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Full text of "Analytical perspectives on the California wine industry, 1935-1990 : oral history transcript / 1990"


# 

University of California Berkeley 
REGIONAL ORAL HISTORY OFFICE 



Regional Oral History Office University of California 

The Bancroft Library Berkeley, California 



The Wine Spectator California Winemen Oral History Series 



Louis Gomberg 

ANALYTICAL PERSPECTIVES ON THE 
CALIFORNIA WINE INDUSTRY, 1935-1990 



With an Introduction by 
Julius Jacobs 



An Interview Conducted by 

Ruth Teiser 

in 1990 



Copyright (cj 1990 by The Regents of the University of California 



Since 1954 the Regional Oral History Office has been interviewing 
leading participants in or well-placed witnesses to major events in the 
development of Northern California, the West, and the Nation. Oral history is 
a modern research technique involving an interviewee and an informed 
interviewer in spontaneous conversation. The taped record is transcribed, 
lightly edited for continuity and clarity, and reviewed by the interviewee. 
The resulting manuscript is typed in final form, indexed, bound with 
photographs and illustrative materials, and placed in The Bancroft Library at 
the University of California, Berkeley, and other research collections for 
scholarly use. Because it is primary material, oral history is not intended 
to present the final, verified, or complete narrative of events. It is a 
spoken account, offered by the interviewee in response to questioning, and as 
such it is reflective, partisan, deeply involved, and irreplaceable. 



************************************ 

All uses of this manuscript are covered by a legal 
agreement between the University of California and 
Louis Gomberg dated 28 February 1990. The manuscript is 
thereby made available for research purposes. All 
literary rights in the manuscript, including the right 
to publish, are reserved to The Bancroft Library of the 
University of California, Berkeley. No part of the 
manuscript may be quoted for publication without the 
written permission of the Director of The Bancroft 
Library of the University of California, Berkeley. 

Requests for permission to quote for publication 
should be addressed to the Regional Oral History Office, 
486 Library, University of California, Berkeley 94720, 
and should include identification of the specific 
passages to be quoted, anticipated use of the passages, 
and identification of the user. The legal agreement 
with Louis Gomberg requires that he be notified of the 
request and allowed thirty days in which to respond. 

It is recommended that this oral history be cited as 
follows : 

Louis Gomberg, "Analytical Perspectives 
on the California Wine Industry, 1935- 
1990," an oral history conducted in 1990 
by Ruth Teiser, Regional Oral History 
Office, The Bancroft Library, University 
of California, Berkeley, 1990. 



Copy no. 




Suzanne and Louis R. Gomberg celebrating Louis Gomberg's eightieth birthday 
in 1987. 



Cataloging Information 

GOMBERG, Louis R. [b. 1907] Wine consultant 

Analytical Perspectives on the California Wine Industry. 1935-1990. 1990, 
88 pp. 

Wine Institute, 1935-1948; California wine industry: growth after Repeal, 
changing from bulk sales to bottled wine, changing products, marketing, 
antitrust threat of 1942; Wine Advisory Board, 1938-1975; Winegrowers of 
California, 1984-1987; winery ownership changes; Louis Petri; developing 
statistics; market stabilization; decline in consumption; anti-alcohol 
movements . 

Introduction by Julius Jacobs, journalist. 

Interviewed in 1990 by Ruth Teiser for the Wine Spectator California Winemen 
Series. The Regional Oral History, The Bancroft Library, University of 
California, Berkeley. 



TABLE OF CONTENTS -- Louis R. Gomberg 

PREFACE i 

INTRODUCTION, by Julius Jacobs v 

INTERVIEW HISTORY viii 

BRIEF BIOGRAPHY ix 



EARLY YEARS 1 

Childhood and First Career, 1907-1924 1 

University, Law, and Journalism, 1924-1935 2 

WORKING AT THE WINE INSTITUTE, 1935-1948 5 

Getting the Job 5 

Functions 7 

The California Wine Industry After Repeal 8 

Stabilization Plans 9 

World War II: Bulk to Bottled Wine 14 

POST-WORLD WAR II CHANGES 18 

The Decline of Dessert Wines After the Mid- 50s 18 

Changes in Winery Ownership 18 

Market Fluctuations of 1946 and 1947 20 

MARKETING ORDERS 22 

The Wine Advisory Board, 1938-1975 22 

The Winegrowers of California, 1984-1987 24 

WORKING TOWARD A MASS MARKET FOR WINE 27 

The Problem of Reaching Consumers 27 

SINCE 1948 30 

Becoming a Wine Industry Consultant 30 

Working for Louis Petri, 1950-1952 31 

Economy and Intermediate -Priced Wines 31 

Recent Major Ownership Changes 36 

The Economy and Intermediate -Priced Market in 1990 39 

LOOKING BACK 42 

More on the Transition from Bulk to Bottled Wines 42 

Marketing and Laws 44 

The Anti -Trust Threat of 1942 46 



WORK AS A CONSULTANT 54 

A Wine Movie and a Wine Book 54 

Inglenook, United Vintners , and Heublein 56 

Wine Industry Statistics 58 

Projects for Possible Buyers and Sellers 60 

More on Market Stabilization 63 

RECENT MARKET FACTORS 70 

Causes of Decline in Consumption 70 

Foreign Interests in the California Wine Industry 71 

Imports 73 

Prices and Demand 74 

Anti- Alcohol Movements 75 

HONORS FROM WINE ORGANIZATIONS 80 

MAJOR POST-REPEAL MARKET DEVELOPMENTS: A SUMMARY 82 

TAPE GUIDE 85 

INDEX 86 



PREFACE 



The California wine industry oral history series, a project of the 
Regional Oral History Office, was initiated in 1969 through the action 
and with the financing of the Wine Advisory Board, a state marketing 
order organization which ceased operation in 1975. In 1983 it was 
reinstituted as The Wine Spectator California Winemen Oral History Series 
with donations from The Wine Spectator Scholarship Foundation. The 
selection of those to be interviewed is made by a committee consisting of 
James D. Hart, director of The Bancroft Library, University of 
California, Berkeley; John A. De Luca, president of the Wine Institute, 
the statewide winery organization; Maynard A. Amerine, Emeritus Professor 
of Viticulture and Enology, University of California, Davis; the current 
chairman of the board of directors of the Wine Institute; Ruth Teiser, 
series project director; and Marvin R. Shanken, trustee of The Wine 
Spectator Scholarship Foundation. 

The purpose of the series is to record and preserve information on 
California grape growing and wine making that has existed only in the 
memories of wine men. In some cases their recollections go back to the 
early years of this century, before Prohibition. These recollections are 
of particular value because the Prohibition period saw the disruption of 
not only the industry itself but also the orderly recording and 
preservation of records of its activities. Little has been written about 
the industry from late in the last century until Repeal. There is a real 
paucity of information on the Prohibition years (1920-1933), although 
some commercial wine making did continue under supervision of the 
Prohibition Department. The material in this series on that period, as 
well as the discussion of the remarkable development of the wine industry 
in subsequent years (as yet treated analytically in few writings) will be 
of aid to historians. Of particular value is the fact that frequently 
several individuals have discussed the same subjects and events or 
expressed opinions on the same ideas, each from his own point of view. 

Research underlying the interviews has been conducted principally in 
the University libraries at Berkeley and Davis, the California State 
Library, and in the library of the Wine Institute, which has made its 
collection of in many cases unique materials readily available for the 
purpose . 



ii 



The Regional Oral History Office was established to tape record 
autobiographical interviews with persons who have contributed 
significantly to recent California history. The office is headed by 
Villa K. Baum and is under the administrative supervision of James D. 
Hart, the director of The Bancroft Library. 

Ruth Teiser 
Project Director 

The Wine Spectator California Winemen 
Oral History Series 

September 1990 

Regional Oral History Office 
486 The Bancroft Library 
University of California, Berkeley 



iii 



CALIFORNIA WINE INDUSTRY INTERVIEWS 

Interviews Completed by 1990 
Leon D. Adams, Revitalizing the California Wine Industry. 1974 

Leon D. Adams, California Wine Industry Affairs: Recollections and Opinions, 
1990 

Maynard A. Amerine, The University of California and the State's Wine 
Industry. 1971 

Maynard A. Amerine, Wine Bibliographies and Taste Perception Studies. 1988 

Philo Biane, Wine Making in Southern California and Recollections of Fruit 
Industries. Inc. . 1972 

John B. Cella, The Cella Family in the California Wine Industry. 1986 

Charles Crawford, Recollections of a Career with the Gallo Winery and the 
Development of the California Wine Industry. 1942-1989. 1990 

Burke H. Critchfield, Carl F. Wente , and Andrew G. Frericks, The California 
Wine Industry During the Depression. 1972 

William V. Cruess, A Half Century of food and Wine Technology. 1967 

Jack and Jamie Peterman Davies, Rebuilding Schramsberg: The Creation of a 
California Champagne House. 1990 

William A. Dieppe, Almaden is My Life. 1985 

Alfred Fromm, Marketing California Wine and Brandy. 1984 

Louis Gomberg, Analytical Perspectives on the California Wine Industry. 1935- 
1990. 1990 

Joseph E. Heitz, Creating a Winery in the Napa Valley. 1986 

Maynard A. Joslyn, A Technologist Views the California Wine Industry. 1974 

Amandus N. Kasimatis, A Career in California Viticulture. 1988 

Morris Katz, Paul Masson Winery Operations and Management. 1944-1988. 1990 

Legh F. Knowles, Jr., Beaulieu Vineyards from Family to Corporate Ownership. 
1990 

Horace 0. Lanza and Harry Baccigaluppi , California Grape Products and Other 
Wine Enterprises. 1971 

Louis M. Martini and Louis P. Martini, Wine Making in the Napa Valley. 1973 
Louis P. Martini, A Family Winery and the California Wine Industry. 1984 



iv 



Eleanor McCrea, Stony Hill Vineyards: The Creation of a Napa Valley Estate 
Winery . 1990 

Otto E. Meyer, California Premium Wines and Brandy. 1973 

Norbert C. Mirassou and Edmund A. Mirassou, The Evolution of a Santa Clara 
Valley Winery. 1986 

Peter Mondavi, Advances in Technology and Production at Charles Krug Winery. 
1946-1988. 1990 

Robert Mondavi, Creativity in the Wine Industry. 1985 

Michael Moone , Management and Marketing at Beringer Vineyards and Wine World. 
Inc. . 1990 

Myron S. Nightingale, Making Wine in California. 1944-1987. 1988 
Harold P. Olmo, Plant Genetics and New Grape Varieties. 1976 

Cornelius Ough, Researches of an Enologist. University of California. Davis. 
1950-1990. 1990 

Antonio Perelli-Minetti, A Life in Wine Making. 1975 

Louis A. Petri, The Petri Family in the Wine Industry. 1971 

Jefferson E. Peyser, The Law and the California Wine Industry. 1974 

Lucius Powers, The Fresno Area and the California Wine Industry. 1974 

Victor Repetto and Sydney J. Block, Perspectives on California Wines. 1976 

Edmund A. Rossi, Italian Swiss Colony and the Wine Industry. 1971 

Edmund A. Rossi, Jr., Italian Swiss Colony. 1949-1989: Recollections of a 
Third-Generation California Winemaker. 1990 

Arpaxat Setrakian, A. Setrakian. a Leader of the San Joaquin Valley Grape 
Industry. 1977 

Elie Skofis, California Wine and Brandy Maker. 1988 

Andre Tchelistcheff , Grapes. Wine, and Ecology. 1983 

Brother Timothy, The Christian Brothers as Wine Makers. 1974 

Ernest A. Wente , Wine Making in the Livermore Valley. 1971 

Albert J. Winkler, Viticultural Research at UC Davis (1921-1971). 1973 



INTRODUCTION -- Louis R. Gomberg 



There's really no doubt about it at all. Louis R. Gomberg is a 
charismatic man, an octogenarian who is in love with life. Go to any 
wine event anywhere and you're more than likely to run into "Lou" and 
his sweet -faced wife, Suzanne, a noted artist in her own right. It 
can be as far north as Mendocino or down south in Paso Robles--but if 
the wine event is an important one, he'll be there. 

The white -bearded Gomberg wears any number of hats: wine 
consultant, statistician, lawyer, one-time real estate broker, a 
journalist for more than a decade, a protagonist for the United 
Nations and the One World concept- -he's trod all these paths and lost 
little if any enthusiasm for any of them. 

But mix them all up or put them into a hat and draw straws for 
his most favored subject; odds are that wine, and making wine the 
favorite beverage of moderation for all Americans, are his consuming 
passion. Since he has been at this ruling conviction for more than a 
half century, it's easy to see why Louis Gomberg is one of the most 
respected wine analysts in the country today. 

I met Lou Gomberg in 1957 when I was an executive for the Wine 
Institute, for which he labored some years earlier. He, at this time, 
was a consultant to the public relations agency which represented 
California wines under contract to the Institute and the old Wine 
Advisory Board. Since I was a liaison person with the agency and Lou 
represented them from his San Francisco offices, our paths crossed 
regularly in the workplace. The correspondence which passed between 
us was on almost a daily basis. 

No facet of the wine industry crossed his desk without careful 
scrutiny. Before computers were beyond the planning stages and 
consisted of roomfuls of bulky machinery, this tweedy gentleman was 
running scrupulous computations for the Wine Institute from the mid- 
19308 through the mid- 50s. He originated and polished an early-day 
economic and statistical section which is still the envy of many 
professionals involved in gathering data for the wine and spirits 
trade . 

Radical in many political outlooks, a humanist by preference and 
conviction, Lou Gomberg appears more the dapper conservative in dress 



vi 



and old-fashioned good manners. But one should never confuse good 
manners and courtliness with a lack of "fire in the belly" and an 
impassioned viewpoint when it comes to the subject of wine and its 
role in society. Many have made the mistake of crossing swords with 
an idealist who holds very pragmatic convictions and is willing to 
fight very hard for them. 

In the decades of writing about, speaking and lecturing about, 
and promoting California's predominant position in American wine 
production, Louis Gomberg has established some notable "firsts." One 
of these was bringing together John Daniel, Jr., and his famed 
Inglenook Winery with the much larger United Vintners organization. 
This resulted in a sale which set new precedents for the flood of 
smaller winery sales, mergers, or consolidations with much larger 
entities which had much greater marketing capabilities. Some were 
American corporations and others in more recent years were foreign 
concerns. Lou was a key figure in many of the negotiations. 

Another achievement was Lou's establishing for the first time an 
organization of attorneys intrigued with wine and anxious to know more 
about it. Thus in 1965 a group of San Francisco lawyers, with 
Gomberg' s key advice and experience, created the Lawyer Friends of 
Wine. The organization was fortunate to have Louis as its creator, 
secretary, advisor, creative spirit, and keeper of the records for two 
decades. Lawyer Friends still meets eight to ten times a year, has 
close to a hundred members, and Lou is the honorably retired 
secretary-emeritus. While serving actively with this professional 
group he was the planner and arranger of travels throughout the wine 
districts of the state for thousands of attorneys who gathered in San 
Francisco regularly at the American Bar Association conventions. On 
several occasions he was the point man in dispatching as many as 1,500 
bar delegates and their wives to wine country vineyards and wineries, 
making warm friends for the industry. 

More than twenty years earlier, in the 1960s, Gomberg also 
planned and established a brand new wine event, a huge charity tasting 
for the benefit of Aid to Retarded Children. In succeeding years this 
event has attracted thousands and raised huge amounts to help retarded 
citizens. Far from being an academic in an ivory tower, this lawyer 
who never practiced law on any formal basis practiced instead a 
practical way of helping both wineries and good causes. 

In earlier years, the energetic Gomberg maintained he needed as 
little as three or four hours of sleep to be fully refreshed for the 
next day's labors. In more recent years, however, he has been known 



vii 



to nod off for a refreshing nap at long or tedious wine meetings and 
hearings. One more dimension to the remarkable Lou's versatility: 
Although complaining of stiff fingers and a lack of any proper 
"practice," this wine consultant can, on appropriate occasions and if 
properly motivated, sit down at the piano and perform with skill and 
dexterity. Not for nothing was he a youthful piano prodigy before he 
ever heard of a fermented grape product known as wine . 

And optimism? Lou Gomberg truly believes that some day Americans 
will eagerly consume large volumes of red, white, and blue wines. 
Blue wine? Furthermore, back in the late 1980s he made reservations 
to attend an international wine conference to be held in Europe some 
time after the turn of the century. He will then be approaching his 
hundredth birthday. Now, THAT is confidence in the future! 



Julius Jacobs 
Napa, California 
June 1990 



viii 



INTERVIEW HISTORY -- Louis R. Gomberg 



Louis R. Gomberg, whose association with the California wine 
industry began in 1935 when he started working at the Wine Institute, 
was for most of the years between 1948 and 1983 a business consultant 
to those with winery interests. Keeping track of industry economic 
trends, largely through analyzing statistics, he was well established 
as an advisor until 1983, when he sold his consulting business to Jon 
Fredrikson. Over the years he has written many articles for Wines & 
Vines and other publications, comments and forecasts. He is also 
frequently called upon by the general press to comment upon wide 
industry changes and events. 

Still energetic at the age of 76 when he formally retired, and 
still energetic today at the age of 83, he continues to maintain his 
San Francisco office, traveling there almost daily from his home in 
Marin County. It was in his office that the three sessions of this 
interview were held, on February 14, February 19, and February 22, 
1990. He was, as can probably be deduced from his account, an 
energetic and enthusiastic participant. 

In reading over the transcript, he made some changes in wording, 
added some information, and gave replies to a few further questions 
the interviewer asked in writing. In a final conference, he clarified 
some statements. 



Ruth Teiser 
Interviewer -Editor 



July 1990 

Regional Oral History Office 
486 The Bancroft Library 
University of California, Berkeley 



ix 

Regional Oral History Office University of California 

Room 486 The Bancroft Library Berkeley, California 94720 

BIOGRAPHICAL INFORMATION 
(Please write clearly. Use black ink.) 

Your full name Louis Roos Gomberg 

Date of birth January 29, 1907 Birthplace Duluth, Minnesota, U.S.A. 

Father's full name William Gomberg 

Occupation Merchant/Contractor (home Birthplace TTH r.aVw^tHgrad . PiiB4a 

i-epalrs) 

Mother's full name Bertha Roos Gomberg 

Occupation Housewife Birthplace Freiburg, Germany 

Your spouse Suzanne Vitz Simon Gomberg 

Your children p r . David Roos Qomberg. Dr* Paul Roos Gomberg, Lynn Elizabeth 
McCarl; step-children: Nancy Simon Hersh, Mark Reid Simon 

Where did you grow up? Duluth. Minnesota, the p( one year) Manhattan, New York; 

(one year^ Chicago, Illinois and (9 yrs.) Ann Arbor, MI 

Present community Tiburon. Marin County. California 

Education Bachelor of Arts degree, 1928 (economics major, statistics minor) ; 

and Juris Doctor degree, 1931 both University of Michigan 

(2) 

Occupation(s) (1) Concert pianist, 1912-1918 ; .Journalist , 1924-1935} Q)Law- 
yer, 1932- 1933 JJ^Trade Association research director (Vine In- 

stitute). 1935-1948 ys'Wine Industry Consultant (self-employed), 

1948- 1986 ;(ujSemi- re tired, 1986- . 

Areas of expertise Wine industry economics and statistics ( government regu- 

lations| vineyard and winery startup guidance | marketing 

policy, planning, programming; competition evaluation; 

company and industry historic developments (mainly post- 
Repeal of l8tt Amendment to U. S. Constitution), etc. 

Other interests or activities Humanism, as global movement, to supersede his- 
toric and contemporary differences in nationalism, religionism, 

neonqnriBm, politics, etc, (past President and Director of Aaer- 

can Humanist Association); also, longtime advocate of global pro- 
ject to fitutiy and ultimately replace as many anti-societal values 

as possible, e.g., greed, power-lust, hate, vengeance, etc. 
Organizations in which you are active American Humanist Association, American 

Ethical Union, Commonwealth Club, Wines & Vines, American Society 
. of Viticulture and Enology, American Society of Wine Education, 

Lawyer Friends oi Wine --all seffii-aetive. 



EARLY YEARS 

Childhood and First Career. 1907-1924 
[Interview 1: February 14, 1990 H/y/ 1 

Teiser: I'll begin by asking you when and where you were born. 

Gomberg: The when was the year 1907, and the where was a little town 

called Duluth, Minnesota. I had my first career, unlike most 
children, when I reached the tender age of five. My sister was 
a professional- -in those days they called it "jazz" or 
"ragtime" --orchestra leader. She took me to her teacher one 
day- -the one who taught her piano- -and the teacher said, "I 
think this child could learn to play." I did learn to play, and 
by the age of six she decided that I should go on the stage. So 
I performed from the age of six to the age of ten, and then she 
died. Arrangements were made for me to go to New York and study 
with a teacher there, and I did. That was in 1918; I was eleven 
years old. 

I studied for one year, came back to Duluth for a vacation 
in the summer, and the teacher in New York died. So that was 
the end of my career as a professional pianist, except for a few 
performances that I gave later on. But that was the main end of 
it. 

