, though.

GALLO: When it does I'll let you know. But getting back to the point, there is — we feel we have an extremely competent winemakers and we also feel that they have to have leeway to use their creativity and they're very serious and responsible about what they're doing and they're very, very professional. And as all professionals they have to be given their leeway to express themselves; it's almost like an art form.

RYSSDAL: When you were young did you put in your time in the vineyards?

GALLO: Oh, yes. Yeah. Yeah.

RYSSDAL: Do you remember it fondly or was it mostly tough labor?

GALLO: I didn't mind it. I worked — my dad always believed in work for children; he thought it was important and so I spent a lot of time in the vineyards. Used to go to the office with him on Saturdays, that sort of thing.

RYSSDAL: Is that a requirement in this family that you have to have — you have to make your bones, making the wine before you can sort of step up in the company?

GALLO: No, not at all. Not at all.

RYSSDAL: What do you want out of the third and fourth generation of Gallo's? Do you want smart business people or do you want great winemakers?

GALLO: I want them to do what makes them happy. Which their best talents lead them to.

RYSSDAL: So it's fine with you if your grandson comes to you one day when he's 23 and says grandpa I don't want to make wine.

GALLO: It's fine if they don't want to go in the business. They want to become a doctor or lawyer or a farmer or something else that's their decision. I think one of the biggest mistakes family businesses make is to try and get their children to go into business when they don't have an interest. Unless you have an interest you won't be good at what you're doing and you won't be happy. If you're not happy and you don't have an interest, then you won't be successful. And the most important thing a parent should do in my case and my belief is they should figure out what is best for the child? And not try and superimpose their will upon the child if they don't have an interest in that area.

RYSSDAL: When you make business decisions about this company, how are those decisions informed by your family history? That you're a family of immigrants that was started by your grandfather and father, that it was started by your father? How influential was that?

GALLO: Well I think that the — out of respect to your question the more influential factor is being around my dad for 50 years. Seeing how he's dealt with issues, how he's dealt with opportunities, how he's dealt with adversity. How he's dealt with business conditions. How he goes about dealing with problems, solving them. He's a very, very clear thinker. He can take a complicated issue and get it right down to the basics. And seeing that synthesis that he goes through and around that experience and his basic values in terms of what should be done and what shouldn't be done for 50 years is a very compelling experience to go through.

RYSSDAL: How would this company have been different if you had decided to go public?

GALLO: I don't know. I don't know.

RYSSDAL: Gallo's — go ahead.

GALLO: That would be speculation.

RYSSDAL: Go ahead, speculate.

GALLO: Ah, it would take an hour to do it. That's a big question.

RYSSDAL: Give me the minute version. Would you be as influential as you are now?

GALLO: It all depends. It all depends. Depends on a lot of factors that — how it evolved.

RYSSDAL: You seem like a man who doesn't deal much with hypothetical.

GALLO: Well, sometimes I do and sometimes I don't. But you know there are cases where family businesses have gone public — I'll tell you this much, a lot of the time these businesses start off partially public, they end up being sold. Because the whole dynamic changes in terms of the decision-making process and so I feel its extremely important to carry on the — which I say is the objective of the founders as well as what we think is what's best for the company is to stay independent.

RYSSDAL: Gallo is obviously a strong brand. One of the biggest in the wine world. You guys in the next couple of years are going to go through a re-branding with a lot of your labels. You're going to create something called a Gallo Family Vineyards.

GALLO: Uh-huh.

RYSSDAL: How important can that be? How strategically is that an advantage when you're already selling 65 million cases of wine a year?

GALLO: Well, the — if I may just elaborate on your question —

RYSSDAL: Of course.

GALLO: We are — we sell — we're an international company. We sell in 92 countries around the world so although the brand is strong in the United States, it's even stronger outside the United States and the company historically, the brand was Ernest and Julio Gallo, the name of the founders. But of course as times change, as the company evolved, we are more generations became involved in the company as the founders no longer active or alive its very logical to move the company in the direction the brand in the direction that more reflects what the brand — what the company stands for which is our family.

And so the brand became Gallo Family Vineyards, which we think is very important positioning. And we think that the — that coincident with that we've put a huge amount of effort to try and upgrade the quality of the wine. So we feel that we continue — and also it's very interesting in terms of positioning there's no other family out there, no other wine brand out there that can call themselves, that I know of, that call themselves a family winery on the scale that we're operating.

And so we feel that's unique positioning and also the people out there, people in general are very, very like the concept, quote/unquote of the family where you have family members involved whatever field its in personally involved trying to make a better product overseeing the quality, overseeing that the public is getting the promise that the family wants to make about doing a better job and making a better wine and as I say upon the quality. We think we have a tremendous positioning there that reflects what we're really doing.

