Gallo Lifts Its Glass To Wal-Mart
Last updated Sunday, December 4, 2005 12:36 AM CST in Business
By Anita French
The Morning News
ROGERS -- You might not think at first glance there would be much in common between Wal-Mart founder Sam Walton, who began his retail empire in rural Arkansas, and brothers Ernest and Julio Gallo, founders of a vineyard in the verdant valleys of Northern California.
But they share a lot, it turns out. Walton built Wal-Mart Stores Inc. of Bentonville into the world's largest retailer, while E.&J. Gallo became the largest wine company in the United States.
And, like Wal-Mart, which boasts of how putting the customer first drives its sales, Joe Gallo, co-president and CEO of E.&J. Gallo, and son of Ernest, has said, "Everything we do starts with understanding the consumer."
So it was inevitable that E.&J. Gallo would become a Wal-Mart supplier and open an office in Northwest Arkansas to be closer to its biggest customer.
E.&J. Gallo has been in Rogers since 1993, growing from a one-man operation working out of his home to a staff of nine at an office at Village on the Creeks. There is also a five-member support team that works in Modesto, Calif.
"We're fortunate that Wal-Mart is growing and, as a supplier, we have to keep up," said team leader Joe Farnan.
Farnan said, as a supplier, Gallo works with Wal-Mart by analyzing the company's wine sales, making recommendations on new items and providing information on trends. He has great admiration for Wal-Mart's focus on its customers, Farnan said.
"I can truly say I've never met a retailer more committed to doing what is right for their customers. 'Is it right for the customer, and is it right for my store?'" are questions continually asked by Wal-Mart buyers, he said.
"The product drives the decision," added Tom Seabolt, Gallo's director of category and trade development.
E.&J. Gallo operates in 96 countries, which helps Wal-Mart because, "If there was ever a global company, it's Wal-Mart," Farnan said. Gallo has been in the United Kingdom for 15 years and other foreign countries as well, so it is able to help Wal-Mart navigate its own international waters.
Although E.&J. Gallo only contracts with overseas vineyard owners, the family still operates its own vineyard in California.
"Fortune has a way of favoring those at the right place at the right place at the right time ... which is exactly where Julio and I were in 1933," Ernest Gallo once said -- a saying that could be applied to Sam Walton as well.
The two Gallo brothers began their winery following the repeal of Prohibition. The Gallo winery has been active in Sonoma, Calif., for more than 70 years and its Healdsburg facility includes two, third-generation family members -- Matt and Gina Gallo. Gina is a third-generation winemaker and her brother Matt oversees the Sonoma and Napa vineyards.
E.&J. Gallo Winery employs more than 4,600 people and markets its wines throughout the United States and more than 90 foreign countries, making it one of the largest winemaking operations in the world.
Because it sells an alcohol beverage, Gallo isn't able to offer its product in all of Wal-Mart's stores -- such as in "dry" areas like Benton County. But that restriction presents little to no difficulties for the company, Farnan said.
He acknowledged, however, that not all of Gallo's wines are going to appeal to Wal-Mart customers.
"Each brand is going to play a different role," Farnan said.
Although Gallo made its name with inexpensive wines, the company also makes a Cabernet that sells for $100 a bottle. Gallo comes out with a new wine or line extension every year, Farnan said.
E.&J. Gallo is not only a family owned company, it is also a "private" one, Farnan said, and does not like to reveal sales figures or how much it contributes to charitable organizations. But the company considers itself a local as well as national good neighbor, so the Rogers office supports Cancer Challenge, Boys and Girls Club, the Children's Miracle Network and the Walton Arts Center.
WAC spokeswoman Natasha Burroughs said Gallo provides the wine for the center's largest annual fundraiser, the Art of Wine Festival.
"Gallo has been our supporter since we began -- not just with wine but throughout the year," Burroughs said.
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