Teiser: The year that it ended was--? 

Gomberg: I was twelve, so that was 1919. I say that I retired at the age 
of eleven or twelve. 



^This symbol (##) indicates that a tape or a portion of a tape has begun 
or ended. For a guide to the tapes, see page 85. 



Teiser: When you went to school, where did you go to school? 

Gomberg: I went to a public school in Minnesota, but when I got to New 

York I went to a very fine private school called Ethical Culture 
School. 

Teiser: Did you go back to Minnesota, then, for high school? 

Gomberg: I went back to Minnesota, skipped the eighth grade, and entered 
high school at twelve. So I was a little younger than the 
average . 

Teiser: Then where did you go to college? 

Gomberg: I finished high school at sixteen in 1923, and went to Chicago 

for a year. My sister had the idea that I should go back on the 
stage, and so I played for a short time at a theater in Chicago. 
Then I decided that that was not going to be my career, but I 
spent the rest of the year in Chicago, and returned in early 
1924 to Minnesota and took a three -month course in accounting, 
which turned out to be very valuable later, because knowledge of 
what accounting is all about is very helpful. 



University. Law, and Journalism. 1924-1935 



Gomberg: I entered the University of Michigan in '24, and got my 

bachelor's degree in '28, with one year of law included in that 
four years because I took what was called a combined curriculum. 
You could get your A.B. degree in three years instead of four, 
which I did, but I didn't get the A.B. until the end of my first 
year of law. 

Then, for some reason I don't recall, I decided to go back 
Into music, so I went to the University of Michigan School of 
Music for a year. At the end of that year I decided that still 
was not going to be my career. So I finished the law school 
course in 1931 and got my Doctor of Law degree then. 

All during this period of college and law school, I was 
self-supporting, because my parents couldn't afford to support 
me. 

Teiser: How did you support yourself? 



Gomberg: 

Teiser: 
Gomberg: 

Teiser: 
Gomberg: 



Teiser: 
Gomberg: 

Teiser: 
Gomberg: 



Teiser: 
Gomberg: 



I was a newspaper man. I was correspondent for the Detroit 
Times, and I had about twenty other newspapers for which I was 
freelance correspondent. 

Did you practice law after you finished law school? 

I practiced law for about two years after I finished law school 
in '31. 

Where? 

Right at Ann Arbor. I used my own automobile as an office, 
because that was the bottom of the Depression, and I couldn't 
afford to rent an office with no practice yet. I tried it out 
for about two years, and decided that law was not my career 
either. 

When did you come to California? 

I came to California in the summer of 1933. I came right to San 
Francisco, and got a job within three weeks on the Chronicle as 
a staff reporter. 



You wrote on your Wine Institute biographical sheet, 
General Strike, 1934, Chronicle." 



'S.F. 



Yes. I was on the Chronicle during the General Strike, and I 
helped to cover it for the Chronicle. 1 wasn't the only one; 
there were about half a dozen of us covering the strike. I 
received a little gold medal, which I still have, complimenting 
me on my having served the Chronicle during the strike . 
[laughs] 



That must have been a tense time. 

It was, very. But it's been typical of my entire life: 
circumstances and conditions, just as that one was. 



unusual 



I was on the Chronicle for about a year. Let's see, I came 
out in June of '33, I got my job in July of '33, and I was there 
until June of '34, except that a good part of that year I spent 
in Marin County as correspondent for the Chronicle because they 
didn't have any assignment for me here in the city. So I got 
this job as correspondent. I lived in San Rafael and San 
Anselmo. 



4 



Then, in the latter part of '34, I decided I'd better come 
back to San Francisco. I looked for an opening here, and I was 
lucky enough to find one with the Associated Press as acting day 
city editor, because the city editor was on leave of absence. 
But within a few months he came back, so they switched me to 
night city editor, which I was until I went to the Wine 
Institute in 1935. 




In 1984 the Wine Institute gave a luncheon at Jack's Restaurant in San 
Francisco honoring early members and associates. Left to right, standing at 
rear: John A. De Luca, president, Wine Institute; Albert B. Cribari, Guild 
Wineries; Maynard A. Amerine, professor emeritus, University of California at 
Davis; Otto E. Meyer, former president of Paul Masson; Edward V. Prati, 
Martini & Prati; B.C. Solari, formerly with United Vintners; John B. Cella II, 
Guild Wineries; Edmund A. Mirassou, Mirassou Vineyards; (in front of Mr. 
Mirassou) Leon D. Adams, former Wine Institute legal counsel; Brother Timothy, 
Christian Brothers; Louis R. Gomberg. Seated: Elmo Dante Bagnani, formerly 
of American Industries Corp. and the California Wine Vinegar Institute; and 
Joseph Vercelli, formerly with Italian Swiss Colony. 



WORKING AT THE WINE INSTITUTE, 1935-1948 



Getting the Job 

Teiser: How did you happen to go to the Wine Institute? 

Gomberg: My mother tells me that way back, in her family in Germany, 
there were some vintners- -wine merchants- -and I guess I must 
have had a desire to get not necessarily into wine, but into 
agriculture. 

Teiser: Did you know that you had any background of that kind? 
Gomberg: No, I didn't know it at that time. I found it out later. 
Teiser: But you had the predisposition- - 

Gomberg: [laughs] I wanted to get into agriculture because I felt it had 
a great future in California. I talked to the then financial 
editor of the Associated Press. His name was Walter Warren; I 
remember it well, because he said, "Look, there's one person who 
knows the agriculture situation in California very well, right 
here in the city. His name is Leon Adams, so go on over and see 
him, and he'll tell you all about what's available in 
agriculture for one of your background and training." And he 
did. 

I went to see Leon, and it just happened by coincidence 
that he was putting together the Wine Institute at the time. He 
said, "We're looking for someone with five qualifications." I 
said, "What are they?" He said, "Number one, you should have 
writing ability." I said, "Well, I've been a newspaper man all 
through college and law school, and two years afterwards, so I 
consider myself qualified on that score." He said fine. 



Leon said, "He should also have legal training." I said, 
"I have a law degree, and I practiced law for a couple of years, 
so I think I'm qualified on that ground. What else?" He said, 
"He should also have a background in economics . 
"Economics was my major as an undergraduate." 
What about statistics? That's very important.' 
"Statistics was my minor as an undergraduate. 



I said, 

'Oh, is that so? 
' I said, 
What else?" 



He said, "He should have trade association experience." I 
said, "There I question whether I qualify, although the 
Associated Press is an association of publishers." So he said, 
"Well, I'm going to recommend that you be given a trial." I did 
get the job at the Wine Institute. They didn't call it research 
director at that time; later, during World War II, it got the 
title of research director. 

In due course, I was offered the job as staff assistant to 
the secretary-manager, and accepted it at a salary of $200 per 
month . 

I was there for about three months and never got paid 
because, as I found out later, I was on trial, and you didn't 
get paid until you'd proven your ability to handle the job. But 
fortunately I kept my job as night city editor of the AP, so I 
had income . 

Teiser: When you went to the Wine Institute, who was there? 

Gomberg: There were just two major staff people, plus eight or ten office 
assistants. There was Harry Caddow, who was called secretary- 
manager, and Leon Adams, who had no title but was assistant to 
Caddow, although in reality far more than that. There was a 
third person, too, who was very important at the Wine Institute, 
but he was legal counsel and not staff. His name was 
Jefferson E. Peyser; he just died recently. 

[phone interruption; tape off] 



December 30, 1989. 



Functions 



Teiser: Your first work at the Wine Institute was--? 

Gomberg: A little of everything. Example: I started the industry 

statistical surveys. I started the Wine Institute Bulletins to 
members. I started doing the preliminary work leading to the 
compiling of summaries of state laws and regulations, which 
eventually led to summaries for every state in the union. I 
handled members' inquiries on the telephone, and inquiries by 
letter on matters pertaining to the work that I was hired to do 
statistics, economics, laws and regulations, written matter for 
the Bulletins to members, et cetera. 

Teiser: I thought Leon started the Bulletins. 

Gomberg: No, I started it. I still have the first edition here. Leon 
started sending what he called Wine Institute letters*- to 
members, but the structured document called Wine Institute 
Bulletins to members I started in 1936. 

Teiser: It's been a very useful- - 

Gomberg: Yes. I noticed they've just hired now a gentleman [Mark 

Stuertz] to be the new editor of the Wine Institute Bulletins. ^ 
That had always been the task of my research department, and 
then later the public relations department. Now it will be an 
independent editor. 

Teiser: Did you have a little public relations work to do at first, too? 

Gomberg: Well, my work was related to public relations, because the 
public relations department --Leon Adams was, of course, the 
original public relations director of the Wine Institute, and 
then he was succeeded by his assistant, Frank Whiteley, who came 
in in 1937. 3 I did a lot of work by way of assisting the public 
relations department, but the responsibility for getting out 
whatever press releases that were sent or any other activity of 



were called "Confidential Bulletins." 

a 

*In 1990 the name was changed to Wine Institute News. 

o 

He continued as assistant general manager and public relations director 
until his death in 1958. 



that department was first Leon's job and then Frank Whiteley's, 
his PR assistant. 



The California Wine Industry After Repeal 



Teiser: Up to World War II, what were the main industry problems that 
you saw from within the Wine Institute? 

Gomberg: There were many, many problems. The main problems could be 
reduced, I would say, to just one: how to make wine a major 
factor in the economics of our agricultural industries here in 
California. Because when I entered the industry in 1935, which 
was just about 20 months following the repeal of Prohibition, 
shipments of all wines into trade and consumer channels- -that' s 
how we determine consumption- -were averaging only in those three 
years ('34, '35, '36) about 46 million gallons a year. That was 
less than one half the peak volume that was reached for wine 
during Prohibition, back in the early twenties. Based on the 
tonnage of grapes crushed for wine, U.S. wine use in those days 
approximated 100 million gallons a year. So the shipments in 
the first few years after Repeal were only about half of what 
those of us who were involved at the time felt should be our 
realizable market- -around 100 millions gallons a year. 

What we didn't realize at that time, but did later, was 
that the United States, which had never been much of a table 
wine -consuming country, still was not a table wine -consuming 
country after the Repeal of Prohibition. But a whole new market 
developed for what we now call dessert wines. Originally the 
government used the term "fortified" wines, so we made every 
effort to substitute the word "dessert" for "fortified," because 
"fortified" sounds like there was something abnormal added to 
the product to make it fortified. Well, technically that was 
true, because it has always consisted of ordinary, partially 
fermented table wine to which a small quantity of high-proof 
brandy was added in order to make it a dessert or fortified 
wine; but that practice has been going on for centuries in 
Portugal, Spain, and other countries, in the production of 
dessert- type wines. 

That market swelled from very small volume at the time of 
Repeal to a peak of over 100 million gallons a year by 1955 and 
1956. On the other hand, the table wine market remained almost 
nominal during those years --very small. It was realized by 



Teiser : 



Gomberg: 



those of us who studied the industry carefully that 
traditionally in this country the table wine market has 
consisted primarily of immigrants who brought over their wine 
enjoyment practices and way of life from Europe- -mostly 
Italians, French, and Spanish, and a few other western 
Europeans. Of course, there was always a small table wine 
market for very wealthy people, but those wines were mostly 
imported, very few of California production. 

However- -and this is important to understand in order to 
realize the nature of the growth of the wine industry in 
California following the repeal of Prohibition- -the major reason 
for the sharp increase in dessert wines was the fact that the 
tax on such wines was comparatively small compared to the tax on 
distilled spirits. As a result, the so-called "poor man's 
whiskey trade" (the Skid Row trade), grew from nothing to very 
substantial dimensions. A substantial amount of that dessert 
wine- -probably as much as half --was consumed by the unfortunates 
who occupied the Skid Rows of the country and were consuming 
port, sherry, muscatel, white port, angelica, and tokays (those 
were the predominant varieties) as an escape from reality and 
life. 

What was the winemakers' attitude toward those wines? They 
didn't mind making them, did they? 

They didn't seem to mind making them, and so they made them. 
Although those of us who viewed the industry in a responsible 
way felt that that was not the route to go, that we should 
somehow get table wines made the predominant class of wine 
available to the public in this country. It so happened that at 
the time dessert wines reached their peak in the mid fifties, 
that was the very time when table wines began to gain growth. 
As it developed, table wines grew and grew, eventually taking 
over the predominance in the marketplace from dessert wines in 
the late sixties. 



Stabilization Plans 



Teiser: Let's go back to the thirties. Besides the industry trying to 
rebuild its base, there were the financial troubles that 
affected everyone. Another thing was the prorate of '38, which 
I guess was an attempt to alleviate the financial troubles of 
this industry. 



10 



Gomberg: Yes. There were two major developments in 1938. One was the 
adoption of the grape prorate program, and the other was the 
approval of the marketing order for wine, both in 1938. The 
basic reason for these programs was to try to develop and 
maintain better balance between supply and demand so as not to 
allow grape prices to become unduly depressed, as they had been 
so often in the past. On the other hand, the main objective of 
the marketing order for wine was to develop new and larger 
markets for California wine. Right from the beginning, a budget 
of around a million dollars a year, out of a total budget of 
around $2 million, was allocated to promotional activities to 
develop such new markets. 

Teiser: That was the Wine Advisory Board? 
Gomberg: Yes. 

The prorate lasted just one year, as I remember it. 
Teiser: Did you get a close look at it? 

Gomberg: Yes, I felt that I looked at it quite closely. My impression 
was that it was not likely to succeed for one primary reason, 
and that is that while it attempted to put restrictions on the 
marketing of grapes, it put no restrictions on new plantings. 
In my opinion, from early on we had to have some method of 
discouraging people from overplanting. That basically is what 
creates imbalance between grape supply and demand, all other 
things being equal. 

As an example, in the twenties, at the time of Prohibition, 
would you believe that the acreage of California grapes almost 
doubled between 1920 arid 1924, the first four years of 
Prohibition? Well, that sounds wild, because in Prohibition you 
would think people would be pulling up vines and not planting 
new ones. What happened was this: the government, in the 
exercise of its questionable wisdom, through act of Congress, 
permitted people under certain conditions to produce 200 gallons 
of fruit juice. That was a cover-up method of referring to 
wine, because obviously, if you make juice and you don't stop 
fermentation, it's going to transform into wine because of the 



L Under the Volstead Act. 

^It included all fruit juices; cider, a traditional farm product, was 
a strong factor. 



11 



yeasts naturally present on the surface of the fruit and in the 
air. 

Anyway, as a result, believe it or not, the production of 
table wine grew enormously between the start of Prohibition and 
for several years thereafter- -just the opposite of what you'd 
expect. As it turned out, that demand was largely for homemade 
wine- -a demand that began to diminish in '24, so that the 
surplus of grapes became almost intolerable on account of all 
the plantings that occurred in the early twenties. 

Teiser: It wasn't that the market for grapes had decreased, but that the 
plantings had increased? 

Gomberg: Yes. The plantings had increased to the point where the 

production of grapes was about doubled by the late twenties- - 
let's put it that way, because it takes four to six years for 
grapevines to mature. By the late twenties both acreage and 
tonnage were about double what they were in the early twenties, 
before all these new plantings occurred. As a result- -and this 
isn't generally known, and it may not even be recorded in any of 
your data to date- -there was a federal program adopted in 1930 
to restrict shipments of grapes to market, to try to prevent 
this surplus from reaching the consuming public, and thereby 
strengthening the price of grapes. It was called the Federal 
Grape Control Board Program of 1930, as I recall. It was tried 
for one year, and then was abandoned because it didn't work very 
well; practical conditions prevented it from working. 

You would think that in 1934, the first year following 
Repeal, grape prices would strengthen and the market would 
expand with the grapes, et cetera. It's true that 1934 was a 
relatively strong year for grape prices , and the demand did 
increase, but it took only one year for that demand to subside. 
In 1935 the demand went down considerably, and we had a severely 
depressed market for grapes that year. Nineteen thirty-six was 
a better year because it was a short crop, but that's been 
characteristic of the industry: short crop, prices rise; big 
crop, prices decline. 



Statistics do not prove that diminished demand was the predominant 
factor. Shipments varied from year to year for various reasons. In 1927 
they reached a peak higher than 1924. See "The Volstead Act, Rebirth & 
Boom," by Ruth Teiser and Catherine Harroun in The University of California 
Book of California Wine. University of California Press, 1984. 



12 



Teiser: The prorate of '38, then, theoretically encouraged people to 
grow more grapes so that they could turn them into brandy and 
get some money back. Or is that an oversimplification? 

Gomberg: The prorate program said, "If you, Mr. Grower, can't find a home 
for your grapes at a decent price, have them converted either 
into high-proof or beverage brandy, and set it aside and we'll 
eventually find a buyer for that product." That was done in 
'38. 

Teiser: They were paid for that? 

Gomberg: Not right away, no. They had to wait until the brandy was 
disposed of. I'm talking about the surplus, now. If I 
remember correctly, there were about 350,000 tons of surplus 
grapes that were converted under the prorate program. 

Teiser: I know that some of them sold their brandy because they didn't 
want to be taxed. 

Gomberg: The reason they were able to sell the brandy--! was there at the 
time and very much aware- -was World War II. The war created an 
artificially high demand for spirits because of wartime 
restrictions, and so there was a shortage of spirits, relatively 
speaking. Thus demand for this brandy all of a sudden was 
created, and that's when growers got most of their money for the 
grapes that had gone into that brandy years earlier. That was 
in the early forties. 

There was a lawsuit involving the prorate, because growers 
in the North Coast counties- -eleven of them, I think- -said, in 
effect, "We have no surplus. The surplus is in the Central 
Valley." And they prevailed. They went to court and got 
exempted from the prorate . Even now the law is so worded that 
if there are constraints on excess tonnages of grapes, these 
eleven counties are excluded. 

Teiser: There was later, in 1961, a set-aside program, wasn't there? 



When the brandy or high-proof met the required standard, the owner was 
given a certificate which he could borrow against at the Bank of America, 
which participated in the program. See Maynard A. Amerine, The University 
of California and the State's Wine Industry, an oral history interview 
conducted 1969 and 1971, Regional Oral History Office, The Bancroft Library, 
University of California, Berkeley, 1971. 



13 



Gomberg: Yes. But even before the 1961 program there were two other 

programs adopted by the industry in attempts to stabilize the 
markets for both winery grapes and wine. The first of these two 
programs was called the Marketing Order for Grape 
Stabilization. Its method was to raise a stabilization fund by 
wineries to be collected in seasons when grape prices were 
reasonably healthy, and then to be paid back to growers when 
prices declined seriously. Some $3.5 million were raised under 
this plan, as I recall, but the program was abandoned after less 
than a year when the industry decided it just couldn't, and 
wouldn't, work. The $3.5 million were refunded to the wineries, 
pro rata. 

The second program was called the Marketing Order for Wine 
Processors. Under this program, wineries were placed on 
shipment quotas so as to prevent overloading the market. This 
program, too, was dropped because it wasn't working. 

Several other programs also were given consideration during 
the 1950s and 60s, only to be abandoned for lack of industry 
support. Even the marketing order for wine, the first of its 
breed to be adopted by the California wine industry back in 
1938, finally came to an end in 1975 when the industry decided 
the time had come to call it quits after thirty-seven years, for 
various political reasons both within and outside the industry. 

But to get back to your question regarding a set-aside 
program in 1961, the answer is: yes, there was such a program, 
adopted that year, called the marketing order for Central 
California grapes for crushing. Under that program- -which 
lasted just two seasons- -about 475,000 tons of grapes were 
diverted from normal channels in 1961 and 1962 and converted 
into dessert wine, brandy, and grape concentrate, completely 
removed from conventional markets for these products. Most of 
these products, it is understood, ended up as industrial alcohol 
after further processing outside the wine industry. 

Although the set-aside marketing order was to be a three- 
year program, subject to possible renewal for another three 
years thereafter, the industry decided to terminate the entire 
project after only two years, and so this program, too, fell by 



Effective September 16, 1949-December 31, 1950. See also pages 63-64. 
2 It was in effect from June 29, 1949, to June 30, 1952. 



14 



the wayside after a short trial period, just as had the two 
earlier programs back in the 1950s. 

Teiser: This is an aside: Now when consumption drops a small 

percentage, everybody howls as if the whole industry were going 
down the tubes. It's as if they forget that anything bad ever 
happened in the past. 

Gomberg: We call it consumption; we don't actually know how much 

consumption was, because the only measures we have are shipments 
into trade channels as determined by tax payments (tax-paid 
withdrawals). There have been occasional years, yes, when there 
would be a drop from the preceding year, but by and large, 
increases have occurred quite regularly until the last four or 
five years-- that' s between the mid eighties and now. 



World War II: Bulk to Bottled WlneM 



Teiser: You struggled through the thirties, and then, suddenly, war. 