RYSSDAL: You can be as lucky as you want and sometimes as smart as you want but you don't go through 70 years of a company's history without making some mistakes. Where in your mind did Gallo get it wrong?

GALLO: Well, I feel that maybe we should have probably gone — we should have moved quicker in certain areas.

RYSSDAL: What kinds of areas?

GALLO: I feel that we should have — in hindsight — it's easy to have hindsight, of course. But we should have recognized that globalization of business much quicker. The industry is a globalized industry and we — I think we did a pretty good job exporting, but we should have, in hindsight, perhaps been quicker to appreciate the fact that there's a global industry with a lot of imports from this country as well and that we have to satisfy the consumer needs.

RYSSDAL: Let me pick up on that for just a second. You've got French wines coming here; you've got some Australian wines coming here. What about Chile and Portugal and South African wine? I mean there's a lot to do.

GALLO: We're going to bring in those a South African wine. We're going to import an Argentinean wine. We're going to import a Chilean wine; we're importing now a New Zealand wine. We import, obviously, from France, as you mentioned. We also import quite a bit from Italy. But we also export a lot of California wine.

And let me say this to you: I feel that, going forward, that California has an enormous future. The reason why is that, first of all, we have a fabulous area to grow grapes where we can get our costs down where we can grow tremendous quality of wine at a reasonable price.

And we feel that — and also we have the technology in our plants and our winemakers are very focused on trying to make a better product. If you go over to Italy, as an example, and I've been there a lot, you go into another part of Italy the size of the average vineyard, believe it or not, is maybe two acres. Two acres! You can go down into the San Joaquin Valley and get thousands of acres, so think in terms of the cost and there it's a family, little family, enterprise. It's almost like the guy's got a little garden he's got a couple acres.

And there's four or five thousand of these folks that have this, that go into a co-op. Well, compare that to the opportunity we have in the United States, we have huge vineyards, low costs, you know very, very state-of-the-art winemaking processes and we feel that California is going to do very well.

RYSSDAL: How tough was it being a California winemaker back in the days when everybody in the wine world looked down their nose at California and said pfff.

GALLO: I didn't know they looked down their nose at California.

RYSSDAL: American wines, right? I mean California wines haven't always had the reputation that they have now.

GALLO: Well, surprisingly going back to the '70s I think that was the era — they had a wine tasting in France and to everybody's surprise California beat all the French wines and all the wines of the whole world and I think that there's no question that that demonstrated to even the most harshest critics that California can make a very good product.

RYSSDAL: Right, but, we can go in that house right there and find Gallo labels from 1952 and 1948 when times were much different and it was probably a little bit tougher.

GALLO: Well, you're going way back. Going back to 1970 where we got recognized for making great wine to me is quite a statement. The industry, by the way, to develop your thinking more, you see this industry was in shambles at the end of prohibition. There were no winemakers, all the great winemaking; all the great vineyards were dug up. Had to start from scratch. As an industry had to develop itself and find itself, so between 1932 and — what they did they worked very closely with the University of California at Davis where they dealt with how to make good wine, where the best grapes should be grown, what varieties grow in what area.

And out of that they developed a tremendous backbone for the industry, so to speak, so that the quality of wine could then do very well. So that was 1932 to 1970 — this was 40 years — we were probably making great wine even before 1970, just got recognized in 1970. We may have been making great wine in 1950 or '60, but it wasn't recognized until this tasting took place and everybody recognized we can make wine just as good as anywhere else. As a matter of fact, I'll give Bob Mondavi credit because if you go back into his history, he got out of Stanford probably in 19 — in the '20s or '30s — and early on he mentioned to the Napa Valley Wine Business Association there's no reason why we can't make as great a wine in California as the best wineries in France.

Here's a young guy, 25-26 years old with that kind of vision. He was right. At that time it was astounding that somebody would say that. A lot of people didn't believe it but it turned out he was right.

RYSSDAL: It's a story that I think anybody who reads about Gallo knows, but what's the short version of how your family came over from Italy and started this company?

GALLO: Well, actually my dad was born in the United States.

RYSSDAL: Your grandfather, though —

GALLO: Grandfather — my grandfather, you know, one thing I feel that's really interesting is the story of immigrants. What's surprising is how young they were when they came over. The average immigrant I'm told came to the United States during the turn of the century, what is it — 13-14 years old?

RYSSDAL: How old was your grandfather?

GALLO: Well, he was sort of a wandering fellow. He first went down to Argentina. Worked down there for a few years, came back there, and then came over here, but he was that type of person and if you think about it that's one thing that made America great because the selection process of somebody in Italy, doesn't speak the language, wants to get on a ship at 13-14 years old, go across the world to better his fortunes, get here, work like mad to get ahead is one of the driving forces to the American people which has made it such a powerful economy and country.

