Wine & Beer

Gallo is buying 34 wine, spirit brands — including a Templeton winery — for $1.7 billion

Taste testing Gallo’s new, rebranded Thunderbird wine

E.&J. Gallo Winery of Modesto has rebranded and relaunched its Thunderbird wine. The old version, known for its citrus flavor and high alcohol, has been discontinued. The new Thunderbird comes in chardonnay, red blend and cabernet sauvignon.
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E.&J. Gallo Winery of Modesto has rebranded and relaunched its Thunderbird wine. The old version, known for its citrus flavor and high alcohol, has been discontinued. The new Thunderbird comes in chardonnay, red blend and cabernet sauvignon.

E.&J. Gallo Winery has added 34 new wine and spirit brands — including Wild Horse Winery in Templeton — after reaching a $1.7 billion deal to purchase properties from rival Constellation Brands.

The Modesto-based company reached an agreement with Constellation, known for producing beers like Corona, Modelo and Pacifico, to acquire several well-known wine brands as well as sparkling wine brands Cook’s and J. Roget and Paul Masson brandy.

Included in the purchase were wine brands Clos du Bois, Black Box, Ravenswood, Mark West, Estancia, Franciscan, Toasted Head, Hogue Cellars, Blackstone, Vendange, Rex Goliath, Diseno, Hidden Crush, Taylor Country Cellars, Blufeld, Manischewitz, Wild Irish Rose, Arbor Mist, Milestone, La Terre, Taylor Dessert, Paul Masson Dessert, Capri, Cribari Dessert, Primal Roots, Taylor NY Table, Paul Masson Table, Simply Naked, Cribari Table, and V.NO.

The deal adds about 700 employees to Gallo’s existing 6,500 worldwide, and six winemaking facilities. They are Mission Bell in Madera, Turner Road Vintners in Lodi, Clos du Bois in Geyserville and Wild Horse in Templeton, along with Washington state’s Hogue Cellars and New York’s Canandaigua.

Cal Poly graduate and wine industry veteran Kenneth Volk founded Wild Horse in 1982, and by 2003 grew it to produce 200,000 cases, becoming one of the most successful winery operations in Paso Robles at the time.

Volk sold the operation to liquor conglomerate Beam Brands in 2003 for $34 million, and Icon Estates of Constellation Brands bought Beam in 2007. Now, Wild Horse moves under Gallo’s umbrella.

Gallo expands again

Gallo has succeeded through “vertical integration” that has grape growing, bottle making, distribution and other functions under one ownership, said Cyril Penn, editor of Wine Business Monthly, speaking by phone from his Sonoma office.

Most of the newly acquired wines are around the $11 price point. New York-based Constellation retains all of its beer brands, SVEDKA Vodka and several other wine labels including the high-profile Robert Mondavi brand family. Late last year, Constellation made a $4 billion investment in Canopy Growth, a Canadian-based cannabis company.

Gallo has long sold wine at a range of prices and should do well with the labels it is buying from Constellation, Penn said.

“I would not expect them to dumb down these brands,” he said. “If anything, it will rejuvenate them.”

Earlier this year, Wine Business Monthly named Gallo No. 1 and Constellation No. 3 for the U.S.’s largest wineries by volume. The Wine Group out of Livermore (with a large production facility near Ripon) came in at No. 2.

Brothers Ernest and Julio Gallo founded the winery in Modesto in 1933. It concentrated on lower-priced wines from the San Joaquin Valley for most of its history but branched in the 1980s into premium vineyards near the California coast. Gallo later added Washington state and imports wine and spirits from several countries.

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The growth has come through Gallo’s own startup wineries and through purchases of established brands. Usually, the acquisition costs are not disclosed because the companies are not publicly traded. Constellation is.

For Gallo, the addition brings some well-known brands into its portfolio.

“We are committed to remaining a family-owned company focused on growing the wine industry.,” said Gallo CEO Joseph E. Gallo in a press release about the acquisition. “While we continue to invest in our premium and luxury businesses, we see a tremendous opportunity with this acquisition to bring new consumers into the wine category. We will continue to provide our customers and consumers with quality products at every price point.”

The Gallo portfolio has over 100 brands, including wine labels Gallo Family Vineyards, Barefoot Cellars, Dark Horse, Apothic and Ecco Domani. Its spirits roster includes New Amsterdam vodka and gin, E&J brandy and Familia Camarena tequila.

Workers harvest pinot noir grapes at Talley Vineyards in Arroyo Grande, California, on a recent October morning as the Autumn grape harvest kicks into full swing.

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