Gomberg: Yes. Of course, the United States did not get into the war 
until 1941, as you know, when the bombing of Pearl Harbor 
occurred. Prior to that, the market was becoming more firm 
because European supply sources were drying up- -being damaged or 
destroyed by reason of the war in Europe. So the market began 
to tighten up in the late 1930s. Then, because of Pearl Harbor, 
early in '42 restrictions were placed on pricing. The wartime 
agency, Office of Price Administration (OPA) , placed price 
ceilings on wine and brandy, but not on grapes, as a result of 
which the demand for grapes reached exceedingly high levels and 
grape prices rose sharply there in the early-to-mid forties, 
despite the fact that ceilings were imposed on wine and brandy 
right from the beginning. 

You might ask, "How could the wineries pay these 
astronomical grape prices and still observe the wine price 
ceilings?" Here is the explanation. What happened was this: 
the wine industry, prior to Pearl Harbor, had been primarily a 
bulk wine industry, shipping wine mostly in tank cars and tank 
trucks to about 1,500 wine bottlers all over the United States. 
The Office of Price Administration, in early '42, put ceilings 
on both bulk wines and bottled wines. The bulk wine ceilings 
could hardly be tolerated, however, because of the slim profit 
margins on such wine. Bottled wine ceilings, on the other hand, 



15 



reflected prices and returned to wineries anywhere from two to 
five times as much as had they sold the same wine in bulk. 

The result was that, with the onset of the war and OPA 
regulations, the bulk wine market for all practical purposes 
disappeared, because bulk wine price ceilings were so low they 
did not permit paying anything like the prices for grapes that 
prevailed in the war years following Pearl Harbor. 

Teiser: Let me ask you to define what you include in bulk wine. 

Gomberg: Bulk wine was and is wine shipped in railroad tank cars, tank 

trucks, and barrels. Bottled wine, of course, was wine shipped 
in bottles and jugs, after packaging in wineries and wine 
bottling establishments. 

Teiser: Here in San Francisco, for example, we used to go with our jugs 
to a store on Pacific Avenue and get wine out of their barrels. 
Was that bulk wine? 

Gomberg: Yes, but that was only a tiny part of the bulk wine business, 

and lasted only for a short time following Repeal. As a result 
of OPA regulations, the bulk wine business for practical 
purposes all but disappeared during World War II, and has never 
come back, except in a very small way. Prior to World War II, 
my best recollection is that bulk wine represented approximately 
80 percent of all the California wine shipped to market. Since 
the war, and up to the present, bulk wine shipments from 
California wineries have dwindled to only a small fraction of 
total shipments, possibly less than 5 percent. 

Teiser: Was that because the market used to be more in the East, and it 
was cheaper to ship that way- -in bulk, that is? 

Gomberg: Not exactly. I would say that's simply the way the wine market 
developed immediately following Repeal when brands of local 
bottlers predominated. That was true of both table wine and 
dessert wine. Then the war changed all that because of OPA 
regulations. Ever since then, bulk shipments have steadily 
declined to the present low level of about 5 percent, possibly 
less . 



also pp. 12-13, Robert Mondavi, Creativity in the California Wine 
Industry, an oral history interview conducted 1984, Regional Oral History 
Office, The Bancroft Library, University of California, Berkeley, 1985. 



16 



Teiser: The wines didn't spoil so easily when shipped in bottles? 

Gomberg: Yes. That was another reason for the drop in bulk table wine 
shipments . What little there was shipped in tank cars , tank 
trucks, and barrels, the tendency still was for the wine not 
infrequently to spoil by the time it got bottled and ready to be 
sold. So that was another factor leading to the marked decline 
in bulk table wine shipments . 

By the end of World War II, bottled wine was already 
completely predominant. One of the few ways bulk wine was 
shipped during the war was where the winery out here making the 
wine was acquired by a bottler somewhere. Like Gibson Wine 
Company of Cincinnati acquired a producing facility here in 
California, made for itself, and then shipped the bulk wine to 
its bottling facility in Ohio. In some instances the California 
winery shipped to its own branch bottling facilities in the 
East, Middle West, or South, and bottled the wine under its own 
brand labels at such locations . 

What winery did Gibson acquire, do you remember? 

I think they bought Colonial Grape Products in Elk Grove. It's 
been called Gibson Wine Company ever since, even after being 
acquired by a California cooperative winery some years ago. 

As far as bulk table wine is concerned, it never reached 
very large proportions even before World War II. After World 
War II, what little remained of that market was, for all 
practical purposes, no longer viable. 

During the war, at least 80 percent was shipped either in 
bottles or in bulk from the producing facility here to the 
bottler's premises in the East, Middle West, or South, where the 
winery had a contract with the bottler to bottle the wine under 
the winery's or bottler's own label in order to take advantage 
of the higher ceiling prices. This arrangement made it possible 
for many bottlers to survive- -temporarily. 

Teiser: Let me go back to the rise in price of grapes: was that partly 
occasioned by the fact that quantities of them were turned into 
raisins for the troops? 

Gomberg: Yes. During World War II, not only were the wine price ceiling 
regulations highly in favor of bottled versus bulk, but also the 



Teiser: 
Gomberg: 



The Sanger Winery Association. 



17 



diversion of raisin variety grapes from winery use to raisins 
for feeding the army further shortened the supply of raw 
material to make the dessert wines, which were the predominant 
wines in those years . 

Another factor that restricted shipments of bulk wine 
during World War II was the diversion of tank cars and tank 
trucks to the war effort, the result of which was that all 
shipments of wine in bulk from California markets nationally 
declined markedly. 



For an additional discussion of the transition from bulk to bottled 
wine, see pages 42-46, 48-50. 



18 



POST-WORLD WAR II CHANGES 



The Decline of Dessert Wines 



Gomberg: I would say the primary impact that I recall on the wine 
industry- -after the war was over and price ceilings were 
removed- -was the realization that the markets for dessert wines 
(chiefly port, sherry, muscatel, white port, angelica, and 
tokay) had pretty much reached saturation when volume flattened 
out in the late 1940s, continued flat into the 1950s, and 
remained flat throughout the 1960s after reaching a peak in 1961 
at just under 110 million gallons (including vermouths and 
special naturals over 14 percent). Beginning in 1969, the 
market for these wines began to decline almost every year, and 
by the late 1980s had dropped to about 50 percent below the 1961 
peak. 

The main reason for this drop in shipments, in my opinion, 
was that by the mid-1950s the economic benefits of European 
travel by what President Johnson called "the affluent society" -- 
people going to Europe and coming back bringing with them the 
enjoyment of wine with meals --began to manifest themselves in 
several ways. Table wines were the major beneficiaries, 
starting to rise in the mid-1950s and continuing to climb almost 
without interruption until peaking at about 400 million gallons 
in 1983-1984. The ten-year immediate post-war average was only 
about 35 million a year, less than 10 percent of the post-war 
high. 

As the table wine volume boomed, the dessert wine market 
started its downhill slide, but not because consumers switched 
from dessert wine to table wine. What happened was that the 
affluent society also made it possible for many of the Skid Row 
habitues to switch from dessert wines to distilled spirits 
because they could afford ardent spirits then for the first 



19 



time, thanks to bigger handouts by caring passersby. So we see 
that the affluent society had two benefits: it greatly 
increased the number of people who could afford to enjoy table 
wine with meals, and helped immeasurably to cause the number of 
unfortunates to switch from dessert wine to distilled spirits. 

Teiser: When the war was over, did the industry have to readjust very 
much, or did it just coast into the post-war period? 

Gomberg: It pretty much coasted, although imbalance of supply and demand 
continue to prevail in most of the years following World War II. 

Teiser: It seems to me I heard that just after the Second World War, 
because some distillers had forced retailers to take wine in 
order to get spirits--! think it was an illegal practice- -there 
was some surplus of wines in the retail market. 

Gomberg: That is correct, but only one or two distillers resorted to such 
practice . 

Teiser: Did that affect the whole industry? 
Gomberg: Yes. 



Changes in Winery Ownership 



Gomberg: And also, at the same time, some of the distillers started 

dumping their winery holdings. Remember, during World War II 
there were four major distilleries that had important holdings 
in the wine industry: Schenley, Seagram, National Distillers, 
and Hiram Walker. In the aggregate, as I remember, a study was 
made by the federal government of holdings in our industry by 
non-wine industry interests, and at their peak they represented 
about 40 percent of the total wine production in California- - 
all owned by distillers. But following World War II, one by one 
by one by one they started getting out. 

The first big one was National Distillers. They owned 
Italian Swiss Colony, Shewan- Jones , and several other brands. 



D. Adams's recollection is that so-called "tie-in sales" were 
generally prevalent in the market, involving distributors and others who 
handled liquors, as well as distillers. 



20 



They got rid of their winery holdings in 1953, when they were 
bought by the Petri family- -the Petri Wine Company. Schenley 
didn't dispose of their major wine holdings until about 1970. 
when they sold to the Guild Wineries and Distilleries Co-op. 
Seagram didn't get rid of their major holdings until about five 
years ago. They kept a couple of small California winery 
operations: Sterling Vineyards* and Monterey Vineyards. But 
the rest of their holdings- -Paul Masson, Taylor California 
Cellars, and several others they had bought- -they disposed of to 
what is now called Vintners International. 

Much the same thing happened with Heublein, although 
Heublein didn't come into the picture until the late sixties. I 
was the intermediary in that transaction. They bought United 
Vintners from Allied Grape Growers, which had acquired the 
wineries from the Petri interests back in the 1950s. Heublein 
held on to most of the United Vintners' brands- -these were 
Italian Swiss Colony, Petri, Shewan- Jones , Gambarelli & Davitto, 
and a few others- -until about four or five years ago. But in 
the meantime, they acquired one more brand, Almaden, for many 
post-war years owned by National Distillers. Heublein had 
previously been bought by R. J. Reynolds, the tobacco people [in 
1982] 3 

Reynolds sold all of their wine holdings and all of their 
distilled spirits holdings they had acquired from Heublein to 
Grand Metropolitan PLC Ltd. of London, so Grand Metropolitan is 
now the number two operator of winery properties in California, 
in size. 



Market Fluctuations of 1946 and 1947 



Teiser: I was reading an article that you had written, "The Possibility 
of Wine Cycles," in the September, 1972, issue of Wines & Vines. 
You noted the break in the market in 1947. 



^Schenley had started selling its California holdings in 1950. 

n 

^Seagram bought Sterling in 1983. 



J See also "Louis Petri Conceived Allied Grape Growers and United 

Vintners," by Ruth Teiser, Wines & Vines. August 1983. 



21 



Gomberg: Nineteen forty- seven was a terribly depressed year both for 

grapes and wine in California. Prices and demand dropped way 
down from their peak levels in 1946. The reason why it took a 
year for that to happen was that when the war ended in '45, 
vintage prices that season rose appreciably because of the 
shortages that had occurred during World War II. They reached a 
peak in '46, to fill the pipelines, so to speak. The pipelines 
were all filled by mid '47, so when the '47 crop matured, few 
wanted them- -and so the price dropped way down. 

Teiser: Somebody ordered his company to buy all the grapes they could 

get. I remember hearing stories about a guy with a truckload of 
grapes, and somebody flagging him down and saying, "Bring it to 
our winery. " 

Gomberg: That must have been in '46, the year of shortage. Because in 
'47, few wineries wanted to buy grapes. There was an acute 
scarcity of grapes in '46, but it was an artificial scarcity. 
It wasn't based on normal demand; it was based on the fact that 
during the war, because of limited production, everybody's 
inventories were shorted artificially by reason of wartime 
restrictions. 



22 



MARKETING ORDERS 



The Wine Advisory Board. 1938-1975 



Teiser: Let's go back to the Wine Advisory Board and the marketing order 
for wine . 

Gomberg: It was founded in 1938. 
Teiser: What did it do? 

Gomberg: Well, let's put it this way: it was established originally to 
provide funds for broadening the consumer base for wine in this 
country. That was the major reason. For seventeen years the 
J. Walter Thompson advertising agency was hired to do the 
advertising to try and expand the consumer base. In my opinion, 
the marketing order for wine accomplished little in broadening 
the consumer base, for a variety of reasons. It's no use going 
into the details, but as an example of what I mean, the main 
theme of the advertising, as I recall it, was illustrated by a 
typical ad showing a beautiful table setting- -a beautiful 
crystal chandelier, lovely glasses and sterling silver, and so 
on- -and maybe a couple of bottles of wine on the table. The 
image theme of the ads, as I remember them, could be put in this 
context: "Mrs. Gotrock serves wine. Why don't you?" In my 
opinion it sold no one- -no table wine. 

The big increase in table wine, which occurred after the 
mid fifties, I attribute to the affluent society, which had 
nothing to do with the ads under the marketing order for wine. 

But there were several good things about the Wine Advisory 
Board that were abandoned when it was discontinued in 1975. The 
major program of the Wine Advisory Board, in my judgment, was 
not to produce money to advertise California wine; the major 



23 



purpose of the Wine Advisory Board from its inception was to 
provide funds for lobbying. They didn't call it lobbying, and 
they never have called it lobbying. The term that they used and 
have used all through the years is "trade barrier" work. That 
work was, in my judgment, the real major value of the Wine 
Advisory Board, early on. 

Teiser: Did it work? 

Gomberg: Yes, it provided funds for that purpose. That's correct. It 
provided funds that otherwise would have had to be raised by 
dues of Wine Institute members. 

Teiser: Was it effective? 

Gomberg: Yes, but in my opinion it wasn't remarkably effective, only 
reasonably so. 

Another program that the Wine Advisory Board had was called 
the dealer service program, in which field personnel- -around 
forty-five or fifty, as I remember it- -were sent around the 
country to talk to wholesalers and key retailers, and persuade 
them to handle California wine or sell it in greater quantities. 
That program, unfortunately, was terminated in the 1950s. It 
might be embarrassing, I think, to certain people if I were to 
go into details of why it was terminated. It was just 
terminated, and that was the end of that program. 

The advertising program was abandoned in the late fifties, 
because it was finally realized, after twenty years- -from '38 to 
'57, I think it was --that it was not producing any real results 
for the industry. 

Teiser: There were a lot of folders about wine with fish and wine with 
cheese and wine with meat. 

Gomberg: Yes, Wine Advisory Board did turn out quite a few of those 

folders. There were also little booklets and pamphlets. But, 
again, as I say, those booklets and pamphlets were directed 
primarily, just like the ads were, toward persons already using 
table wine or likely to become users of table wine --what I call 
the semi-elitist trade. They were never broadly disseminated to 
the great masses of the population. 

Teiser: You were talking about lobbying being called "trade barriers." 

I'm constantly impressed by the fact that when the wine industry 



24 



talks about "education" of the consumer, what they mean is 
promotion. They don't really mean education. 

Gomberg: Yes --it's not really education, although loosely speaking it is 
referred to as education- -loosely , that is. But promotion is 
correct. 

Teiser: The marketing order that created the Wine Advisory Board was 
voted in by the industry, was it not? 

Gomberg: Yes. 

Teiser: Was it a difficult fight, do you remember, to get it in? 

Gomberg: Not the first time, but it came up for renewal every three 

years, and, yes, there were some three-year periods when it was 
difficult to win renewal. 

Teiser: Was there a gap? 

Gomberg: Yes, there was a gap. I'm trying to remember what year it was-- 
1954, as I recall. But it did not have fatal results. It did 
terminate for a short time the flow of funds, both into the 
marketing order and out of the marketing order into the various 
channels under which contracts had been made. 

After the abandonment of the marketing order for wine in 
1975, there was no program until the early eighties. 



The Winegrowers of California. 1984-1987M 



Gomberg: It was 1984, if memory serves me correctly, that the marketing 
order for the Winegrowers of California was adopted by a 
combination of wineries and growers- -a combined program for both 
growers and wineries. That lasted only three years, I think it 
was, and was terminated because the wineries felt that the 
growers were attempting to assert themselves excessively in 
matters of policy questions and so on. 

Teiser: What were the main considerations? 

Gomberg: The growers simply felt, "We're contributing money to this 
program, so we should have something to say about it." The 
dominant winery representatives felt that the growers were 



25 



exceeding their rights, so to speak, and attempting to exert too 
much influence on the decisions of the advisory board. And so, 
after three years, the entire program was terminated; 

Teiser: Would it have been a good idea to continue it? 

Gomberg: I think it would have, because what we have now, since then, is 
a California Wine Commission with no growers on it, adopted by 
law; it's an amendment to the State Food and Agricultural Code, 
which creates the California Wine Commission. The correlative of 
that, the California Wine Grape Commission, failed to be 
adopted. The wine grape growers hoped that, if they couldn't 
work together with the wineries, they could work separately. 
But their program was not voted, and consequently there has been 
no wine grape grower program comparable to the Wine Commission 
program. 

Now, to get into the reasons why the grape program failed 
to be adopted involves once again delicate political and 
economic matters. Suffice it to say, for the purpose of this 
analysis, growers were reluctant to vote themselves a program if 
there was any uncertainty about finding a market for their 
grapes, and there was uncertainty. So instead of voting a 
program, the majority voted not to have a program. 

Teiser: How could growers have a guaranteed market for their grapes, any 
more than the winemakers would have a guaranteed market for 
their wines? 

Gomberg: It wasn't a guaranteed market; it was a case of growers feeling 
that if they voted a program, the chances of finding a buyer for 
their grapes would be reduced to low level, or possibly zero. 
They were fearful of that; so they, in effect, said, "Well, we'd 
better not approve this program, because we don't want to 
jeopardize the market for our grapes." In my opinion that's why 
the grower program was not adopted. 

Teiser: I wonder how, in New York, they got a program that includes both 
growers and wineries? 

Gomberg: My impression is that most of the grapes used for winemaking in 
New York are grown by the wineries themselves, and not by 
independent growers. That would probably explain why it was 
possible to combine the two. 

Teiser: That's another thing that's kind of interesting: I think the 
public impression is that every bottle of any wine that has a 



26 



well-known label comes right out of that winery's own vineyard, 
when, of course, that's not the case. Of bottled, labeled 
wines, how much do you think comes from winemakers' own 
vineyards? 

Gomberg: It depends upon the category of wine you're talking about. If 
you're talking about ultra-premium wines, which are at the top 
of the quality list, chances are that virtually all of the 
grapes are grown by the winery. If you're talking about super - 
premium wines, then a small percentage is purchased, compared to 
the quantity grown by the winery itself, but it's still 
predominantly a winery- grown grape product. Then, if you're 
talking about traditional or conventional levels of premium 
wines, there I would say the quantity of grapes purchased by the 
winery would at least equal the quantity grown by the winery 
itself. And then if you come to popular-priced wines and 
economy-priced wines, virtually none of the grapes, or at most a 
very small tonnage, are grown by the winery; they're largely 
purchased. Does that give you a picture? 

Teiser: Yes. 



27 



WORKING TOWARD A MASS MARKET FOR WINE 



The Problem of Reaching Consumers 



Teiser: The growth now is in the higher-priced wines; wouldn't it be to 
the benefit of everybody if lower-priced wines also had larger 
markets? 

Gomberg: Bear in mind that during none of the years of the marketing 

order for wine- -from 1938 to 1957, when they had the advertising 
program, nor even up to the year 1975, when the order was 
terminated- -was any genuine, effective effort made to reach the 
mass market in this country. It's important to remember that at 
the peak of the growth of dessert wines and the beginning of the 
growth of table wines, in the mid fifties, Elmo Roper did a 
demographic study. The important thing to me, that typifies the 
realistic answer to your question, is this: during the course 
of asking five thousand people four hundred questions (if 
memory serves me correctly, that's what it involved), one of the 
questions asked was, "Do you think of wine as a drink for 
Americans?" The responses were almost zero: "No, we don't." 
The next question was, "If you don't think of it as a drink for 
Americans, what do you think wine is a drink for in this 
country?" The three predominant answers were: "Wine is for 
rich people," "Wine is for foreigners," and "Wine is for bums." 
That was in 1955, the peak of the fortified wine market and the 
beginning of the table wine market boom. It tells us that the 
program started in 1938 had accomplished virtually nothing in 
creating a mass market for wine in this country. 

Incidentally, this may or may not be relevant to the 
interview today, but I have personally come up with a concept 
that I think will eventually create a mass market for wine in 
this country. You might wonder what this concept is. I'll tell 



28 



you what it is in brief. It's all trademarked, so there's 
nothing to worry about- -plagiarism. I've decided that we've 
never effectively reached the hundred million adult Americans 
who never, never, never consume wine. What would we do to reach 
them? In my opinion, we've got to go to them with a program 
that wipes out all the ideas they've ever had about wine in the 
past. What are they? 

Number one: it is not of foreign origin; it is an American 
product, not a product of France, Italy, Germany, or wherever. 
It's U.S. You might well ask, "Well, doesn't the word 'Taylor 
Brand' tell them it's an American product?" Yes, it does, in 
part, but it doesn't go far enough, in my opinion. Okay, my 
brand that I'm attempting to get adopted by the industry, or 
someone in the industry, is U.S.A. Brand. Then there's no 
question of where it originated. 

The next question is, "What about the appellation of 
origin?" Because most wines show where they came from. Okay, 
normally, if it's California, we call it California burgundy. 
If it's a product of New York state, we call it New York state 
chablis, or whatever. If it's a product of several states, we 
call it American. My plan is to give it an even broader name: 
U.S.A. Brand All-American, conveying the idea that it's not only 
American, it's of good quality; because an ail-American is a 
high quality performer. 

