Gallo Buys Napa's Louis M. Martini Winery

The world's largest wine company enters Napa Valley with the purchase of the historic Cabernet producer

Sep 10, 2002

E. & J. Gallo, the world's largest winery, has purchased Louis M. Martini winery in Napa Valley for an undisclosed price. The Martini deal gives Gallo its first wholly owned winery in California's premier winemaking region.

Martini, which owns more than 600 acres of vineyards in Napa and Sonoma counties, is one of Northern California's oldest continuously operated wineries. Founder Louis M. Martini began making wine in Napa Valley in 1934, soon after the repeal of Prohibition. His grandchildren, Carolyn, as president and CEO, and Michael, as vice president and winemaker, have been running the winery and will continue in their roles and on its board of directors.

"Gallo wanted a presence in Napa Valley, and we had a number of family members who wanted to leave and some who wanted to stay on," Mike Martini said. "The idea right now is to continue to run as Louis Martini with support from the mother ship, so to speak."

Mike Martini said Gallo approached his family about 18 months ago, and the two companies have been in discussions since then. The appeal for the Martinis was Gallo's powerful sales and marketing muscle. "None of us took this decision lightly," he said. "For our size of a winery, it's impossible to compete out there." He added that Gallo plans to emphasize Martini as a restaurant brand, focusing more on its high-end wines.

"This really broadens our fine wine portfolio," said Caroline Coleman Bailey, director of marketing and public relations for Gallo of Sonoma. "This is really a family-to-family connection, more than anything. The relationship has been there since grandpa (Julio) and Ernest."

Martini's Cabernets from the 1940s through the late 1970s, especially those from the Monte Rosso vineyard in Sonoma Valley, aged exceptionally well. Martini's son, Louis P., who died in 1998, was a pioneering California winemaker; he bottled the first varietal Merlot in the state, championed Pinot Noir from the Carneros district and was an early proponent of cold-stabilized fermentation for white wines.

Through the 1980s and 1990s, the Martini winery was a solid producer of value-priced wines, but lost its role as a quality leader in the California wine industry. Today, it produces about 150,000 cases annually, including vineyard-designated Cabernet Sauvignon, Chardonnay, Gewurztraminer, Merlot, Pinot Noir, and Zinfandel, along with the lower-priced varietal bottlings.

With the Martini purchase, Gallo solidifies its position as one of the largest vineyard owners in Sonoma County, rivaled only by Kendall-Jackson Wine Estates. It also makes its first significant leap into Napa Valley real estate. The Martini winery is located in the heart of Napa Valley, just south of the town of St. Helena.

While the Gallo family bought significant amount of grapes from Napa growers through the 1980s, it long eschewed owning Napa vineyards and instead focused its North Coast winemaking efforts in Sonoma County. These centered on its large winemaking facility in Dry Creek Valley, which draws on the more than 3,000 acres of vineyards Gallo owns throughout Sonoma.

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