WORLD’S BIGGEST WINERY GETS BIGGER
E. & J. Gallo Winery announced Tuesday that it has finally completed an $810 million purchase from Constellation Brands Inc. The Modesto-based company got 30-plus labels at various price levels, along with winemaking capacity in the Lodi area and four other locations.
The two industry giants announced in April 2019 that they had agreed on a larger deal, totaling $1.7 billion. The Federal Trade Commission raised concerns about Gallo getting too much control of the sparkling wine, dessert wine and brandy markets. The parties agreed to strike those portions from the transaction in a Dec. 23 draft ruling by the FTC. The revised purchase price was initially $1.1 billion. It dropped again to $810 million “related primarily to changes in inventory for which Constellation has already received the benefit,” a news release from that company said.
Gallo is adding about 350 employees to the 7,000 or so it already had in Modesto and other locations around the world. “The closing of this transaction represents our company’s long-term commitment to the wine industry,” said Ernest J. Gallo, the third-generation CEO, in another release. “We are pleased to welcome the new employees joining the Gallo family.” Gallo is making its first foray into the New York state industry, with Taylor and a few other brands. It also is getting its second winery in Washington state and adding to its holdings in premium and mid-priced California regions.
Gallo, founded in Modesto in 1933 by brothers Ernest and Julio Gallo, was the world’s largest wine producer even before the Constellation purchase. It has made low-priced bottles throughout its history and ventured into premium regions starting in the 1980s. Gallo also markets vodka, gin and other spirits.
- Gallo got major production volume at Turner Road Vintners near Lodi. This plant mainly makes wines with the “California” appellation, cheaper for consumers than Napa Valley and other premium sources. Among the brands are Vendange, Black Box, Rex Goliath and Toasted Head.
- Gallo added to its premium portfolio with Franciscan in Napa; Ravenswood and Clos du Bois in Sonoma County; and Hidden Crush, Estancia and Wild Horse on the Central Coast. Another new brand, Mark West, has both premium and California appellations.
- Hogue Cellars joins Gallo’s Columbia Winery in Washington.
- Gallo got Blufeld from Germany and Diseno from Argentina to go with existing imports from several countries.
- The company takes over the New York winery that produces the Taylor, Arbor Mist, Wild Irish Rose and Manischewitz brands.
The company also has closed on the Nobilo winery in New Zealand in a separate $130 million transaction with Constellation.
The FTC approved the deal with a few anti-trust conditions. Gallo must sell its Sheffield Cellars port and Fairbanks sherry to Precept Wine, based in Seattle. Constellation must retain its Cook’s and J Roget sparkling wines and sell its Paul Masson brandy to Sazerac, based in New Orleans. The large Mission Bell Winery near Madera also was stricken from the deal. Constellation, based in Victor, N.Y., said selling to Gallo would allow it to concentrate on wines priced at more than $11 per bottle. This company also is a key player in the beer and spirits industries.