My third evaluation concept is that we've got to make the 
product very simple to describe. Like when you want to buy some 
salt, it says, "Leslie Salt," if you want to buy Hills Brothers 
coffee, it says, "Hills Brothers Coffee," et cetera, et cetera. 
Almost all the major products have the generic term on them. 
You find very few wine bottles with the word "wine" on them in 
large letters. My three wines are red wine, white wine, and 
blue wine. I realize that the word blue is something that's 
never been considered by the industry. Well, I think the time 
has come to do so. You can get a blue wine by giving a white 
wine a little color- -bluish food color- -so that the consumer can 
say, "I want that U.S.A. Brand Blue Wine. That's what I want 
for dinner tonight." 

[phone rings; tape off] 

This concept of U.S.A. Brand, Ail-American Red, White, and 
Blue wines is for the purpose of reaching out to the hundred 
million Americans, not with a burgundy, not with a sauterne, not 
with a chianti--not with a traditional European wine, but a 



29 



Teiser : 



whole new line of wines made expressly to fit the average 
American palates: low in alcohol, low in acid, pleasantly sweet 
(derived from the grapes; not added sugar), a good balance, and 
produced in little bottles- -like they can nibble away at 
something while they're watching television and enjoy sipping 
the contents of this twelve ounce bottle of wine. We don't have 
that in this country. A little bit in that direction was done 
by the wine coolers, but it's never been done by port, sherry, 
muscatel; never been done by burgundy, chablis, and sauterne. 
It's a whole new concept. 

I keep thinking that there's the great Midwest, where people 
don't customarily drink wine, that somehow hasn't been 
penetrated. I was in Italy being shown a winery, along with an 
American pizza chain executive from the Midwest. The winery 
representative, a woman, said to him, "We hope you'll put our 
wine into your pizza restaurants." He said, "Well, it would be 
nice to have some, but, really, we couldn't have much, because 
our restaurants are family restaurants; we have children and 
families." 



She said, "What? You don't want wine in a family 
restaurant!" She absolutely couldn't understand why you 
wouldn't have wine available to the whole family, children and 
grandmothers alike. 

Gomberg: The problem with wine and its extensive use throughout America 
is that we don't teach children what I call the "womb -to -tomb" 
syndrome, which teaches them from infancy on to understand, to 
appreciate, to respect, to use wine--if they choose to use it-- 
in a civilized manner. We don't teach them that. We teach the 
"forbidden fruit" syndrome. "Forbidden fruit" means prohibited, 
prohibited, prohibited until you're twenty-one, and then you can 
drink, which is senseless, when you stop to analyze it. That's 
our system in this country. 

Teiser: Until you're eighteen in some places? 

Gomberg: No, they changed that in all except two or three states, because 
the government passed a law three years ago saying, "No money 
for highways unless your minimum age for drinking wines, beer, 
or spirits is twenty-one." 




Louis R. Gomberg, 1950s, 



30 



SINCE 1948 



Becoming a Wine Industry Consultant 



Teiser: After you left the Wine Institute, which was in 1948, did you go 
directly into your own business as a consultant? 

Gomberg: Yes, within three months, I think. I waited about three months, 
and then opened my own office as a consultant, because I asked 
myself the question, "Where could I best serve the industry?" 
The answer was as a consultant, doing much the same kind of 
thing I was doing at the Wine Institute, except on my own. 

Teiser: I gather that as a consultant you did a lot of services that the 
Wine Institute couldn't do for just any member. 

Gomberg: To some extent, yes, but most of my work was an extension of 

what I had been doing at the Wine Institute. You see, I was not 
replaced at the Wine Institute. I was involved with almost all 
of the different departments. One of them that I didn't mention 
earlier was the technology department. I established the 
Technical Advisory Committee of the Wine Institute. These were 
specialists in the technology of winemaking. That was 
eventually discontinued. 

Most of my work had to do with government regulations, 
financing, production and marketing problems, administration and 
internal management matters. These were all things that I had 
been doing at the Institute, but now I was doing it on a 
consultant-client basis. 

Teiser: As a consultant, have you given advice on hiring practices? 



smaller Technical Committee continues. 



31 



Gomberg: Let's put it in this context: I have never gotten directly 

involved with who to hire and who not to hire. I have gotten 
involved with, "What do I do when I need somebody in my 
cellar?"--let' s say a cellar foreman. There's a simple way to 
go: you run an item in the Wine Institute bulletin under "trade 
items," as they call it. That's one way to go. Another way to 
go is to run an ad in one of the trade journals in the wine 
industry, like Wines & Vines . and so on. That's the kind of 
advice I'd give. 



Working for Louis Petri. 1950-1952 



Teiser: Then for a couple of years you worked with Louis Petri. 

Gomberg: Yes, I did. Louis asked me, after I opened my office in 1948, 

if I would be willing to become his executive assistant in 1950, 
shortly after the Korean War broke out. I found out later that 
the reason he wanted me to do that was because he was afraid 
that the Korean War might end in a third world war, and he 
needed somebody on the staff with world war capabilities and 
experience, which I had had in World War II. So, reluctantly, I 
agreed to do that. 

I managed to keep most of my clients aware of what I was 
doing, and occasionally they would call me, but I was not 
available day after day, as I had been. I was reporting in 
directly to the Petri Wine Company. That lasted about two 
years, beginning in late 1950. In 1952, Lou and I both agreed 
that since Korea did not develop into another world war, he 
didn't need anybody like myself on his staff, and so I reopened 
my own office as a consultant. 



Economy and Intermediate-Priced Wines 
[Interview 2: January 19, 1990 ]## 



Teiser: Would your U.S.A. label apply to what we now call jug wines? 

Gomberg: The answer must be yes and no, and here's why. Yes, in the 

sense that they would be economy or moderate -priced products, 
but no, in the sense that they would not be related to the so- 



32 



called premium segment of the industry, as the so-called jug 
wines are. I prefer not to call wines "jug" wines, because I 
think it's detrimental to their identity. 

Teiser: Whatever they're termed, they are still not premium wines, 
[phone rings; tape off] 

Gomberg: There are no absolutes in the measurement of wine quality, as 
you well know, and that's another reason that I tend to resent 
the term "jug," because by clear inference it suggests inferior 
quality. Actually, the wines that you asked me about- -my 
concept of U.S.A. Brand ail-American Red, White, and Blue wines- 
is not involved with this comparison of quality. There are very 
close correlations, in my judgment, between the quality, 
generally speaking, of so-called jug wines and the great 
preponderance of the so-called premium wines, largely because, 
over the years, for all practical purposes, the only so-called 
jug wines that are sold in great volume today are produced by 
Gallo. Gallo has been the leader in quality improvement 
development to such an extent that I think it would be fair and 
safe to say that the great preponderance of Gallo' s so-called 
jug wines, like Hearty Burgundy and Pink Chablis and others, are 
on a very close quality level with the great preponderance of 
the so-called premium wines selling at the low end of the 
premium scale . 

Teiser: How about the other Central Valley wines, though? What do you 
call them if you don't call them jug wines? 

Gomberg: Two categories: if they're very low priced, I call them 

economy-priced wines; if they're intermediate -priced wines, I 
call them popular-priced wines, and not jugs. 

Teiser: Aren't there other wineries, like Guild, that contribute 
considerably to the-- 

Gomberg: For all practical purposes, there are very, very few wineries 

other than Gallo producing bottled so-called jug wines. All of 
the major brands, at one time or another since the repeal of 
Prohibition, to the best of my knowledge at this time, have to a 
large degree or entirely disappeared from the market. Some of 
the great name brands in the so-called jug wine category were 
Roma, which was the number one brand for the first ten years I 
was in the industry; number two, Italian Swiss Colony, which for 
a long time was a very large-selling popular-priced wine; Petri, 
another large -selling, popular-priced wine. Then, among the 



33 



lesser levels of volume were FI (that stood for Fruit 
Industries). There was Guild bottled wines, that came into 
being during World War II, because prior to World War II they 
were only in the bulk wine business. There were other 
miscellaneous brands, like Cribari, Bisceglia, and several 
others. All of these brands, for all practical purposes, have 
largely disappeared from the market, and the only major brand 
that's left now in the so-called popular-priced category is 
Gallo. And the only brand that is left in the economy-priced 
category is Carlo Rossi, which is also a Gallo-owned brand. 

Teiser: Where does the juice go from all of those Central Valley grapes 
these days? 

Gomberg: Let's put it in this context: the juice from the Central Valley 
grapes goes into a wide variety of products, starting with, of 
course, the Gallo and Carlo Rossi brands which, combined, 
represent very close to 50 percent of all of the production of 
the Central Valley. The remaining 50 percent goes into brandy, 
high-proof brandy, bulk wine shipped to out-of -state bottlers- - 
but mostly now to one winery that used to be just a bottler. In 
the ranking of winery sizes today, I would say it's probably 
number two in the nation. It's located in upstate New York, and 
it's called Canandaigua Wine Company. When you add up all of 
the brandy, the high-proof brandy, the grape concentrate, the 
juice now to some substantial degree going into food products as 
an inexpensive fruit juice, and the bulk wines shipped to 
wineries and bottlers in other states --in the aggregate, all 
that gallonage is probably not more than 50 percent, and maybe 
less than 50 percent of the grapes you're talking about 
originating in the Central Valley. 

Now, I haven't mentioned several California brands that 
have to be taken into consideration because their volume is 
fairly substantial, but not anywhere near that of Gallo. I'm 
talking about the Central Valley branch of Robert Mondavi 
Winery, located in Woodbridge. I'm talking about the Central 
Valley branch, so to speak, of Almaden--in fact, it's no longer 
a branch; it's the main winery now, because they've terminated 
their operations along the coast where they had several 
wineries. You also must recognize that a substantial proportion 
of so-called second brands of premium wineries originate in 
vineyards in the Central Valley. Los Hermanos of Beringer is 
one example. C. K. Mondavi is another. There was a brand that 
the Geyser Peak Winery developed that has since been sold to a 
Central Valley winery. That brand--! believe the name was 



34 



Summit- -was produced, to the best of my knowledge, from grapes 
either largely or entirely grown in the Central Valley. 

So we have an entirely different picture, now, of what 
happens to Central Valley grapes in the wine industry than we 
had, say, twenty- five or thirty years ago. Entirely different. 

Teiser: A winery like the one at Manteca that bought that big vineyard 
at the south end of Monterey Vineyards -- 

Gomberg: Yes. Delicato. 

Teiser: They have a brand, but they also sell in bulk, do they not? 

Gomberg: Yes. The brand is relatively new. Until recently, Delicato, to 
the best of my knowledge, was a contract producer for others of 
wines produced either entirely or largely from grapes grown in 
the Central Valley. There are others in that category. The so- 
called J.F.J. Bronco winery is another large contract producer 
of wines produced largely or entirely from grapes grown in the 
Central Valley. And there's a third giant in that same basic 
category of contract producers, and that's The Wine Group, 
consisting of three brands that at one time were the mainstay of 
the business, but then it's gone through several different 
ownership changes since then. Those three brands were Franzia, 
Mogen David, and Tribune Vermouth. That's The Wine Group. * 
They also market 20/20 brand and Summit brand wines, plus of 
course large volumes of bottled wine under others' brand labels. 

Teiser: The Tribune label has certainly traveled around, as have others. 

Gomberg: That's correct, yes. Speaking of which reminds me that there 
have been so many changes of ownership in the wine industry, 
especially in the past ten years, that it would take an expert 
many hours just to trace the changes that have occurred with 
respect to individual brands, for example, or companies. Or 
changes, let's say, from high level priced wines and quality 
premium operations, to something at lower price levels and 
therefore quality below the so-called premium level. I can't 
recall any winery that has shifted entirely, or even largely, 
from the premium to the popular-priced sector, or from the 
premium sector to the economy-priced sector- -except , of course, 
Inglenook brand, which uses "Navalle" as its secondary 
designation for its lower-priced line. 



See also page 37. 



35 



Teiser: But Almaden, which had some premium and some popular priced, is 
now- - 

Gomberg: Almaden never really had a popular-priced line under that brand 
name. They had only one major brand, called Almaden, and then 
they had, let's say, sales stimulating individual wine types at 
lower prices, under the Almaden brand, the main one being 
Grenache Rose. That's the one that really started the ball 
rolling for Almaden in the premium sector. They were a tiny 
operation until Grenache Rose came along, and then they grew 
from a few hundred thousand cases a year to millions of cases, 
all still in the premium- image category (but often selling at 
below-premium prices). The only thing that came close to what 
we call a straight popular-priced product line was Le Domaine, 
which was their second level brand of sparkling wine. In that 
respect, Le Domaine was like Los Hermanos is to Beringer: it 
was the second label and lower priced. 

But don't get the impression that having, let's say, a 
premium reputation and a second brand which comes close to being 
popular-priced is uncommon; it's quite common in the industry. 
In addition to the wineries I've mentioned, Fetzer has the same 
thing with Bel Arbors label; that's a secondary. There are 
several others in the so-called premium segment of the industry 
that have secondary labels that are lower priced; in fact, often 
priced as low as the higher priced popular-priced wines. The 
outstanding example of that being Inglenook, because, you see, 
Inglenook has two levels of quality and price. One is the pure, 
unadulterated label called Inglenook, usually followed by the 
appellation of origin, Napa Valley, and then a varietal name. 
The other segment of the Inglenook line is called Inglenook 
Navalle--the word "Navalle" really a sub -designation underneath 
the primary brand name Inglenook. Navalle means that some of it 
came from Napa Valley, but most of it came from other parts of 
the state- -chiefly the Central Valley. That, to a large degree, 
is how they were able to build their sales volume. When United 
Vintners bought Inglenook back in the mid sixties, the volume 
was about 25,000 cases a year. Ten years after Heublein bought 
United Vintners, including Inglenook, they built the Inglenook 
label up to a peak level of about eight million cases a year, 
based largely on that secondary designation, Navalle. 



36 



Recent Malor Ownership Changes 



Teiser: Paul Masson has gone through plenty of changes, too, hasn't it? 

Gomberg: Yes, it has. Paul Masson, as you know, started out as a very 
small, super-premium winery, back in the 1800s. I believe it 
was 1852, the year they were established. At any rate, when 
Repeal came, after having closed, like practically all the other 
wineries did during Prohibition, except for a small quantity of 
medicinal sparkling wine, Masson was purchased in 1936 by Martin 
Ray, directly from Masson himself. 

Martin Ray revived the label following Prohibition and 
built it up to maybe ten or fifteen thousand cases a year. That 
was standard volume for a small premium winery in those days. 
Interestingly enough, that was the size of the Martin Ray 
operation based upon his insistence that: one, the wine be 
priced at or near the top of all the premium brands sold by 
California wineries; two, that his Paul Masson wines be 
displayed at retail only next to the top French brands of 
corresponding types. That would help to explain and defend his 
high prices compared with other California premium wines. 

Even despite his apparently successful effort to build 
volume, it was still nominal when World War II came, and who 
should buy it but Seagram, as you know. Well, it isn't quite 
the case that Seagram bought it initially; they bought it later 
on in a deal with the two gentlemen whose names became well 
established as the marketers of Paul Masson wine, Fromm & Sichel 
(who were also the marketers of Christian Brothers wines for 
many years ) . 

There came a time in the mid 1960s, as I recall, when Paul 
Masson, thanks in large part to the funding made possible by 
Seagram, became a million-case operation, having grown from its 
tiny, few- thousand- case size under Martin Ray. By the early 
1970s, sales had risen to over two million cases. That 
operation, I thought, was a profitable one that Seagram would 
preserve, because they're a super giant, as you may know, in the 
distilled spirits field. They're number one, having long since 



the relationship of Paul Masson winery, Fromm & Sichel, and 
Seagram, see Morris H. Katz, Paul Masson Winery Operations and Management. 
1944-1988. an oral history interview conducted 1990, Regional Oral History 
Office, The Bancroft Library, University of California, Berkeley, 1990. 



37 



replaced Schenley, and I thought would completely dominate the 
premium wine end of the business by building up volume under the 
Paul Masson label. But their intense interest in Paul Masson 
began to diminish when Alfred Fromm, under his contract with the 
Christian Brothers, doing business as Fromm & Sichel, was asked 
by the Brothers to give up his efforts also to build the Paul 
Masson label. 

The brand had enjoyed substantial growth. It was the 
second or third largest-selling premium California wine brand at 
its peak. In more recent times, the Paul Masson operation 
became just one of several large winery holdings of Seagram, 
which included Taylor California Cellars and Taylor-New York, 
acquired from the Coca Cola people of Atlanta, Georgia, who had 
gotten into the wine business in 1977 by buying Taylor Wine 
Company of New York. I believe the price quoted for Taylor-New 
York was about $93 million. With Taylor-New York went several 
other brands that had been owned by the Taylor people- -Gold Seal 
was one of them, and Great Western another, for champagne. 

Coca Cola had built up all these brands- -especially Taylor 
California Cellars- -to substantial volume, not under the Taylor- 
New York label, but under the Taylor California Cellars label. 
Coca Cola held onto these operations only until 1983- -just six 
years after they had been acquired. Then they decided to unload 
them. 

It might be of interest historically to note- -although it's 
a matter of record- -that while Coca Cola of Atlanta was still in 
the wine business, they decided to acquire all the holdings of 
Coca Cola Bottling Company of New York City, which included 
three brands that Coca Cola Bottling had bought many years 
earlier: Franzia, Mogen David, and Tribune Vermouth. Well, 
Coca Cola of Atlanta could not add those three brands to the 
ones they already owned without inviting trouble from the 
Department of Justice with respect to anti- trust laws. So, 
immediately upon acquiring Coca Cola Bottling Company of New 
York, Coke -Atlanta divested themselves of these three brands -- 
and that's how The Wine Group was formed here in California, 
under Arthur Ciocca. They simply took over those three brands 
from the Coca Cola people. 

But not long thereafter- -1983 , to be exact- -Coca Cola said, 
"We've had it with the wine people." You can well imagine our 
surprise- -"our" meaning those of us who have lived a long time 
in the wine industry- -to learn who would buy all of these wine 
holdings that Coca Cola had bought and/or built up: Taylor-New 



38 



York, Taylor California Cellars, Great Western, Gold Seal, and 
possibly one or two other brands. Who would buy them? Seagram. 
Now, you would say, "Well, that makes sense. Seagram was a 
giant operation," and they were and still are- -in the spirits 
business. 

But, interestingly enough, within a very short time after 
they took over all those holdings [1987] of Coca Cola of 
Atlanta, Seagram decided to divest themselves of all their 
properties except Sterling Vineyards, in Napa Valley, and the 
Monterey Vineyard in Monterey County. All the other holdings 
were sold to a new entity called Vintners International Company, 
Inc., which did not exist prior to that time. In other words, 
Seagram created Vintners International for the purpose of 
acquiring these holdings by one former employee and one ex- 
owner of Gold Seal Vineyards. 

You're aware of the fact, aren't you, that when any company 
has property for which there appears to be no market, very often 
the owners will create an entity to buy it? 

Teiser: Vintners International had Seagram people in it, didn't it? 

Gomberg: There were two people. One was the former owner of Gold Seal, 
one of the Taylor-New York properties, and the other was a 
former executive of the Seagram operation. These two gentlemen 
formed Vintners International, presumably well financed by the 
seller, because I'm sure these gentlemen didn't have access to 
anything like the quarter of a billion dollars which I 
understand was involved. 

Teiser: Does that tie in with the general market shift that has taken 
place since? The fact that the upper end has been on the 
upswing and the lower end has been down? 

Gomberg: No, I don't think one could say there is such a close 

relationship between the two. The growth of the upper end- -the 
so-called premium end- -of the wine business in the United States 
is a development that has no necessary relationship to what 
Seagram has done, or to what Heublein has done, or what National 
Distillers has done. 



Schlem and Michael Cliff. For a discussion of the financing, see 
"Vintners International's $240 Million Gamble," Impact. April 1 and 15, 1988, 
pages 1-21. 



39 



** 

Teiser: Perhaps, in a sense, they had added to that market division. 

Gomberg: If it were that simple, yes; but it wasn't that simple, in my 
judgment, because, as I just mentioned, Heublein was another 
entity, and a big one, involved in the wine business. For 
example, Heublein, believe it or not, bought the Almaden 
operation from National Distillers, and within one week, I 
believe it was, turned over its entire wine business, including 
Almaden, to a London buyer, by way of the R. J. Reynolds and 
Reynolds -Nabisco operation, which owned Heublein at that time. 
(Reynolds had bought the entire Heublein distilled spirits and 
wine business several years earlier.) 

But here we have R. J. Reynolds, within one week after 
acquiring Almaden, turning over its entire wine and spirits 
holdings to Grand Metropolitan Holding Corporation of London. 
So now you have Grand Metropolitan the owner of several major 
California premium wine interests, and holding also interests 
over and above the ones I've just mentioned, such as Beaulieu 
Vineyard, Inglenook, and just recently, the Christian Brothers. 
As you can see, it's been an ownership merry-go-round, of 
monumental dimensions. 

