Drink a THUNDERBIRD in his honor....

Ernest Gallo, California Wine-Making Entrepreneur, Dead at 97

Ernest Gallo, whose pioneering use of advertising helped develop the U.S. mass market for wine and built the family-owned E&J Gallo Winery into the largest U.S. maker, died yesterday. He was 97.

Gallo died last afternoon of natural causes at his home in Modesto, California, winery spokesman John Segale said yesterday in a telephone interview. He would have turned 98 on March 18.

Gallo outlived two younger brothers: Julio, his lifelong partner, who died in 1993, and Joseph, 10 years his junior, who died last month. The youngest brother -- one of California's largest cheese producers -- was estranged after he lost a protracted court battle to brand his dairy products with the family name.

By all accounts, Ernest Gallo was the more ambitious and driven of the two brothers in the wine business. Ernest had persuaded Julio to join him in starting a winery when Prohibition was repealed. He devised ways to finance, promote and sell wine, while Julio oversaw the vineyards and production.

The Gallo brothers popularized wine as a beverage accessible to the general public. The company's downscale ``Thunderbird'' wine, a beverage developed in the 1950s that combined high-alcohol wine and citrus juice, gave way in the 1980s to its Bartles & James wine cooler, which blended wine and fruit juice. The company later developed a line of premium varietal and imported wines.

``Ernest Gallo's contributions to the wine industry, agriculture and the state of California will endure forever as legacy matched by very few,'' Tom Nassif, president of trade group Western Growers Association, said in a statement. ``It is hard to imagine a California wine industry without Ernest Gallo.''

As chairman of the company, Ernest Gallo worked until his mid-90s, although he passed his duties as chief executive office to his son, Joseph E. Gallo, in 2001.

Family Control

From the outset, Ernest Gallo was determined to keep the company in private hands. The brothers welcomed the involvement of their children and grandchildren. At least 15 family members worked at the winery in 2006, according to Forbes magazine, which estimates the fortune of Ernest Gallo's family at $1.3 billion.

The company ranks as the second-largest wine company in the world after Constellation Brands Inc., selling 65 million to 70 million cases each year in more than 90 countries. Although Joseph E. Gallo spearheaded the global expansion, he spoke deferentially of his father's business skills on National Public Radio's ``Marketplace'' program in 2006.

``He's a very, very clear thinker,'' the CEO said. ``He can take a complicated issue and get it right down to the basics.''

Ernest Gallo was born in 1909 in Jackson, California, 125 miles east of San Francisco. His parents, Giuseppe and Assunta Gallo, were Italian immigrants who operated a boardinghouse in the Sierra foothills in the waning days of the Gold Rush.

End of Prohibition

His parents soon moved to Oakland to manage a saloon and boardinghouse. His mother -- overtaxed by the birth of a second son 12 months after her first -- sent Ernest to her parents in the San Joaquin Valley, where he remained until he was 6.

In his autobiography, Gallo described a happy childhood, with memories of his grandfather harvesting and crushing grapes to produce homemade wine. After he rejoined his parents, he shared their hardscrabble years on a series of farms.

His volatile father was a harsh taskmaster and required both Ernest and Julio to work in the fields when they weren't in school.

Ernest became a salesman at 17 when he volunteered to travel to Chicago to sell carloads of the family's grapes in the rail yards in 1926. His father had begun growing grapes four years earlier as Prohibition spurred demand for homemade wine. Federal regulators permitted families to produce as much as 200 gallons annually without violating the ban on intoxicating liquor.

Taking Control

The stock market crash of 1929 decimated the elder Gallo's finances. In 1932, he retreated to a rundown raisin-grape ranch south of Fresno, while Ernest and Julio tried to keep his Modesto vineyard going.

On June 21, 1933, hired hands discovered the bodies of the elder Gallos at the Fresno ranch, dead from an apparent murder- suicide. The father's debts totaled almost $30,000, while his assets were scarcely a 10th of that amount.

Ernest Gallo sought a probate judge's permission to continue his father's grape-growing business. He persuaded Julio to start a winery in a leased building in Modesto with equipment bought on credit. It was Ernest who devised a profit-sharing plan to pay grape growers only after their wine was sold. Then he went to a local public library to research commercial winemaking.

Financial Recovery

The shelves were bare of helpful books, in the same way Prohibition had decimated the ranks of experienced winemakers. But in the basement, a librarian unearthed pre-Prohibition pamphlets written by a research scientist at the University of California at Davis.

``Those old pamphlets probably saved us from going out of business our very first year,'' the winery founder said in ``Ernest & Julio: Our Story,'' a joint autobiography written with Bruce B. Henderson.

Remarkably, the Gallos turned a profit in their first year. By 1935, they had paid off the obligations of their parents' estates and had outgrown their first winery. They expanded their operation in 1936, even though Ernest was hospitalized for six months with tuberculosis. When he recovered, he resumed his practice of traveling five or six months of the year.

Even in his 80s, Ernest Gallo set a relentless pace. He enjoyed telling the story of how one hapless employee was left behind on a tour of Florida stores. As he recounted in his autobiography, Gallo refused to backtrack for the man, saying, ``How valuable can a guy be if he wasn't missed in three hours?''

Industry Leader

The brothers readily turned to new technologies or methods to improve their business. They invested in a bottling room with sterile conditions in 1946 that became a model for the industry. They built their own glass plant in 1957 to supply bottles.

After World War II, Ernest Gallo became a leader in wine industry advertising and promotion, providing retailers with Gallo wine racks and point-of-sale displays. He used billboards in local markets, and nabbed national publicity by staging a wine ``crush festival'' with pretty girls for the benefit of Life Magazine photographers.

Careful research preceded almost every agricultural, product or marketing decision. ``Thunderbird'' was developed over two years before its market debut in 1957.

Made of wine and citrus flavoring, the low-priced ``Thunderbird'' broadened Gallo's customer base but also gained popularity in slums. In 1989, Ernest Gallo ordered distributors to quit selling the product to stores frequented by derelicts.

Imported Brands

Both brothers adapted to changes in the marketplace. Julio, the winemaker, had preferred to blend grapes to achieve consistent quality, but he agreed to begin vintage-dating some Gallo varietal wines in 1983. Later, he embraced the company's move into premium estate wines, produced from grapes grown within a single viticultural area.

Ernest, a fierce opponent of imported wine, eventually supported his son's overseas expansion. Joseph E. Gallo opened the company's first international sales office in the U.K. in 1985.

The company now not only exports U.S. products, but also imports wine produced with partners in France, Italy, Australia, New Zealand and a growing number of countries. ``Ecco Domani'' from Italy and ``Red Bicyclette'' from France are two of its leading imports.

The Gallo family was riven in the 1980s by legal disputes between Ernest and Julio and their younger sibling Joseph, after the latter branded cheese products with the family name. Sued for trademark infringement, Joseph Gallo lost the case and changed his label to ``Joseph Farms.''

Joseph Gallo in turn sued his older brothers in 1986, asserting ownership of one-third of the winery. A federal judge dismissed the claim in 1988 and the ruling was upheld on appeal in 1992.

A year later, Julio Gallo was killed in a jeep accident on a family ranch. Ernest Gallo was also preceded in death by his wife, Amelia, and elder son, David. Survivors include son Joseph, five grandchildren and three great grandchildren.