So getting back to your question, so he came over here and he landed in Pennsylvania and he didn't speak English; worked in the coal mines and he made a few dollars and then he got on a train, came west and didn't speak English — all he knew was the word "pie" so he — every place they stopped, he'd get pie and came across the country.

(Laughter)

And then he moved around a lot. My dad was born up in the mountains up here in California, in a gold mining town and Amador County. And so — Jackson. And then he moved around quite a bit, ended up in Modesto as a young fellow and that's where he began.

RYSSDAL: The company, though started after a great family tragedy where your grandfather — what happened to him happened to a lot of people in the depression. And he couldn't make it through.

GALLO: What's your point?

RYSSDAL: There's no point at all. I just wonder, I guess, how that affected you and the family? Let's tell folks what happened, I mean your grandfather had very serious financial problems we think —

GALLO: Yeah.

RYSSDAL: And he committed suicide.

Your father writes in his book that he doesn't think about it, hasn't thought about it since that day.

GALLO: Yeah. No, well, we don't talk about it.

RYSSDAL: You've mentioned several times this morning the effect and influence your dad has had on you. What do you think your influence has been on your children?

GALLO: Well, I guess I hope it's been positive, very positive. I'm very proud of what they've done. They're very, very involved in the company and I think that I try to pass on some of the values my dad has taught me. As many as I can.

RYSSDAL: You can do a lot of research on the Gallo Company and the thing you learn most is that you are a very private man and the company is a very private company.

GALLO: Well, I'm having this interview.

RYSSDAL: It's your first one on radio isn't it?

GALLO: Yeah.

RYSSDAL: Why us? Why now?

GALLO: Well, I've given — I've given interviews to the press.

RYSSDAL: Why is being circumspect and careful and cautious important to you?

GALLO: Would you repeat your question?

RYSSDAL: It seems to me you're a very circumspect man. Says what he's thinking, but maybe not too much more.

GALLO: Maybe it's my style.

RYSSDAL: This was — at one point, Gallo was a small company. It's obviously changed a lot, as has the industry. I'm wondering, though, if you think you can be a small winemaker in the wine industry today and still survive?

GALLO: Oh, I think so. It's happening all the time. There's always room for people to make a quality product. And they're doing it and they're doing a great job. I think it's a very, very healthy thing for the industry.

RYSSDAL: I guess a comparison in my mind might be the big bookstore chains versus the guy running the neighborhood bookshop and the feelings he might have towards the big chain squeezing him out because of prices and variety and choices and options.

GALLO: No, no. The industry is — has a lot of needs. Restaurants have a lot of needs; fine wine shops have a lot of needs for their customers. And the customers, you know, if a person promotes his product and makes a good product, there is enough people who will find it and it'll do very well. There's thousands of wineries in this state and I would say that most of them are doing very well. Doing fine.

RYSSDAL: You go over to France to try to bring back French wine into this country; you come up this brand we mentioned, Red Bicyclette. I've read that it single-handedly reversed a decline in red wine sales in this country. How does that sort of influence make you feel as the guy running this company?

GALLO: Well, I think that's an overstatement of our accomplishment. We've done fine, but I don't think we've sole-handedly turned things around. We've contributed to it.

RYSSDAL: Had great influence, you might say?

GALLO: We contributed to it.

RYSSDAL: I want to ask you about one more phrase I read about you. You say it's real important to make a wine with "an absence of negatives." It's important not to have drawbacks. Where does that factor into your corporate decision-making?

GALLO: Well, again, it gets down to the consumer. And the — a lot of wine historically has been flawed. In the process of how it's been made and it's very important that the products being made is clean, not bitter. We feel it should have a lot of fruit taste to it and so the extent that that is achieved we think that the public will respond very well. You know when I was over in England in the 1960s, and in those days there's no California wine, or no" new world" wine sold over there. And the biggest selling wine in those days was a French wine, Herondale. Very, very inexpensive, did not taste very good. Wine sales went nowhere.

The California industry, new world industry — they call it the new world versus the old world — new world as well as California as well as — particularly the new world wines that were over there and Australia, and the wines were much better — wine sales started to grow. They've grown enormously.

Just demonstrates the point. If you make a good product, the public will respond to it, and the industry will do very well. So getting back to your question about absent negatives to the extent that the industry knowing ourselves makes better wines without these awful flavors that people don't like means they're going to sell more product. Better for the industry.

RYSSDAL: What's a good glass of wine for Joe Gallo?

GALLO: For myself? I'm not the world's best expert I can promise you that, but I do like wines that are fruitful and taste more like the taste of the grape without too much oak.

RYSSDAL: You a red guy or a white guy?

GALLO: I drink both.

RYSSDAL: Joe Gallo thanks a lot for your time.

GALLO: Nice to be with you.

[NOTE: The text above is an extended excerpt of the interview and may have been edited. It should not be taken as a verbatim record.]

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