I don't think- -and this was your question- -there is any 
decisive or meaningful relationship between these big firms 
getting in and out of the wine business, and the decided shift 
toward premium wines here in the United States. Because all of 
these wineries that I referred to- -and I'm including all of them 
that relate to major shifts in ownership, both now and in the 
past five or ten years --had been premium wineries. 



The Economy and Intermediate-Priced Market in 1990 



Gomberg: So this is not a case of people getting out of the jug wine 

business and helping to build the premium wine business. These 
so-called jug wine operations that we talked about a short time 
ago were in competition with Gallo, and I haven't even begun to 
mention all of them, by any means. All of those were strictly 
jug wine businesses, and they're all gone now, for all practical 
purposes. The only one that's left is Gallo, in the West, and 
on the East Coast there is the Canandaigua Wine Company, which 
is now, I believe, the number two wine operation in America-- 



40 



although you probably won't find them listed as number two in 
various publications because most such lists list only 
California wineries. 

Teiser: Canandaigua has a good- sized plant still near Madera; it took 
over Bisceglia Brothers winery. That's still going, isn't it? 

Gomberg: Yes, they produce California wine entirely or largely from 

Central Valley grapes, the wine to be used in further processing 
back in New York State before reaching the consumer. Believe it 
or not, they market the largest selling natural wine brand in 
America containing over 14 percent alcohol by volume. The name 
of the brand is Richards Wild Irish Rose. Would you believe 
that Richards Wild Irish Rose has now reached a volume, along 
with a few other brands of minor importance , which exceeds in 
gallonage all of the California port, sherry, muscatel, white 
port, angelica, tokay, madeira, marsala--you name it. The total 
of all these over- 14 percent wines are exceeded in volume now by 
Canandaigua' s Richards Wild Irish Rose all by itself. 

There's only one brand of wine now in California above 
14 percent alcohol by volume that sells in substantial volume, 
other than Gallo brand, which has the great preponderance of 
what's left of that business. There are several of these 
brands, all Gallo owned. The big one is Thunderbird, and then 
there are Night Train, Night Train Express, plus a few others. 
These are all called special natural wines over 14 percent 
alcohol by volume. 

Teiser: And they still hold part of the market? 

Gomberg: Yes. It's astonishing. If anyone had said to me even as 

recently as five or seven years ago that California would become 
the number two state in the union in the production and 
marketing of wines over 14 percent alcohol by volume, except for 
special natural, I would have said, "No, unthinkable!" Because 
thirty, forty, fifty years ago, 80 to 90 percent of all wines 
over 14 percent alcohol marketed in America were produced in 
California. 

Teiser: What proportion of Wild Irish Rose do you think does come from 
California- -of the finished product? 

Gomberg: I can only estimate, because they've never disclosed the figure, 
but my best guess is that a minimum of 60 to 70 percent is of 
California grape production, possibly as high as 80 percent. 
The rest is the product of New York state Concord grapes and 



41 



other varieties that are used to give the wine its 
characteristic flavor. 

Teiser: You've explained, really, in a way, another question I was going 
to ask. This is in relation to the slight downturn of the wine 
market here in recent years. I was about to say that if there 
were an improved market for lower priced wines, wouldn't that 
help the whole industry one way or another? 

Gomberg: Hold your question for just a moment. Let me qualify the 

wording you've used: slight decline, you said. According to 
the best judgment of my associate successor, Jon Fredrikson, he 
predicts that in 1990 sales of all wines in the United States -- 
predominantly California wines, of course- -will have declined by 
approximately 100 million gallons from their peak of four years 
ago. So that is not a slight decline; that is close to a 
20 percent drop, because at their peak, sales reached about 580 
million gallons. His prediction is that in this year, 1990, 
sales will be down to around 490 million gallons. That's a drop 
of close to 100 million gallons, and it is a monumental decline, 
not a small decline, coming as it does after 50-plus years of 
almost uninterrupted increases, year after year. 






42 



LOOKING BACK 



More on the Transition from Bulk to Bottled Wines 



Gomberg: Before going into a little more depth in response to that 

question, however, let me call your attention to one point that 
I think I neglected to mention when I said that such one-time 
major popular-priced brands as Roma, Italian Swiss Colony, 
Petri, Mission Bell, Gibson, FI , Guild, Biscegelia, and so on, 
have for all practical purposes been driven off the market. 
Here's the point: prior to World War II, the predominant volume 
of all California wine sold (mostly dessert wine) was shipped in 
bulk (mainly in tank cars and tank trucks) to bottlers around 
the United States. At that time --we 're talking now about 1934 
to 1941- -there were about 1,500 such bottlers, and they were 
buying the great preponderance of bulk wine during that period. 

When World War II came, as I explained, regulations under 
the Office of Price Administration placed no ceilings on grapes 
but did on wine. This forced virtually every winery to get out 
of the bulk wine business, because the ceilings on bulk were so 
low, and into the bottled wine business where the ceilings were 
considerably higher. 

When the war was over, there was relatively little such 
trade left, OPA regulations having laid the foundation for 
building winery brands instead. ^ I'm not talking now about 
premium wines, because they were still quite small --less than 
5 percent of the industry volume and always bottled. The 95- 
plus percent were the so-called popular-priced and economy- 
priced wines. The war situation laid the foundation, as I say, 



See also page 48. 



for the shift from bulk wine to bottled wine , but the only 
winery that had the interest and desire and the will and the 
funding to promote its brand of bottled wine, to the exclusion 
of everything else, was Gallo. Roma was owned by Schenley, and 
Schenley's major business was distilled spirits, not wine. 
National Distillers owned Italian Swiss Colony at that time, and 
their business was spirits, not wine. Seagram was relatively 
small at that time because their main winery interest was in 
Paul Masson--I'm talking now about right after World War II-- 
and a few other brands. And then there was the marketing of The 
Christian Brothers wines, by way of Fromm & Sichel, in which 
Seagram owned an interest, so that was their primary wine 
business . 

But, as I say, for all practical purposes, the only entity 
that had the will and the ability to promote its popular-priced 
wines after World War II was Gallo. The rest all faltered, fell 
by the wayside, lost interest. A few kept trying but were no 
competition for Gallo. Only the premium brands managed to 
survive successfully. 

Teiser: That shifted the merchandising completely, didn't it? 

Gomberg: Completely shifted the merchandising. Completely. It got to 
the point, in fact, where so many bottlers- -this was not the 
result alone of the skills and efforts of Gallo, but because 
most of the bottlers had been driven out of the wine business to 
a large degree during the war because they couldn't buy bulk 
wines. Some of them made deals with California wineries to stay 
alive and keep their brands alive, but most of them dropped out 
of the picture, one by one- -not all at once, but one by one. 
The 1,500, which was the peak, as I recall it, of the bottling 
trade for wine nationally, had declined to less than fifty after 
World War II. Now, to the best of my knowledge, it's zero; 
there are no bottlers alone left in the business, as far as I'm 
aware . 

You see, a big bottler was Canandaigua, but they shifted 
from just bottling to producing, too. Also a big bottler prior 
to World War II was Mogen David in Chicago. They shifted to 
Mogen David brand as a producer. Prior to that they were just a 
bottler. 

Teiser: There were bottlers in New Orleans. 

Gomberg: Yes, bottlers all over the country- -Florida and so on. I wanted 
to bring out that point, because Gallo has succeeded, in my 



44 



opinion, largely due to determination, skill, the ability to 
outsmart, outfox, outmarket competition. 

Teiser: Outwork, too, maybe. 

Gomberg: Oh, yes. He [Ernest Gallo] would travel --he used to; I don't 
know if he still does (he just turned eighty) --all over the 
country and go into stores that either were not handling his 
wines or were not doing a good job. He would talk to the 
proprietor and persuade him to start making a big display out of 
Gallo wine. 



Marketing and Lavs 



Teiser: Do I remember that Gallo stepped in and bought some bottlers in 
a couple of instances? 

Gomberg: The only two bottlers that I recall that he bought were one 

called Melody Hill in Indianapolis, and the other, PIO, was the 
biggest -selling brand in the state of Pennsylvania at one time. 

He moved into Indianapolis successfully by taking over 
Melody Hill. Gallo had been listed in Pennsylvania prior to 
this episode, and then the reports in the industry--! can't 
vouch for this, because I don't have any evidence in my 
possession, nor have I seen it- -were that he got into some kind 
of dispute with the Pennsylvania Liquor Control Board, and they 
discontinued handling his brand. 

The average person would say, "That's tough; I'll see if I 
can't get back in," and maybe make some effort to get back in. 
Gallo was so smart that he decided the way to get back in was 
not to try to undo what had already been done: "I'll do 
something that's never been done before." He checks to see 
which is the biggest-selling brand in the state of Pennsylvania, 
and he buys it! [laughter] As a result of which he gets back 
in the state with virtually no mention of Gallo on the label at 
all. The brand name "PIO" is the big brand, but little by 
little the big brand name goes down in size and the name Gallo 
goes up, and eventually it becomes only Gallo brand. 

That's an example of his astuteness. He was a genius at 
that sort of thing. He's outsmarted everybody in the industry 
when it comes to marketing. He was cited on two occasions with 



which I am familiar. I may have mentioned one --the Office of 
Price Administration- -for alleged breach of the regulations. 
The reason I remember this so well will become evident when 1 
finish this little anecdote. 

I got a call from him one day- -this was when I was still 
with the Wine Institute --and he said, "Will you please go to 
Sacramento? My attorney will be there, and we're going to have 
a meeting with the U.S. attorney's office in Sacramento, because 
they think I have violated the OPA regulations ceilings." It 
turned out that there were, I think, thirty-nine accusations of 
violation. The purpose of my going to Sacramento was to help 
explain two things, primarily: what the thinking was of the 
industry behind the OPA regulations as applied to wine; and, 
second, how what Gallo did must have been an innocent, 
unintentional, non- felonious violation of the regulation. 

Gallo 's attorney and I did talk to the U.S. attorney, and 
we were informed early on that the he was planning to turn the 
matter over to the grand jury. When we finished explaining what 
had happened, and that no intentional violation occurred, the 
U.S. attorney switched it from a grand jury proceeding to a nolo 
contendere action which, as I recall it (I'm a little hazy on 
that now), says, "I never committed any of these acts in 
violation of the law, but I promise never to do it again." 

As a result of which, instead of being indicted and facing 
the possibility of criminal action, he paid, as I remember it, 
$1,000 apiece in the settlement for these thirty-nine alleged 
violations. The reason I say I remember it so well is that the 
following Christmas- -this was in the mid- forties, during World 
War II--about 1944, as I recall in the mail is an envelope from 
Gallo, and in the envelope is a check. (I don't think I'm 
breaching any confidence by saying this.) This was a check in 
appreciation for my having gone to Sacramento and helped get 
this thing straightened out. The check was for $1,000. 

I took it to my boss, who at that time was Harry Caddow at 
the Wine Institute. I said to Harry, "Look, I got this check in 
the mail from Ernest Gallo, and I don't feel I'm entitled to it, 
because all I did was to go up to Sacramento and help to explain 
that the violations of which Gallo was accused were at the worst 
unintentional. They resulted from a misunderstanding of the 
regulations , and the service I rendered was already paid for by 
the Wine Institute, so I don't think I'm entitled to this check. 
I'm planning to send it back." 



46 



He said to me, "Lou, if you send that check back to Gallo, 
you're fired." So I never sent it back; I kept it. 

That was one instance. Now, in the more recent past- -I 
wasn't directly connected in any way with this, but I did do 
some work in digging up facts and figures for the industry- -he 
was accused by the Federal Trade Commission of, shall we say, 
using practices that were alleged to be impermissible under the 
law in building up his sales volume. A simple language term 
used for that, you might say, is "arm-twisting" of the trade: 
"Look, you've got to buy my product, or else," you know. 

At any rate, the Federal Trade Commission cited him, as I 
recall it, for seven such alleged violations of the Federal 
Trade Commission Act. Here again, he was in no way criminally 
prosecuted. He signed an order not to do any of these things, 
without admitting that he had ever done them before. That went 
on for about seven years, I would say. That would have brought 
it up to about the early to mid eighties. About six or seven 
years ago he went to the Federal Trade Commission and said, 
"Look, gentlemen, the situation in the industry has now changed 
radically. We have new competition now. We have Coca Cola of 
Atlanta competition; we have Beatrice Foods of Chicago, who have 
bought into the industry in the meantime as competition; and 
Pillsbury Mills out of Minneapolis that have bought into the 
industry; we have Nestle Foods of Switzerland who have bought 
into the industry," and so on. 

As I remember, his argument- -it became a matter of public 
record- -was that this alleged arm-twisting could not be done any 
more because there were now super-giants, multibillion dollar 
companies, with which he had to compete. And he was relieved of 
the constraints contained in the seven-point citation. 



The Anti-Trust Threat of 1942 



Teiser: This brings to my mind something not connected with it, but 

another legal threat, in 1942. Do you remember the indictment 
drawn up by the federal grand jury here in San Francisco against 
almost the whole industry? 

Gomberg: I remember it well. I was deeply involved. What happened was 
this: You're talking about a grand jury proceeding here in San 
Francisco, in which, as it turned out, the Wine Institute and 



47 



many major members of the Institute were to be cited for 
violations of the anti-trust laws, basically for price - f ixing- - 
getting together and agreeing on the minimum price that 
everybody was going to charge. Yes, I was then with the Wine 
Institute, and I remember it well because there were two 
gentlemen and I who were directly asked to go to Washington to 
discuss it with the U.S. attorney general in Washington. I 
went, and the gentleman who was then in charge of commodity 
loans for the Bank of America, Jesse Tapp, who later became 
chairman of the board of the bank, and another gentleman, who 
was an attorney out of Fresno, whose name was Mount [K. ] Wild. 

The three of us went to Washington to discuss it with a 
representative of the U.S. attorney general. And we did 
explain. 

What we did was to point out that competition in the 
industry was extreme and involved. At that time, out of the ten 
biggest wineries, as I remember it, three or four of them were 
co-ops, so they were both growers and vintners, and they were in 
a position to cut prices if they chose to do so unmercifully. 

** 

Gomberg: So the three of us sat down with this gentleman in Washington 
and explained the complexity of the situation, why it was 
necessary to have some kind of agreement, even though it was not 
enforceable in law, among and between the wineries to prevent 
severe injury, if not financial death to many of them, should 
prices fall as low as some of them were prepared to lower their 
prices . 

The corollary to thatboth federal and state laws at that 
time, as now, provided in the case of agriculture, for what 
would otherwise be violations of anti- trust laws, for growers to 
get together and fix minimum prices, put restraints on 
shipments, and all that sort of thing. With those privileges in 
mind, and bearing in mind that at that time I think about half 
or more of all of the tonnage of grapes crushed for wine was 
crushed by growers and co-ops --in other words, the wineries grew 
all or a good many of the grapes themselves, and in the case of 
co-ops, all the grapes were grown by members of the co-op. So 
they represented at least 50, maybe as high as 60 percent of all 
the grapes crushed. 

On that basis we were able to get the attorney general in 
Washington to send a communication to the grand jury foreman 



here in San Francisco, and to the U.S. attorney, saying, "We 
have looked into this matter carefully, and we direct that you 
discontinue any further criminal investigation regarding the 
wine industry." He did send this wire, and I remember a story 
appeared in the paper the next day when 1 got back, saying, in 
effect, "Grand jury foreman protests action by Washington to 
discontinue investigation into the wine industry which would 
have led to criminal prosecution for violation of anti- trust 
laws . " 

If there had been no important relationship between grape 
growing and winemaking, the action to prosecute would have been 
right. But here was an industry that was at least half, and 
maybe 60 percent consisting of growers. The 40 percent were 
caught in the middle, so to speak, and were helpless to do 
anything about it because these growers were also wineries and 
were, in effect, setting the price of the grapes indirectly by 
putting prices on the wines that they sold. It was the right 
thing to do, under the circumstances, and I said that to myself 
as a lawyer as well as, I think, a fair-minded person.*- The 
price of wine did not become unconscionably high as a result of 
that; and besides, the great preponderance of that wine in those 
days went to, shall we say, the poor man's whiskey trade- -I'm 
talking about fortified, or dessert wine, as we called it. 



From Bulk to Bottled. Continued 



Teiser: We were discussing the change in merchandising as a result of 
bottling. What were the effects on merchandising in general? 

Gomberg: There were many effects. Number one (not necessarily in this 
order of importance) was the reduction from a peak of around 
1,500 independent wine bottlers all over the United States, 
bottling the wine mostly under their own brands; the sudden 
disappearance of most of that trade during World War II; and the 
ROW complete disappearance of bottlers' brands, for all 
practical purposes, because the independent bottler no longer 
plays an important role in the marketing of wine. Furthermore, 



also the interview with Burke H. Critchfield in California Wine 
Industry During the Depression, an oral history interview conducted 1970- 
1972, Regional Oral History Office, The Bancroft Library, University of 
California, Berkeley, 1972, particularly the interview history. 



49 



those bottlers, with very few exceptions, bottled almost 
entirely dessert wines, not table wines. 

Teiser: Was there an increase in brand advertising then, when bottling 
took over? 

Gomberg: Wine was always bottled, except in a few states like California, 
where you could get a jug filled from a barrel at a retail 
package store. But that was permissible in very few states. 

Teiser: The bottlers used different brands; they didn't always use the 
winery's label? 

Gomberg: They were all local bottlers, selling locally, and advertising 
locally. 

Teiser: Wasn't there, then, a shift in advertising? 

Gomberg: Let's put it in this context: I think I mentioned that about 
80 percent of all the wines shipped from California wineries 
prior to World War II were transported in tank cars and tank 
trucks, and almost none of that was bottled under the winery's 
brand; it was bottled under the bottler's brand. The only 
brands that were of any importance prior to World War II were 
Roma, Italian Swiss Colony, Petri, and a few others. They were 
not major factors in the markets nationally, but rather major 
factors in California and a few other states. 

But, for example, the biggest-selling brand for some time 
in the city of New York was Mission Bell. What is Mission Bell 
brand? That was owned by the Arakelian family winery at Madera, 
California. You might ask, "How did that brand get started?" 
Well, the Arakelian family made arrangements to ship the wine in 
bulk to their own bottling location in New York, where it was 
bottled under the winery's own Mission Bell brand. It was 
advertised on radio and in newspapers, and for a time it was the 
largest-selling brand in New York. Later, Chateau Martin brand, 
owned by a New York bottler, became number one, as I recall, 
only this time the bottler had to acquire a California winery to 
assure its source of supply. 

Teiser: Then there wasn't much national advertising? 

Gomberg: No, there was no national advertising of any wine that I can 
recall at that time, except little premium winery ads 
occasionally in a fancy magazine- -something like that. There 
was no television then, but on radio and in newspapers and 



50 



magazines, the big media of communication, there was no national 
brand advertising in those days for non-premium wines. 



Premium Wines and Their Products 



Teiser: What kind of promotion and advertising and merchandising have 
the premium wineries used? 

Gomberg: First you've got to look at the premium segment of the industry 
in broad perspective. You heard me mention a little while ago 
that the premium wineries represented less than 5 percent of the 
California wine industry prior to World War II. There were not 
more than about thirty or thirty- five premium wineries in 
California altogether. Outside of California there were maybe 
at the most twelve or fifteen premium wineries, including one or 
two in Ohio, three or four in New York, one or two in Michigan, 
and so on, mostly very small and few in number. In the 
aggregate and historically, California premium wines were only 
about 5 percent of all California wine shipment volume into 
trade channels, and the premium wines of other states were 
barely one fifth of that. 

The Office of Price Administration regulations during World 
War II permitted a winery to charge the highest price at which 
their wine brands were sold during the base period prior to the 
war. Naturally and obviously, every winery that could 
rightfully and legally do so, chose their highest-priced brand, 
and in a few instances they were premium priced. In California, 
for example, Schenley owned not only Roma, the giant, but they 
also owned Cresta Blanca, which they bought prior to World War 
II. They bought it, as I recall, in 1941. Naturally, when 
World War II came and the OPA regulations permitted you to use 
the highest -priced brand that you had legally on the market in 
the base period, they diverted I would say a good part of their 
gallonage- -probably much of it- -to the Cresta Blanca brand. 

Teiser: I remember that happened, but I didn't know why. 

Gomberg: When the war was over, of course, sales started to drop 

precipitously. The same thing happened with Lou Petri. He 
didn't have a premium brand that amounted to anything, but there 
was one limited- volume brand he called "Angelo Petri Signature." 
Naturally, he tried to sell as much as he could under that 
brand, which was relatively high-priced, but it really didn't 



51 



amount to very much. As I remember, after the war that brand, 
too, dropped from what small volume level it had reached. Other 
wineries, including Italian Swiss Colony, had much the same 
experience. 

