Food & Beverage Processing:<BR>Technology Ferments TransformationFood & Beverage Processing:<BR>Technology Ferments Transformation

A key business strategy for Gallo is to grow its relationship with consumers, something that was hindered in years past by the Family's tendency to keep a low profile. "Ernest is like the Henry Ford of this industry," says Abate, a 25-year veteran who joined Gallo right out of college and has worked in both sales and IT.

The Family could've gone down the road of acting like the rich and famous, "but Ernest never wanted to do that," says Abate. "He wanted his privacy." Julio died in a car accident in 1993, and it's his granddaughter, Gina Gallo, who's helping make the Family more familiar to consumers. Gina, a winemaker, is often seen in Gallo television and print ads strolling through the company's Sonoma vineyards, which produce its best products. Such exposure of one of its own was a big step for the Family, but a crucial one for building consumer sentiment and loyalty. Gallo is run by a team of co-presidents that includes Ernest's son Joe Gallo, Julio's son (and Gina's father) Bob Gallo, and Jim Coleman, husband of Julio's daughter Sue. The wine industry seems confused about who's leading the company, but through various inferences it appears Joe Gallo has a CEO-type role. Ernest, 93, is chairman.

High-quality videoconferencing helps Gallo understand how people feel about its wines, and what they think of the company. "When people drink our products, what they're experiencing is emotional satisfaction," says Gerry Glasgow, VP of marketing and a 21-year Gallo veteran. Marketers visit sites across the country and question selected consumers on their opinions of Gallo ads, various wines, and suggested brand names, as executives watch from Modesto. "Their body language and facial gestures tell us a lot," Glasgow says.

Meanwhile, the Internet plays a big part in quantitative research. The company sends market researchers to shopping malls and has them corner consumers to ask their opinions of brand names, packaging, and concepts, but last year it transferred 40% of that research to online surveys. This year, 65% of its quantitative studies will be done online, says Glasgow. Gallo partnered with an outside research firm to compile a pool of nearly 50,000 consumers who participate in its online surveys.

Those are just some of Gallo's more high-profile projects. Others include an online employee-review process, online benefits information, and online training courses available to all employees. Many new initiatives are related to process and product quality, such as document management for the wine manufacturing facilities' ISO 9000 certification process, a standard methodology for measuring quality in manufacturing; a partnership with its research lab to pilot real-time testing of grape quality in its vineyards; and implementation of a new controls system at its grape-crushing facilities. For consumers, Gallo is making available an increasing number of informational Web sites, including multilingual ones in an effort to maintain the momentum of its fast-growing export business. There's also a new, automated reordering system that links to Gallo's key suppliers.

As a private company, Gallo has been able to keep investing in IT when other companies in the industry have had to cut back to please shareholders, says Tony Youga, Gallo's VP of finance and Kushar's boss. He says the company's IT budget is higher as a percentage of revenue than most of the industry. He wouldn't provide details, but information 500 research ranks the food and beverage industry's average spending on IT at about 1.5% of annual revenue.

"We're very committed as a company to investment in technology," Youga says. It doesn't hurt that nearly every IT project has been a success. Gallo uses a methodology provided by Youga's finance team to estimate the projected return on investment of each project, and later measures the projection against the actual results after a project is implemented.

IT is playing a big role in Gallo's transformation from an enigmatic, family-owned giant of the wine industry to that of a world-class and highly collaborative business operation. It's a new image for the company, and a visit from a reporter still creates a stir, since historically the media hasn't been a friend of the Family.

"Everyone is so excited by this visit," explains Kushar, who later in the day serves up a cake made with Snickers bars that one of the finance managers baked the night before in anticipation of the big event. Still, stepping out into the bright Central Valley sunlight after what felt like a visit with a nice family, one can't help hoping that even as Gallo grows more technically sophisticated, it never loses that small-town-family charm.

Photos by Angie Wyant