The premium sector of the wine industry of the United 
States was concentrated in California- -very few outside of 
California- -and, as mentioned, there were only about thirty or 
thirty-five in California. Now, that's looking at it from a 
broad perspective standpoint. Look at it now today, in 
contrast. There are not only not just thirty or thirty- five 
premium wineries in California; there are now over 500 premium 
wineries in California alone, selling their wines at prices 
above the so-called jug wine level. Not only that, but there 
were only about, I would say, five or six states that had any 
premium wine operations prior to World War II. Today forty- 
four states have one or more premium wineries , and the number of 
such wineries outside of California has risen from, like I say, 
twelve or fifteen at the most to well over a hundred. 

Teiser: How have they made that segment grow? 

Gomberg: You've got to understand who made it grow, rather than how they 
made it grow. To the best of my knowledge, the one person to be 
credited with stimulating most of these other states to get out 
of the common, ordinary, popular-priced wine business and into 
the premium wine business was our friend Leon Adams. In the 
past thirty- five years since he left the Wine Institute (he left 
it in 1954, as I recall it) he has made it almost a mission to 
go from state to state to encourage the potential grape growers 
and winemakers of those states to get their laws amended to 
permit the production and marketing of fine wines at a 
reasonable profit. He is responsible, in my judgment, for most 
of the state laws that have now been amended to permit such 
production. 

You might say, "That explains, perhaps, from one point of 
view how this segment of the industry has grown. What other 
explanations are there?" Well, here's one: as you know, wine 
has a rich cultural background, covering religion, covering 
literature, covering politics, covering economics- -the economics 
of winegrowing having been recognized, in a small way, for 
hundreds and hundreds of years. Wine has a cultural appeal as a 
science, it has a cultural appeal as an art, and perhaps as 
persuasive as any appeal that it has is that it enables a 
newcomer into the industry to rub elbows with important people. 
I would put that high up on the list of reasons. 



52 



As a result of all these things, you look now at the roster 
of winemakers In the United States, including the approximately 
550 in California and another two or three hundred in other 
states, and you will find that many were doctors, lawyers, very 
successful businessmen, airplane pilots, professors at colleges 
and universities, some of whom who gave up their careers to 
become winery owners, and so on and on and on. The list is 
incredible. 

Teiser: In the thirties and through the forties, too, winemakers were 
not sought after as they are now, as I'm sure you remember. 

Gomberg: That would be true in part, but not entirely. Let me give you 

an example: one of the greatest winemakers in French history is 
the Rothschild family, the richest Jewish family in the world at 
that time. They were very proud of their winery operations, and 
there are still two Rothschild wineries in France. Now, if 
you're talking about winemakers who are employed by the owners 
of the property, you would be right. 

Teiser: I'm talking about California winemakers as a whole, except for 
maybe John Daniel, Jr.. 

Gomberg: I wouldn't say that that is correct, even in California. John 
Daniel certainly is not an exception to the rule, in my opinion. 
I'm talking about premium wines only, now; I'm not talking about 
Roma brand or Italian Swiss Colony brand, or Petri brand. For 
example, Paul Masson himself was a very highly regarded person 
in the cultural life of California a century ago. The Ventes of 
Livermore were winemakers, but they were also very highly 
regarded. One of the Wente brothers, Carl, became president of 
the Bank of America.^- 

You take another distinguished name, the de Latour family 
of Beaulieu Vineyard fame. The de Latours were in very high 
social regard when I arrived here in 1933. They started in 
1900, and the original Georges de Latour was still alive then. 
He operated all during Prohibition for the production of 
sacramental wine for the Catholic Church. So did Concannon. He 



'Carl Wente, a brother of partners Ernest and Herman Wente, was not part 
of the family wine business. 



53 



was very highly regarded; he even once sent wine to the Pope in 
Rome as a gift. 

So I would not say that these premium wine people were just 
ordinary winemakers and not highly regarded socially. They were 
so regarded, for the most part. Oh, there were a few 
exceptions, of course. The Mirassous, for example, were not 
very active socially back in the thirties and forties, nor were 
the Mondavis when they first entered the industry right after 
Repealbut subsequently became quite active socially, and today 
Robert Mondavi is famous in the world of wine for his efforts to 
gain recognition for the universality of wine. 

But getting back to your question regarding winemakers 
generally, you would be right if you were to take the state as a 
whole, yes. There was nothing very refined or attractive about 
grape growing and winemaking, but there were these exceptions, 
and those are the ones I'm talking about. 




Leon D. Adams and Louis Gomberg, late 1980s. 



54 



WORK AS A CONSULTANT 



A Wine Movie and a Wine Book 



Teiser: We discussed your career up to the time you went to work for 
Louis Petri. Since you returned from his employ in 1952, to 
1983, when you sold this business and theoretically got out of 
it (but not quite), you were on a pretty straight course, 
weren't you? 

Gomberg: Substantially, although when I got out of the Wine Institute and 
opened my own office as a wine industry consultant in 1948, I 
was the first of the breed, I believe. There were no other wine 
industry consultants at that time. Indeed, there were wine 
consultants then, but they were all technologists- -people 
involved in the technology of winemaking. My work was that of 
all aspects of the industry, as I had done at the Wine 
Institute, but even more diversified because I was able to do 
things as an independent contractor that I could not have done 
when I was with the Wine Institute. 

For example , I was approached by a young man in the middle 
fifties. I had opened my office in '48, and he came in to see 
me in '55 or '56, and said, "Mr. Gomberg, I understand that you 
helped put things together in the wine industry." I said, 
"Well, I've done a certain amount of that, yes. What is it that 
you had in mind?" He said, "You've heard of the famous book by 
Alice Tisdale Hobart, The Cup and the Sword? She wrote this 
novel, and it was built around the life of Georges de Latour, 
founder of Beaulieu Vineyard in the Napa Valley." This young 
man then said, "I've been an usher and a head usher in Grauman's 
Chinese Theater in Hollywood, but now I've decided I want to do 
a motion picture based on this novel." 



55 



Gomberg: "It's a wonderful story, and I think it would make a great 
motion picture." I asked, "What do you want of me?" He 
answered, "I need $50,000 to pay the screenwriter to do a 
script." I said I wasn't about to try to raise $50,000 for him 
to get a screenplay written unless he had a pretty rock solid 
basis for my doing so. 

He said, "The writer is Casey Robinson," and then he 
rattled off the names of some of the famous screenplays Robinson 
had written. One of his most recent ones was the famous one 
about the mountains in South Africa, and he had done quite a few 
for Bette Davis and other famous people. I said, "If you can 
give me a two-page statement of what you have in mind and what 
you propose to do, I'll see what I can raise." 

He did give me that, and I did go to my friends in the 
industry, and I raised not $50,000; I raised $25,000, on 
condition that if the picture was produced they got a percentage 
of the profits from the picture. He got Casey Robinson to 
accept the $25,000 to write the screenplay, and then he started 
to find some producer to do the production of the screenplay. 

Well, he wasn't able to persuade any of them, so he went 
one night to the home of Rock Hudson and told Rock Hudson, "I've 
got a screenplay by Casey Robinson, and you will star in it and 
do wonderfully well. I need your name, because if you're 
willing to do it I can get Universal International to produce 
it." Sure enough, he left the script with Hudson, Hudson read 
it and called him the next day and said, "This is for me. I'll 
recommend it to Universal International." 

Hudson did, and Universal International said, "Mr. Hudson, 
if you'll do the picture, we'll finance it." So it cost them 
$3.5 million dollars to produce the picture. It starred Rock 
Hudson, Jean Simmons, Claude Rains, and Dorothy McGuire. The 
chap that I raised the money for formed a little corporation 
called Vintage Productions, Incorporated. The picture was 
produced, and the last I heard it had grossed over $30 million. 
My guess is that by now it must have grossed at least $40 or 
$50 million. 

Teiser: So some of your wine industry friends made a little money? 



"Released in 1957. 



56 



Gomberg: They did, but not as much as they should have, because the deal 
was not as generous as it should have been. Instead of all my 
investors that I got to put up the 25 grand getting a good- 
sized piece of the total action, all they got was a small 
percentage. I think it was 10 percent of Vintage Productions 
profits. The other 90 percent went to the screenwriter and to 
this chap who called on me. The investors got their money back 
and a little bit more. I got a fee. I forget what it was now; 
I think it was $7,500. I didn't get paid at all for raising the 
money, but I got this fee for being the technical advisor in the 
production of the picture. Mostly it was the satisfaction of 
getting the picture made. It was the first major motion picture 
of its kind ever produced about the California wine industry, as 
far as I know. 

The second experience in that general direction was the 
satisfaction I derived from helping to get a luxury book 
published about California wines, put out by the University of 
California Press, called The Story of Wine in California.^- That 
was another instance of getting something done that had never 
been done before. I helped the photographer, Max Yavno (it was 
an illustrated book), and the U.C. Press people put the book 
together. M.F.K. Fisher wrote the text. 



Inelenook. United Vintners, and Heublein 



Teiser: For the wineries themselves, you helped them put together deals. 
Typically, how did that sort of thing work? Did somebody come 
to you and say, "I'm a lawyer, I've made a lot of money, and I 
want to buy a winery"? 

Gomberg: Both sides. People came to me and said, "I want to buy a 

winery. Will you help me find one?" And the other way, winery 
owners said, "We've had it. We want to get out of the business. 
Will you find us a buyer?" 



Teiser: 



Gomberg: 



Did winery owners ever say, "We're short on money, 
me a partner?" 



Can you find 



Yes, I've had a few of those. But the main wineries with which 
I've been involved in that respect, I've functioned as a real 



Published in 1962. 



57 



estate broker. I've been so licensed since the early 1950s. My 
first major deal under that license was the sale of Inglenook to 
United Vintners (which later sold out to Allied Grape Growers) . 

There was no common denominator among these . Each one was 
different. They say there's no general rule. For example, the 
biggest deal that I handled was the $40 million sale of United 
Vintners to Heublein. That was in 1968, and at that time it was 
the biggest deal to date. There have been bigger ones since 
then. In that instance I wasn't approached by either party; I 
dreamed up the concept that United Vintners needed some 
stimulus, because Louis Petri, with all due respect to his 
skills, was not a merchant. He was a wheeler and dealer; he 
would buy and sell properties, and that's how he made his big 
money . 

Like, for instance, he wanted to sell his winery, and 
nobody wanted to buy it; so he created a buyer. 

Lou Petri formed the Allied Grape Growers in 1951, and that 
was a typical example of what I consider to be his brilliance, 
if not genius, in respect to transactions involving purchase and 
sale of properties. 

The reason I say that is because I had something of a hand 
in helping Mr. Petri to find a buyer for his winery property, 
which he wanted to sell after World War II was over. This was 
in the late forties, about '48. He wanted to sell, and there 
were no ready, willing, and able buyers, to the best of my 
knowledge; I was unable to find one for him, and he couldn't 
find any. So he did the thing that would occur only to a 
creative mind. The creative mind says, "If a buyer doesn't 
exist, create one." And he did. 

He went to his growers , from whom he had bought many tons 
of grapes over the years, and said, in effect, to them, "Now 
that the war's over and the market conditions are getting back 
to normal, and you're having trouble selling your grapes, and 
I'm having problems selling my wine, how about forming a team? 
I will assist you in forming a new organization of grape 
suppliers called Allied Grape Growers, and I will be buying your 
grapes, not as the Petri Wine Company, as I have been doing in 
the past, but as a new entity called United Vintners. You will 
share in my profits, just as I will share in your profits, and 



58 



so working together in harmony like that we will help to insure 
our financial success." And that's exactly what happened.^- 

I found that the United Vintners deal fitted in very well 
with my counselling, because United Vintners in those days 
needed better marketing. The growers- -Allied Grape Growers- - 
owned it, and they were not expanding their markets. Heublein 
didn't have any wine business except a few lines of imports. 
They didn't have any United States or California wines. I had 
become friendly with the chairman of the board of Heublein, John 
Martin, during World War II when I often visited Washington, and 
I went to him and said, "What if United Vintners were available 
to you? Would you be interested?" "Yes! That's the kind of 
property we'd be interested in." And eventually it was put 
together. 



Wine Industry Statistics 



Teiser: Your other functions, then, as a consultant included gathering 
statistics and making them available? 

Gomberg: When I joined the Wine Institute in 1935, there were no wine 

industry statistics being issued by the Institute. The nearest 
thing to it were some statistics put out by the University of 
California Giannini Foundation of Agricultural Economics in 
Berkeley. So my first self -assigned duty was to start putting 
out periodic statistics on the wine industry. I had had the 
advantage, as you know, of a statistical minor in my 
undergraduate days at the university, so I knew something about 
statistics. As a result of that, I started the wine industry 
statistical surveys. I think my first one was in the 1936, 
shortly after I joined the Wine Institute. 

In addition, I also initiated the Wine Institute Bulletins 
to members, which reported in some detail what was then going on 
in the wine industry. 



also Louis A. Petri, The Petri Family in the Wine Industry, an oral 
history interview conducted in 1969, Regional Oral History Office, The 
Bancroft Library, University of California, Berkeley, 1971. 

n 

*See also pages 61-62. 



59 



Teiser: As a consultant, then, did you continue-- 

Gomberg: I continued to do very much the same sort of counseling, except 
that as a consultant my relations were on a consultant -client 
basis, instead of as a trade association research director and 
member -of -trade-association basis. So there was quite a 
difference. I continued to do that right up to the time of the 
transfer of my business in '83. 

Teiser: As an independent consultant, where did you get statistics, and 
what did you do with them? 

Gomberg: I would get the data mostly from the State Board of Equalization 
in Sacramento, which receives monthly tax reports, based on 
gallonage production and shipments of wine subject to tax, from 
each winery. I would assemble the figures for the important 
wineries; I didn't attempt to do every one, because even in 
those days there were about 250 or 300 altogether. But I got 
data for the important 50 or 60 top wineries and put their 
numbers down, month by month- -shipments into trade channels- - 
and made those figures available to my clients. 

Teiser: But not to the industry in general? 
Gomberg: No, not to the industry in general. 

Teiser: When did you start writing articles on industry trends for 
Wines & Vines? 

Gomberg: Oh, that started in the early 1950s. 

Teiser: So you were, in effect, making your data available through that. 

Gomberg: Yes, but in those days it wasn't so much statistics that I was 
writing and reporting on; I was emphasizing economics- -the 
economic problems of the industry. In fact, now that you 
mention it, it's amusing that I recently read some of my early 
writings and found that I wrote an article for Wines & Vines in 
1952 on the need for a state grape commission, and the 
importance of stabilizing the industry legally under this 
commission set-up. Way back in the early fifties, the only 
thing of this character that had been done up to that time that 
had succeeded was the marketing order for wine --which, as you 
know, started in 1938. In this article, in October of '52, 
entitled "Memorandum on an Overall Stabilization Program," I 
recommended the establishment of a California grape commission; 
and now we have the California Wine Commission, which is not the 



60 



Teiser: 
Gomberg: 



same thing but similar in principle as far as legislative 
formation and program objectives are concerned. 

The purpose was to help bring about stability in the 
industry, because except during the war years when there was a 
scarcity of everything, we had surplus after surplus most of the 
time. 

My point in calling your attention to this article in 1952 
is that it will be forty years, in just two years, since I urged 
the industry to get legislation forming the California grape 
commission. Last year legislation was adopted, creating the 
California Wine Commission for the first time. It's still not 
by any means all that needs to be done, but it's a step in that 
direction. I'm often accused, you know, of being too far ahead 
of my time. 

Only thirty-eight years [laughter]. 
And even then, it's not it, yet. 



Projects for Possible Buyers and Sellers 
[Interview 3: February 22, 1990 ]#// 



Teiser: After we finished taping last time, you showed me a study of the 
industry you had made for a company that was considering 
entering the wine industry in California. Do you often do 
those? 

Gomberg: It's now forty-plus years since I opened my office as a 

consultant. I've done not more than ten or twelve such reports, 
so I averaged one every five years or so . 

Teiser: When you do that, do you start with the specific things that the 
company wants to know? How do you go about it? 

Gomberg: It starts usually with a preliminary conversation on just what 
the client has in mind with regard to possible entry into the 
industry, what they're seeking. Then I respond by putting 
together a document that I like to think answers most, if not 
all of their questions about possible entry, having to do with 
the nature of the entry, having to do with the advantages of 



61 



entry, having to do with the disadvantages of entry, and so 
forth. 

Teiser: So you have to survey the whole industry in relation to that? 

Gomberg: In relation to the needs of the inquiring client, yes. Of 

course, surveying the whole industry really means, in practical 
terminology, looking at the industry from the standpoint of the 
client's desires, objectives, goals, et cetera, and then 
responding by coming up with various suggestions about choices. 

Teiser: If, for instance, you were making a report for someone who was 
interested in entering the premium wine end of it, would you 
first investigate that area of the industry? 

Gomberg: Yes, I would respond, but I would first ask the client to define 
as specifically as possible the dimension of its interest- - 
that's in terms of dollars to be invested, in terms of case 
volume to be attained, and so forth; numerical dimensions. Then 
I would ask as to location- -where they would prefer to be 
located, because today there are many different possible areas 
of location. And I would ask them as to their ultimate 
objective --what they are seeking to do eventually, assuming that 
they enter and the formula fits their aspirations. 

Teiser: Have you had inquiries from companies wishing to enter the 

business who didn't want a whole report; they just wanted your 
opinion on this or that? 

Gomberg: Yes, there have been quite a number of such inquiries over the 
years . 

The major entry into the wine industry which I have 
identified was back in the late sixties, when I called the 
attention of the Heublein people to the possibility that the 
number two winery at that time, called United Vintners, might be 
available. In that case I didn't prepare a formal study for the 
Heublein people. I merely explained to them that there was a 
possibility of acquiring United Vintners, and I made myself 
available to the Heublein people to respond to many questions 
that arose in connection with their consideration of this 
acquisition. 

Teiser: In that case you had a close understanding of the business, 
having worked with Petri earlier. 



62 



Gomberg: Yes, I had a special understanding of United Vintners, having 

had a slight hand in its formation. It was really the creature 
of Louis Petri. 1 That was in the late 1960s. 

But my work in the area of calling possible availabilities 
to the attention of clients who had sought my guidance and 
information started a few years after I opened my office as a 
consultant. That would be in the early 1950s. 

Teiser: Would someone in the wine industry who wanted to sell ask you to 
find a buyer? 

Gomberg: Yes, I did have some. As a result of those inquiries in the 

early 1950s- -I think the year was 1953- -I secured a California 
state license as a real estate broker. That authorized me to 
function in that capacity as intermediary between buyer and 
seller. 

Teiser: Then did some people who wanted to buy come to you and ask you 
to find property for them? 

Gomberg: Yes, there were a few of those. But I would say that the 
majority of the transactions in which I was involved as 
intermediary- -in other words, as a broker for either the buyer 
or the seller (sometimes both; it's perfectly permissible to 
serve both parties, if both parties are informed in advance of 
your dual capacity, and I did that on a number of occasions) -- 
occurred as a result of buyers seeking sellers, rather than 
sellers seeking buyers. 

Teiser: Did a lot of property change hands in the sixties and seventies? 

Gomberg: Quite a bit, yes. The big one at that time was the sale of 
United Vintners- -82 percent, not 100 percent- -to Heublein. 



also pages 57-58. 



63 



More on Market Stabilization 



Teiser: You mentioned that you were interested in stabilization 

programs, and that you had written an article in 1952, and that 
something you suggested in it had been done. 

Gomberg: Not exactly. The basic idea that I proposed in that article in 
1952 has come into being in part, but not in its entirety. In 
the article in 1952, which was written seven years after the end 
of World War II , there had been good years and bad years . The 
great year was in 1946 , when the market for grapes and the 
demand for wine reached unprecedented levels. It was obvious to 
those of us who were familiar with the market situation that the 
reason why that occurred was that during World War II normal 
supplies of wine were depleted because the demand was so great 
and the supply was so small . 

So in 1946 the demand for grapes was higher than it had 
ever been prior to that time, prices to growers were higher than 
they had ever been prior to that time, and the demand for wine 
in the marketplace was greater than it had ever been up to that 
time. It was a case, for those of us who studied the situation 
carefully, of filling pipelines- -warehouses- -that had become 
empty during the war. None of us realized at that time that it 
was a one-year situation, because in 1947, the following year, 
the grape market collapsed, the wine market collapsed, growers 
took a terrible beating, and wineries found themselves in 
superabundant supply of unsold products. 

It was then, in 1948 --the year I opened my off ice --that I 
decided that what the industry needed was some form of 
stabilization which would prevent runaway, excessive prices and 
excessive shipments into trade channels, followed by the 
severely depressed prices and severe drops in market demand for 
product. So I started, you might say, a crusade- -a miss ion- -to 
try to get the industry to adopt some form of stabilization 
program which would tend to bring supply and demand, both of 
grapes and of wine, into better balance than they had been in 
previous years, and to keep them there on a continuing basis. 

However, the industry was not prepared to go quite that 
far. There were two programs that I mentioned that were adopted 
in 1949. One was called the Marketing Order for Grape 



pages 59-60. 



64 



Stabilization. Well, it was a half-baked effort to create a 
fund of money during normal conditions and times, so that when 
adverse conditions and times occurred growers could be paid from 
this grape stabilization fund, at least in part to compensate 
for their costs of production, because in severely depressed 
years growers wouldn't even recover such costs. That was a 
State of California marketing order. 

I remember it well because it was in effect about the time 
I became Louis Petri's executive assistant. The program lasted 
just a little over one year [September 1949 to December 1950] . 
It was terminated because the industry realized that it was 
simply not possible to raise adequate funds to compensate 
growers for losses sustained as a result of product surplus and 
depressed prices. 

Teiser: Where had its funds come from? 

Gomberg: The wineries were the ones who paid the assessments that built 
this grape stabilization fund. 

Teiser: What happened to the money, then? 

Gomberg: The funds, as I recall, were returned to those who put the money 
into the account, and so, in effect, the program was abandoned. 

There was another program--! think it was the same or the 
following year; that would make it 1949 or 1950 1 - -called the 
Marketing Order for Wine Processors. The purpose of that 
marketing order- -also a state order- -was to put all wineries on 
shipping quotas based on prior shipment volume, so they could 
ship only so much into trade channels and thus not flood the 
market. 

Well, wineries realized that this was no way to go. It 
didn't solve the problem of surplus; it just meant that the 
wineries that had already contributed to the surplus, as had the 
growers, were sitting there with unsold products that couldn't 
move into trade channels, and that was no solution. So that was 
abandoned. 

Teiser: Wouldn't that have put a cap on growth for a while if a winery 
really wanted to grow and was held back by not being able to 
market more than a certain amount? 



was in effect from June 1949 to June 1952. 



65 



Gomberg: You could say that that was the purpose of the Marketing Order 
for Wine Processors --to put a ceiling, a limit, on both winery 
expansion funds and new winery entries. But it did not function 
as the industry hoped it would. 

I should say at this point that I personally felt that both 
the Marketing Order for Grape Stabilization and the Marketing 
Order for Wine Processors were efforts to stabilize the industry 
without solid bases, either one of them. I did not feel that 
either one was likely to do the job. That's why, in 1952, I 
wrote that article and said to the industry, "Gentlemen, in my 
opinion, the way to solve this imbalance between supply and 
demand, years of excessive surplus and depressed prices, and 
years of shortages and runaway high prices, is to have a 
permanent program applicable to all three branches of the 
industry, functioning under a state commission called the 
California Grape Commission." That was the name of it. Each of 
the three branches of the industry would function under that 
commission. There would be a subcommission for grapes entering 
fresh fruit channels, a subcommission for the grapes entering 
raisin channels, and a subcommission for grapes entering wine 
channels . 

Teiser: And brandy? 

Gomberg: Wine and brandy, yes, and concentrate and other products of the 
wine industry. Much to my regret, that proposal was not acted 
upon. So for the next approximately ten years, the industry 
struggled through continuing imbalances between supply and 
demand, until at the end of the 1950s there was a decision by a 
group in the Central Valley. That was while the Central Valley 
was still the predominant area of production of wine because the 
demand was predominantly for dessert wine made from Central 
Valley grapes. That was when such wines were still 70 to 
80 percent of the industry. 

In 1961, that segment of the industry decided on a federal 
marketing order. It was called the Marketing Order for Central 
California Grapes for Crushing. I didn't have anything to do 
with that order, but I do know it was in effect for two crop 
years, if memory serves me correctly. The purpose of that 
order was to try to assert some form of constraint on over 
production and provide for diversion of the surplus into non- 
normal channels. The surplus was actually diverted to various 



was voted out by referendum and discontinued after June 30, 1964. 



66 



products (dessert wine, brandy, and concentrate), and it did, to 
a limited degree, stabilize conditions a little better than they 
would have been without it. Some 475,000 tons of grapes were 
diverted in the two years the program lasted. 

It reminded me, in many ways, of the diversion plan under 
the prorate program back in the 1930s, which also called for the 
diversion of surplus. At any rate, the 1961 program under 
federal jurisdiction, as I say, lasted only two years, as I 
recall it, and was terminated. That was the last of any such 
stabilization efforts, to the best of my knowledge, by the 
industry. 

Teiser: One of the fruit marketing orders had a program, whenever there 
was a surplus looming, of getting some of the crop out of the 
way before it was harvested. A green drop program. 

Gomberg: My recollection is- -and it may be faulty- -that while that 
concept was debated and discussed, and may have been 
incorporated in one or more of the marketing programs- -that 
would be especially the one Marketing Order for Wine Processors -- 
it was never employed. Green drop was never actually done for 
grapes, to the best of my knowledge. 

Teiser: Would it be applicable today? 

Gomberg: I have reservations about that because grapes are a very dynamic 
product that can change from bad to good or good to bad during 
the growing season, so that if you were to have a green drop 
programwhich means cutting off the surplus which appeared at 
that time- -and then frost damage occurred and destroyed a good 
part of the crop, that would then create an artificial shortage. 
Also, it is not possible to accurately measure the size of a 
crop prior to actual harvesting, and so what might appear to be 
a surplus crop could turn out to be no surplus at all, and the 
green drop would simply have created an artificial scarcity. 
No, I don't think the green drop concept makes much sense 
because of the dynamics of grape growing. 

Teiser: If someone said to you today, "Outline for us a stabilization 
program,"-- 



*A voluntary green drop program was suggested under the federal 
Marketing Order for Central California Grapes for Crushing, but was not 
approved by the growers . 



67 



Gomberg: [laughs] I was in hopes that you would ask that question, 
because 1 have discussed my ideas of a sound stabilization 
program that, to me, make abundant economic sense for the 
industry, and at the same time abundant public sense as far as 
the impact on the consumer is concerned, for that reason is 
equally important. 

To my way of thinking, what the industry has needed, ever 
since it became evident that surpluses (normal) would be 
followed by a year or two of scarcities, which then would be 
followed by more surpluses; that since most years the industry 
would over-produce and a few years it would under-produce , and 
so on, and so on- -it seemed to me the logic of the situation 
called for- -and this goes back to my proposal of 1952- -a good, 
sound, continuing healthy balance between supply and demand, as 
best that relationship could be determined from available data. 
All intended to lower the peaks of price and raise the valleys 
of price-depressed surpluses. 

My thinking has gone in this direction, and I believe, 
unless I'm very much mistaken, someday the industry will come 
around to this way of conducting its affairs. There will be no 
prohibition against new plantings, for example. In France and 
Italy and other places where there have been grape surpluses, 
there have been laws prohibiting new plantings when the surplus 
has reached a certain level. I don't believe in that. 

What I believe in is an alternative to that. Let the 
grower plant all he or she chooses. However, each year a board 
in charge of activities of the industry, responsible to the 
people of the state, would determine what size of crop is needed 
to supply the fresh market, what supply is needed to supply the 
raisin market, and what supply of grapes is needed to supply the 
wine and related markets that include brandy and concentrate. 
Each grower would be given, in effect, a quota: "This is it." 
Based on past experience and present capability, each one would 
be given a quota, and the effect of that would be to discourage 
excessive overcropping and would also discourage overplanting. 
Because you can't prohibit overplanting, but you can say, "If 
you, Mr. Grower, have a quota of a thousand tons for the wine 
market, and you, as a result of overcropping and/or 
overplanting, now have 1,500 tons, you can grow those 1,500 
tons, all right, but instead of paying an assessment of a dollar 
a ton on each of the thousand tons that you are given 
authorization to produce, you pay $20 a ton, or $50 dollars a 
ton, or a hundred dollars a ton- -some enormous figure so the 
grower thinks twice before overcropping or overplanting. The 



68 



same principles would apply to grapes for the fresh market and 
for the raisin market, but each one would have its separate 
quota system. 

I think that method, someday, will come into use, because 
to me it makes the only sense that I can think of over control 
of production. Otherwise the growers will overcrop and they 
will overplant, or both, and the result is depressed market 
aga in - - ove r - supp ly . 

As far as the market end is concerned, the basic policy of 
the industry over the last fifty-plus years, since the repeal of 
Prohibition, has been at best an occasional public relations or 
promotional piece, and for a while advertising, which was 
discontinued way back in 1957, I think. There's been no 
industry advertising that I'm aware of, except a few medical 
journal ads, since 1957, and even then only for a short time. 

Instead of that kind of promotion, the industry has been in 
great need, in my opinion, of carefully researched studies to 
evaluate what will cause wine to become far more widely used in 
America than it is now and has been at any time since Repeal- - 
in fact, since the beginning, which goes back to the late 1700s, 
when the wine industry started- -not as a commercial industry, 
but by the Franciscan fathers who planted the original vineyards 
and made the wine mainly for sacramental purposes . 

My feeling is that there has never been, in all the years 
I've been in the wine industry- -this is now my 55th year- -a 
conscientious, creative, intelligent effort to seek the mass 
market in America, like the beer people have, for example. I 
think I reported what the Roper study revealed, that the average 
American thought wine was not a drink for Americans, but was a 
drink for rich people, foreigners, and bums. The situation is 
pretty much the same today, except the foreigners have 
disappeared, because there are no longer any Western European 
immigrants in big numbers, as there had been in the 1800s and 
early 1900s. 

Consequently, the great mass American market has never been 
approached, let alone tapped, by our industry. There is 
desperate need to go after that market. That's where my idea of 
U.S.A. Brand All -American Red, White, and Blue wines comes in. 
That's not necessarily the best answer or the only answer, but 



*-And for their own tables. 



69 



it's an approach that I think is desperately needed: go after 
the mass market. We've never done it. 




Gary Heck, Adolph Heck, and Louis Gomberg at the 100th anniversary celebratic 
of the Hecks' Korbel Champagne Cellers, 1982. 



70 



RECENT MARKET FACTORS 



Causes of Decline in Consumption 



Teiser: At present there is some impact of anti- alcohol movements on the 
market. We talked about the decline in wine consumption- -do you 
think they're a major factor in that? 

Gomberg: Yes. Not the only factor, but a major factor. There have been 
other reasons, too. 

Teiser: What are the others? 

Gomberg: For example, wine coolers have declined substantially in volume, 
in my judgment primarily because a good part of the wine cooler 
market was illegal --in other words, consumption by persons under 
the age of twenty-one, which is the minimum age in most states. 
Parents and others got after them and caused them to stop or 
reduce their consumption. That's one reason for the decline. 

Another reason for the decline is that a substantial part 
of the increase in consumption of wine in the 1960s and 1970s 
and up to the early 1980s was a result of the use of wine, to a 
large degree, by women as a replacement for spirits beverages as 
a before-meals , especially evening meals, appetizer beverage. I 
think, to some degree, that market has declined because, like so 
many things that have happened in the wine industry, there have 
been periods of rises followed by periods of falls, and I think 
that market was over-sold, so to speak. The demand for a time 
was far in excess of what would become stabilized as a normal 
market. So that, too, helps to explain in part the decline in 
wine demand. 



71 



Teiser: 



Gomberg: 



And then it is true, to some degree, that part of the 
reason for the decline is a shift by consumers from what are 
called jug wines to premium-priced wines, and in so doing 
causing a decrease in the volume consumed. Why? Because a 
small number of dollars would buy a substantial -volume container 
of so-called jug wine, whereas those same dollars would buy a 
much smaller bottle of premium-priced wine. That's another 
reason for the volume decline. Interestingly, despite the 
volume decline, dollar revenues from sales reached an all-time 
high in 1989. 

Maybe some people got tired, as I did, of going to receptions 
and being served poor white wine. 

There no doubt has been some of that, but I'm not inclined to 
think of it as a matter of wine quality, because it's been my 
observation- -and, of course, I'm prejudicedthat very little 
undrinkable California wine has been produced in the last twenty 
or thirty years; very little, because of the remarkable advances 
in wine quality technology, especially by the University of 
California at Davis. 



Foreign Interests in The California Wine Industry 



Teiser: I wanted to ask about foreign ownership. I read an interview 

with you, fairly recent, in which you said that we'd always had 
foreign ownership. You brought up people of German birth, the 
French de Latours, and so forth- -the foreign-born people who 
started wineries here, which, of course, is true. On the other 
hand, in recent years there's been investment by absentee 
owners, which is quite a different thing. 

Gomberg: Yes, that's true. However, taken in the total context of all 

ownerships, all volumes of wineries, the number of foreign- 

owned wineries in relation to the number of wineries owned by 
Americans is still relatively small. 



Gomberg: The great preponderance of the industry's volume today- -and I'm 
speaking now not just of the California wine industry, but the 



the Santa Rosa Business Journal. Special Supplement, October 1989. 



72 



wine industries of all other states --is represented by the 
E & J Gallo Winery. If you take the next several wineries in 
size after E & J Gallo, you find that while number two happens 
to be Grand Metropolitan of London, it takes Grand 
Metropolitan's volume plus the volume of ten more wineries 
combined just to equal the Gallo volume. Of those ten more 
wineries, off the top of my head I can't think of any of them 
that is foreign- owned. Grand Metropolitan isn't even one third 
the size of Gallo. 

Number three is Vintners International. You could argue 
about that and say, "Well, Seagram did own it, and Seagram is a 
Canadian corporation." Yes, you could argue that, but after 
that you have The Wine Group and- -I've got to stop and think, 
because there have been so many changes. 

Teiser: But foreign interests in the aggregate- - 

Gomberg: The aggregate is still small in volume. We're talking about 

volume now. You could argue and say, "Maybe in gallonage volume 
they're small, but how about dollar volume?" I would have to 
concede that, yes, in dollar volume they are bigger than they 
are in gallonage volume because practically all of the foreign- 
owned wineries are in the higher-priced premium-wine brackets. 
None of them is solely in the low-priced bracket. That's true. 

Teiser: Do you see more foreign investment coming in? 

Gomberg: Yes. I believe that it will continue to do so as long as 

California maintains its reputation for quality excellence, and 
the economy of the industry remains sound at the premium level. 
As long as the premium-priced level continues to hold its 
strength, so to speak. That segment of the industry was growing 
at the rate of close to 20 percent per year for about ten years , 
and last year it dropped down to, I think, 6 percent growth; but 
it was still growth. 

And, by the way, if you have no figures on this, my 
associate successor, Jon Fredrikson, has developed some dollar 
sales volume numbers of California premium wines and all other 
California wines. For the first time in history, I believe, he 
found that in 1989 California premium wine sales dollar volume 
exceeded that of all the rest of the industry, even though in 
numbers of gallons and cases the premium segment represents only 
about 25 percent of the totals. 



73 



Teiser: For the long run, then, it looks as if the premium segment is 
okay. 

Gomberg: Yes, it's healthy and has been growing steadily over the last 
ten to twenty years . 



Imports 



Gomberg: The import segment I don't think we've mentioned. The import 
segment has undergone drastic losses. They were growing at an 
incredible rate, there, in the seventies and up to the middle 
eighties, and reached a level, if memory serves me correctly, of 
somewhere in the neighborhood of 140 million gallons at their 
peak in 1984 (142.4 millions, to be exact). The proportion of 
total import volume of all wines consumed in America that year 
was in excess of 25 percent. That imports volume has now 
dropped from over 140 million to less than 80 million- -a drastic 
loss. And in percentage of industry total, imports' share has 
gone from over 25 percent down to about 16 percent. 

That decline, in my judgment, occurred primarily as a 
result of three developments. One was a scandalous situation 
that pertained to Austrian wines, as I recall, injuring both 
German and Austrian shipments into this country. Then there was 
another scandal involving Italian wines that deeply and 
adversely affected shipments of Italian wine into the United 
States following that disclosure. The third reason was the 
reduced purchasing power of the dollar, calling for more money 
to be paid for these imports in terms of American dollars . The 
combination of those three things was responsible primarily for 
the drop in imports, I believe. 

I remember some years ago, when imports were rising from 15 
to 18 percent of the total market, then 18 to 21 percent, 21 to 
24 percent, and finally 24 to 26 percent, headed apparently for 
30 percent. I gave a talk to an industry group, in which I 
said, "At the rate they're growing now, they're heading for 
about 40 percent of the total U.S. market, maybe more." But 
little did I dream or know, at that time, of these scandals that 
would cause severe drops in imports, plus of course the 
decreased purchasing power of the dollar. 



74 



Prices and Demand 



Teiser : 



Gomberg: 



In the meantime, the prices of our wines have shot up. 
not so? 



Is that 



Teiser: 



Gomberg: 



Teiser: 



Gomberg: 



Yes. The comparatively high prices for California premium wines 
in the past five years or so can be attributed to a combination 
of things. One, of course, is increased demand at the consumer 
level, which has been growing steadily, as I mentioned earlier. 
For a time, the average annual increase was around 20 percent 
over a ten-year span. Even though the increase dropped down to 
about a 6 percent gain last year, it was still growing. Also, 
the cost of raw materials- -grapes- -used in the production of 
most of these premium and other higher-priced wines had risen 
substantially, from an average of about $350 a ton in the mid- 
1970s (fifteen years ago) to an average in 1989 of over $900 a 
ton- -more than a 250 percent increase. 

If the wineries had objected strongly enough, wouldn't the price 
of grapes have stayed down? 

No, I don't think so. You say if the wineries had objected; 
well, if the market was demanding they produce a certain 
quantity from a certain variety of grape, they're not going to 
say, "Mr. Grower, I'm not going to pay your price, even though 
I've got a market for the product." It's been a supply and 
demand situation all along. I'm not talking about all grapes 
crushed in California, the average price of which includes 
predominantly grapes grown in the Central Valley where price 
averages are far below those of the coastal counties. It's just 
the North Coast grape price average that has risen 
substantially. So, as I've stated, market demand requires that 
you must pay the market price for raw materials, whatever it 
might be, or go out of business. 

The retail price of economy-priced wine, for instance, has 
grown , too . 

Yes, but not to anywhere near the extent of premiums. I assume 
you also meant popular-priced wines, where the preponderant 
volume still prevails. You can still buy wines of that quality 
and price range at levels comparatively far less higher than the 
increase in prices of premium -quality wines from premium grapes. 
I haven't done an arithmetic analysis of that, but I would say, 
judging from what I observe, I see bargain prices, now, of wines 
in four-liter containers, which is a super- jug size, equivalent 



75 



to less than a dollar a bottle. Even in the severely depressed 
times of the past twenty- five years, a bottle would still bring 
anywhere from fifty to seventy- five cents, so comparatively 
speaking, the price of these economy and popular -priced wines in 
larger sized containers today is still relatively low. 

Teiser: If they kept that price down even lower, would that increase 
their share of the market? 

Gomberg: Not in my opinion, because, you see, the studies that have been 
made of the markets for wine in this country, to oversimplify, 
consist of these demographics, looked at purely from the 
standpoint of education, income, and societal status. The 
latest study that I saw showed that about 85 percent of the 
market for wine in this country I'm talking about table wines, 
now, not about dessert wines --is accounted for by only about 
15 percent of the adult population, which I call the elitist and 
semi-elitist trade. 

The great mass of the population, excluding the elitist and 
semi-elitist trade- -and, by the way, by elitist and semi-elitist 
is meant above -average income, above -average education, and 
above-average societal awareness and consciousness- -in other 
words ,. the other 85 percent of the population consists roughly 
of about one -third drys who will never touch wine or any other 
product containing ethanol; and the other two -thirds enjoy beer, 
perhaps, and some spirits, but almost never any wine. In 
numbers, that segment of the population, by my best estimate, 
comes close to about 100 million people. So we have a great 
untouched mass audience yet to be reached by wine. 

Teiser: What percentage of the volume of wine is in Skid Row wines? 

Gomberg: My best estimate is this, looking at the whole picture: at its 
peak, the market for wines over 14 percent ethanol reached about 
108 million gallons. That was in the mid 1950s. At that time I 
estimated that the so-called Skid Row trade accounted for not 
more than about one-third of that 100 plus million gallons. The 
other two- thirds consisted of the great mass of the people who 
had a glass or two of port occasionally, or of sherry 
occasionally, et cetera. But about one -third of it was consumed 
by a small segment of the American public, consisting of the 
unfortunates occupying so-called Skid Row. 

That 108 million has dwindled to a little over 50 million, 
about half that market having disappeared. So the question now 
is, of this remaining 50 million, how much of it is the so- 




Louis R. Gomberg at his desk, 1973. 



Photograph by Wines & V- 



76 



Teiser: 



Gomberg: 



called Skid Row trade, and how much of it is the legitimate, 
normal trade? Again, no one has measured it exactly. My best 
judgment is that it probably now represents something more than 
one-third of the market, which it did when it was 108 million. 
My guess is that it's probably close to 40 percent, but 
certainly no more than 50 percent. The balance is still 
consumed by the average American as a temperate, healthy 
beverage . 



That 40 to 50 percent, I suppose, 
enough social pressure on it. 



could go down if there is 



That is the theoretical reasoning. My pragmatic reasoning tells 
me that while it may go down, it will probably come back again, 
for a very simple reason: it's the cheapest form of ethanol 
(notice I don't call it alcohol), and if they can't buy it on 
Skid Row, they'll find somebody to move to another part of the 
locality and pick up a case and bring it to Skid Row. In other 
words, they'll still get it somehow. I don't think it will 
materially reduce the quantity consumed. 

The regrettable fact of life, in my opinion, is that this 
whole attempt to reduce the abuse (and that's what it is) of 
these wines by this so-called Skid Row trade will never be 
solved by trying to prevent them from having access to the 
product. The problem is a societal one. Our society creates 
conditions, not willfully, but allows conditions to develop that 
cause these poor unfortunates to exist. The solution to that 
problem and the abuse of wines used by them is to eventually 
reduce and eliminate that branch of society. 



Anti-Alcohol Movements^/ 



Teiser: Do you think they're here to stay, all these efforts to cut down 
alcohol consumption and equate it with drugs? 

Gomberg: The so-called temperance movement is a misnomer, as you know. 

Prohibition is the proper term; they seek not temperance but the 
return of prohibition, just as they would like to prohibit 
drugs, too. I think there is justification for prohibition with 
drugs, because I don't know of any favorable social use to which 
drugs are put- -I'm talking about heroine, cocaine, crack, and 
some of these other drugs . 



77 



Teiser: Do you see any future decline in the anti -alcohol sentiments 
from the various reformist groups? 

Gomberg: No. I think that, based upon what reading I've done, the so- 
called anti-alcohol movement has been with us for at least 150 
years. It's of interest to know, in case no one has mentioned 
it yet in any of these taped recordings, it's my understanding 
that thirty-two states out of the forty-eight were already bone 
dry before national Prohibition in 1918. 

Teiser: These movements come up and go down, as shown by the repeal of 
Prohibition. 

Gomberg: I wouldn't put it in that context. No, here's how I'd put it: 
Prohibition came into being largely because groups of people- - 
one was called the Women's Christian Temperance Union, and the 
other was called the Anti-Saloon League- -pursued a crusade. 
They made a career out of bringing about Prohibition on the 
grounds that all forms of beverages containing ethanol were 
evil, not only from a societal standpoint, but from a religious 
standpoint, too, and should be prohibited. That was never true, 
it isn't true now, and it never will be true, because some, as 
you know, of the greatest figures of history have praised the 
use of wine in moderation as a major contributing factor in an 
enriched and fulfilling life. 

Now, whether that's also applicable to beer and spirits, 
I'm not prepared to say; I haven't read any studies in those 
fields. But as far as wine is concerned, when Thomas Jefferson 
praised wine, as he did abundantly; when Socrates praised wine, 
as he did abundantly; when Louis Pasteur praised wine as the 
greatest beverage, et cetera, et cetera, et cetera. These were 
not crazy people, these were not wild people; these were 
perfectly sane, highly cultivated people who recognized the 
value of wine as a beverage of moderation. 

Teiser: What brought about, then, lessening of prohibitionist fervor? 

Gomberg: That led to Repeal? There was no let-up, up until the time of 

the enactment of the Eighteenth Amendment. That was the peak of 
their achievement in this country. I lived through the 
Eighteenth Amendment, so I have personal knowledge of what went 
on. The great preponderance of people in this country obviously 
considered Prohibition a regrettable joke. There was no way to 
enforce it. Speakeasies were to be found in every city in the 
country, bootleggers were to be found in every city in the 
country, with people using mostly spirits, because very little 



78 



vine was produced for sale , but a tremendous amount was produced 
for home consumption. 

The dry movement reached its peak with the passage of the 
Eighteenth Amendment, but because of the fact that from a 
practical standpoint it didn't work, people found numerous ways 
of cheating and defying the law, and this was true all over the 
country. Prohibition created the Al Capones and goodness knows 
how many other despicable violators of the law. The net result 
was that by the early thirties it was the consensus of most 
rational people that the drys had had it; Prohibition didn't 
work, so let's get rid of it. As you know, President Roosevelt 
ran on a repeal platform, and within a very short time- -in fact, 
within the month upon taking office in March 1933- -Congress 
itself repealed the Eighteenth Amendment in part by legalizing 
beer and wine containing not to exceed 3.2 percent alcohol by 
weight (4 percent by volume) . That was just nine months before 
the Twenty-First Amendment was adopted, repealing the Eighteenth 
Amendment . 

Now, you wonder about the dry movement. As a result of 
that repeal effort, the drys took cover and did not assert 
themselves for some time. We're talking now about a period 
starting with the early thirties and ending, I would say, with 
the late seventies. It wasn't until the late seventies that we 
began to see evidence of the drys at work again, trying to bring 
back Prohibition. We now call them neo-prohibitionists . 

Teiser: This time, however, they are different groups. 

Gomberg: Yes, it's taken a different form than it did in the days prior 

to and during Prohibition. It's no longer the Women's Christian 
Temperance Union, although that still exists, I'm told. The 
Anti- Saloon League long ago passed out of existence. But there 
are now all kinds of organizations. One, for example, is called 
Center for Science in the Public Interest, the promoter of 
which, a gentleman named Michael Jacobson, says, "I'm not in 
favor of prohibition; I just want abuse stopped." Well, if he 
was honest about it, he would go after the causes of abuse, not 
the results of abuse. The causes of abuse have nothing 
whatsoever to do with the product, any more than the causes of 
55,000 people killed on the highways each year are traceable to 
automobiles. You don't hold the automobile to blame for it; you 
hold the driver of the automobile responsible. Similarly, the 
fault is not the product. The fault is society's failure to 
take affirmative action to preclude abuse of the product. 



79 



Teiser: Someone asked me not long ago what were the main forces behind 
Prohibition, and I said women and churches. 

Comber g: That's correct. 

Teiser: Neither of which is very evident now, except Mothers Against 
Drunk Driving. 

Gomberg: Well, yes. Everybody's against drunk driving. It shouldn't be 
limited to mothers; it should be human beings against drunk 
driving. 



80 



HONORS FROM WINE ORGANIZATIONS 



Teiser: 



Gomberg: 



I know you've been active in wine-related organizations, 
are some of them? 



What 



Teiser: 
Gomberg: 

Teiser: 
Gomberg: 



I have, for reasons unknown, been cited by the Society of Wine 
Educators, California Association of Wine Grape Growers, 
Brotherhood of the Knights of the Vine, and quite a number of 
others, including "Wine Man of the Year," awarded in 1984 by 
Wines & Vines . the highly respected wine industry trade journal. 

As being an outstanding wine person, I suppose? 

Yes, as a contributor to the, let's say, heightened acceptance 
of wine as an enjoyable factor in enriched living in this 
country . 

What do you think the importance is of such organizations? 

I consider them all important contributors to a fuller life. 
The Brotherhood of the Knights of the Vine is an international 
organization of wine consumers. The Society of Wine Educators 
is an organization of largely professional people who are 
knowledgeable about wine and are able to address the subject of 
wine and its intelligent, civilized, moderate use in educational 
circles- -colleges, universities, publishers, trade 
organizations, business conferences, and that sort of thing. 
The California Association of Wine Grape Growers is an 
association of growers here in California, and they have a 
definite role in the future growth and development of 
agriculture and the wine industry, since it's their product that 
provides the basis for wine production. The Wines & Vines 
symposia contribute immeasurably to a better understanding of 
the wine industry and its role in society. 



81 



Teiser: Do you think these various organizations together, including 
wine and food societies and so forth, have much impact on 
consumers? 

Gomberg: The word impact, of course, is imprecise, so it's hard to 
respond to that except to say that in the aggregate, in my 
opinion, they do influence public understanding of wine and its 
civilized use. But not as a result of their collective, unified 
action; there is no such unification, to the best of my 
knowledge . 

Teiser: Do they increase consumption? 

Gomberg: I would say they are certainly factors in the increased 

consumption of premium wines in the past ten or fifteen years. 
They have not impacted to any noticeable degree, however, upon 
the other segment of the industry, the so-called popular-priced 
and economy-priced wines, which are still in their earliest 
infancy in the U.S. 



82 



MAJOR POST-REPEAL MARKET DEVELOPMENTS: A SUMMARY 



Gomberg: I think I may have said this before here: There have been three 
major developments in the wine industry of this country since 
the repeal of Prohibition. The first development was the 
stunning growth of dessert wines. The runaway growth began in 
the first year of Repeal, 1934, and continued to its peak, which 
I believe was reached in 1955, twenty-one years later. The 
industry had little to do with promoting the development of that 
market because, as I mentioned earlier, it consisted, to a 
substantial degree, of product abuse by the unfortunates on Skid 
Row. However, that market did grow, and it was also a popular 
beverage among a segment of the masses, but to a very limited 
degree because they consumed relatively little per capita. 
Table wines were almost unknown to the average person in those 
days . 

In the mid- fifties we began to see the results of the 
second major growth development in the wine industry of this 
country: table wines. That development is what I call the 
affluent society growth period. Here's what happened. After 
World War II, travel to Europe increased tremendously. Millions 
of people, many of them schoolteachers, visited Europe, and many 
came back as wine converts, starting the ball rolling toward 
increased consumption of table wine. Prior to the mid- fifties, 
table wine consumption in the United States was quite flat and 
nominal. It began to expand about 1955 for the reason just 
stated, and grew from a base of about 35 million gallons a year 
between 1948 and 1955, to a maximum average peak in 1982-1984 of 
400 million gallons. Now, that's massive growth. 

The third major development since the repeal of Prohibition 
is a heterogeneous group I call specialty wines. The giant in 
this category has been wine coolers, which peaked at 122 million 
in 1987. Another but much smaller one has been pop wines, which 
grew to a peak of around 50-plus million gallons in the early 



83 



seventies. Sangria, Cold Duck, and Lambrusco were other 
outstanding examples of this category, but on relatively small 
volume levels. These are all specialty wines; they're not 
traditional table wines and they're not dessert wines. In the 
aggregate, they represent a significant portion of the total 
wine market, however. 

Almost all of these specialty wines have had sharp volume 
increases, followed by market flatness and then declines. In 
the aggregate of these wines today, the great preponderance of 
the volume that's still left, after reaching a peak of over 
120 million gallons, is wine coolers. (In total, coolers are 
still close to 85 million gallons.) The Sangrias are way down, 
the Cold Ducks are way down, the Lambruscos are way down, and so 
are most of the others. Exceptions are believed to be 
Thunderbird, Richards Wild Irish Rose, and Night Train Express. 

Those three groups- -dessert , table, and specialty wines- 
have been the three major growth categories that I've observed. 
I don't know if that's ever been written anywhere, and it may be 
that others will have different points of view, but that's the 
way I perceive it. 

Teiser: What's next? 

Gomberg: According to the best estimate and judgment of my successor, Jon 
Fredrikson, total wine sales in the United States in 1990 will 
be almost 100 million gallons less than it was at its peak in 
1986. That's a drop of close to 20 percent, enormous in a 
period of five years, when most of us were looking forward to 
continued growth at a rate of at least 3 percent per year- -the 
prevailing average for over fifty years. That's shocking. The 
question is, "Now what's going to happen?" Nobody knows. The 
premiums, as I mentioned earlier, have more than held their own; 
in fact, have shown marked growth despite the drop overall. In 
my opinion the big drop in all three fields --dessert wines, non- 
premium table wines, and specialty wines- -has about reached its 
lowest level, unless the drys are successful in their neo- 
prohibition efforts beyond anything they have achieved up to 
now. I am in hopes that the industry, as I said earlier, will 
adopt a program of some kind to restore this 100-million-gallon 
loss that we've suffered now in the past four years, and in 
addition to that start building again for the future so that we 
show some growth each year, instead of the declines that we have 
seen in the recent past. 



Teiser : 



84 



It's all very discouraging to those of us who have been 
conditioned to think in terms of annual growth, as I have. 
Because during the first fifty years of my lifetime career in 
the industry, up until the mid-eighties, every year showed some 
growth. Well, once in a while it was flat, or may have been 
down slightly and temporarily, but except for those occasions it 
was up, up, up, year after year. 

One of the things we have to do, in my opinion, is to 
address the problem of wine semantics, both intelligently and 
aggressively. By wine semantics, I mean doing something to 
counteract and eventually to limit, if not to prohibit, such 
terms as "drunken," "drinking," "intoxication," "booze," 
"alcohol," "alcoholic," "drugs," et cetera, as all applied to 
wine- -all the evil connotations that the drys have succeeded in 
identifying with wine, plus, of course, beer and spirits. The 
wine industry has done virtually nothing in that direction. 
There's great need for a pro- semantic counterattack. 

I'm very grateful to you for putting all this thought into the 
interview. I hope I haven't worn you out. 



Gomberg: Oh, no, I'm just beginning! 



Transcriber and final typist: Judy Smith 



85 



TAPE GUIDE -- Louis R. Gomberg 



Interview 1: February 14, 1990 
tape 1, side a 
tape 1, side b 
tape 2, side a 
tape 2, side b not recorded 

Interview 2: February 19, 1990 
tape 3, side a 
tape 3, side b 
tape 4, side a 
tape 4, side b 

Interview 3: February 22, 1990 
tape 5, side a 
tape 5, side b 
tape 6, side a 
tape 6, side b not recorded 



1 
1 

14 
24 



31 

31 
39 
47 
54 

60 
60 
71 
76 



86 



INDEX Louis R. Gomberg 



Adams, Leon D. , 5-8, 19, 51 
Allied Grape Growers, 20, 57- 

58 

Almaden Vineyards, 20, 33, 35, 38 
Angelo Petri Signature brand, 

50-51 

Anti-Saloon League, 77, 78 
anti-trust action, 46-48 
Arakelian family, 49 



Bank of America, 47 

Beatrice Foods, 46 

Beaulieu Vineyard, 39 

Bel Arbors brand, 35 

Beringer Vineyards, 33, 35 

Bisceglia [Brothers] brand, 33, 42 

bottlers, 49 See also bulk wine 

brandy, 8, 12, 14 , 33 
Bronco, J F J, Winery, 34 
Brotherhood of Knights of the 

Vine, 80 
bulk wine, 14-17, 33, 34, 42- 

43, 48-50 



Caddow, Harry, 6, 45-46 
California Association of Wine 

Grape Growers, 80 
California Wine Commission, 25, 

59-60 
California Wine Grape Commission, 

25 
Canandaigua Wine Company, 33, 

39-41, 43 

Carlo Rossi brand, 33 
Center for Science in the Public 

Interest, 78 
Chateau Martin brand, 49 
Christian Brothers winery, 36- 

37, 39, 43 
Ciocca, Arthur, 37 
Cliff, Michael, 38 
Coca Cola Bottling Company, 
Atlanta, 37, 46 



Coca Cola Bottling Company, New 

York, 37 

Colonial Grape Products, 16 
Concannon family, 52-53 
Cresta Blanca winery and brand, 

50 

Cribari brand, 33 
Cup and the Sword. 54 



Daniel, John, Jr. , 52 
de Latour, Georges, 54 
de Latour family, 52 
dealer service program, 23 
Delicate Vineyards, 34 
dessert wines, 8-9, 17, 18- 19, 
40, 48, 75, 82 



Federal Grape Control Program, 

11 

Federal Trade Commission, 46 
Fetzer Vineyards, 35 
Fisher, Mary Frances Kennedy, 

56 

fortified wines. See dessert wines 
Franz ia brand, 34, 37 
Fredrikson, Jon, 41, 72, 83 
Fromm, Alfred, 37 
Fromra & Sichel, 36-37, 43 
Fruit Industries, Ltd., 33, 42 



Gallo, Ernest, 44-46 

Gallo, E. & J. Winery, 32, 33, 

39, 40, 43, 44-46, 72 
Gambarelli & Davitto, 20 
Geyser Peak Winery, 33-34 
Giannini Foundation, 58 
Gibson Wine Company, 16, 42 
Gold Seal brand, 37-38 
Gold Seal Vineyards, 38 
Gomberg, Louis R. , 

career as consultant, 30-31, 54- 
63 



87 



career as journalist, 3-4, 
6 

career as lawyer, 3 

career as pianist, 1, 2 

education, 1-3 

at Wine Institute, 5-6, 7- 

8, 30, 45-48 

Grand Metropolitan PLC, 20, 39, 72 
grape concentrate , 33 
Great Western brand, 37-38 
Guild Wineries and Distilleries, 

20, 32, 33, 42 



Heublein Inc., 20, 35, 38, 39, 

57-58, 61, 62 
high-proof. See brandy 
Hiram Walker, Inc. , 19 
Hobart, Alice Tisdale, 54 
Hudson, Rock, 55 



Inglenook winery, 34, 35, 39, 

57 
Italian Swiss Colony winery and 

brand, 19, 20, 32, 42, 
43, 49, 51 



Jacobson, Michael, 78 
jug (popular-priced) wines, 31- 
35, 39-42, 74-75, 81 



Le Domaine label, 35 

lobbying, 23 

Los Hermanos brand, 33, 35 



Marketing Order for Grape 
Stabilization, 13, 63-64, 

65 

Marketing Order for Central 
California Grapes for 
Crushing, 65-66 

marketing order for wine, 1938. See 

Wine Advisory Board 
Marketing Order for Wine 

Processors, 13, 64, 65, 66 



marketing orders, 10, 12-13, 
22-25, 27, 63-68 See also 
Wine Advisory Board, 
Winegrowers of 

California 
Martin, John, 58 
Masson, Paul, 52 
Melody Hill bottlers, 44 
Mirassou family, 53 
Mission Bell brand, 42, 49 
Mogen David brand, 34, 37, 43 
Mondavi, C. K. , brand, 33 
Mondavi, Robert, 53 
Mondavi, Robert, Woodbridge 
winery, 33 
Mondavi family, 53 
Monterey Vineyard, 20, 38 
Mothers Against Drunk Driving, 
79 



National Distillers, 19, 20, 

38, 39, 43 

Navalle brand, 34, 35 
Nestle SA, 46 



Office of Price Administration 
(OPA), 14-15, 42, 45, 50 



Paul Masson winery, 20, 36- 38 
Petri, Louis, 31, 50, 57-58, 

62 
Petri Wine Company and brand, 

20, 31, 32, 42, 49, 57 
Peyser, Jefferson E. , 6 
Pillsbury Mills, 46 
PIO bottlers, 44 
pop wines, 82-83 
premium wines, 50-51, 72-73 and 

passim 

Prohibition, 10-11, 36, 77- 79 
prorate, 9, 12, 66 



raisins, 16-17 
Ray, Martin, 36 
Reynolds, R. J. , 20, 39 
Robinson, Casey, 55 



88 



Roma Wine Company and brand, 

32, 42, 43, 49, 50 
Rothschild family, 52 



Sanger Winery Association, 16 
Schenley Industries, 19, 20, 

43, 50 

Schlem, Paul, 38 

Seagram, 19, 20, 36-37, 38, 43, 72 
set-aside program, 1961, 12- 13 
Shewan- Jones winery, 19, 20 
Society of Wine Educators, 80 
special natural wines, 18, 40 
stabilization programs, 59-60, 

63-68 See also marketing 

orders . 
State Board of Equalization, 

59 

Sterling Vineyards, 20, 38 
Story of Wine in California. 

56 

Stuertz, Mark, 7 
Summit brand, 34 



table wines, 82 and passim 

Tapp, Jesse, 47 

Taylor California Cellars, 20, 

37-38 

Taylor Wine Co. , 37, 38 
Technical Advisory Committee, 

Wine Institute, 30 
Thompson, J . Walter, advertising 

program, 22, 23 
tie-in sales, 19 
Tribune brand, 34, 37 
20/20 brand, 34 



Warren, Walter, 5 

Wente family, 52 

Whiteley, Frank, 7, 8 

Wild, Mount K. . 47 

Wine Advisory Board, 10, 22- 24 

wine coolers, 29, 70, 82, 83 

Wine Group, The, 34, 37, 72 

Wine Institute, 23, 46, 54, 58 

wine market, United States. Passim 

Winegrowers of California, 24 

Wines & Vines. 59, 80 
Women's Christian Temperance Union, 

77, 78 



Yavno, Max, 56 



Wines mentioned in the Interview 

angelica, 9, 18 

Cold Duck, 83 

Grenache Rose, 35 

Hearty Burgundy, 32 

Lambrusco, 83 

madeira, 40 

marsala, 40 

muscatel, 9, 18, 40 

Night Train Express, 40, 83 

Night Train, 40 

Pink Chablis, 32 

port, 9, 18, 40 

Richards Wild Irish Rose, 40, 83 

Sangria, 83 

sherry, 9, 18, 40 

Thunderbird, 40, 83 

tokay, 18, 40 

white port, 9, 18, 40 



U.S.A. Brand All-American label 
proposal, 28, 31-32, 68-69 

United Vintners, 20, 35, 57- 58, 
61-62 



Vintners International Company, 
Inc. , 20, 38, 72 



Ruth Teiser 



Born in Portland, Oregon; came to the Bay 

Area in 1932 and has lived here ever since. 
Stanford University, B.A., M.A. in English; 

further graduate work in Western history. 
Newspaper and magazine writer in San Francisco 

since 1943, writing on local history and 

business and social life of the Bay Area. 
Book reviewer for the San Francisco Chronicle, 

1943-1974. 
Co-author of Winemaking in California, a 

history, 1982. 
An interviewer-editor in the Regional Oral 

History Office since 1965. 



o 82 



U. C. BERKELEY LIBRARIES