Full text of "The Petri family in the wine industry : oral history transcript / and related material, 1969-1971"

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University of California Berkeley

University of California Bancroft Library/Berkeley

Regional Oral History Office

Louis A. Petri

THE PETRI FAMILY IN THE WINE INDUSTRY

With an Introduction by
Maynard A. Amerine

An Interview Conducted by
Ruth Telser

1971 by The Regents of the University of California

Louis A. Petrl
1953

All uses of this manuscript are covered by a
legal agreement between the Regents of the University
of California and Louis Petri, dated 2? August, 1971.
The manuscriot is thereby made available for research
purposes. All literary rights in the manuscript,
including thf right to publish, are reserved to The
Bancroft Library of the University of California at
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 at Berkeley.

Requests for permission to quote for publication
should be addressed to the Regional Oral History Office,
US6 Library, and should include identification of the
specific passages to be quoted, anticipated use of the
passages, and identification of the user. The "egal
agreement with Louis Petri requires that he be
notified of the request and allowed thirty days in
which to resoond.

TABLE OP CONTENTS Louis A. Petri

PHEFACE i

INTRODUCTION ill

INTERVIEW HISTORY v

THE PETRI FAMILY 1

PROHIBITION YEARS 6

EARLY POST REPEAL YEARS 8

FROM BULK TO BOTTLED WINES 13

ACQUISITIONS AND THE CREATION OF ALLIED GRAPE GROWERS 1?

ACQUISITION OF ITALIAN SWISS COLONY 21

THE WINE TANKER ANGELO PETRI 26

THE SALE TO ALLIED AND OTHER VENTURES 29

WINE MARKETING PATTERNS AND COMPANY STRUCTURES 33

THE BUYING AND SELLING OF PROPERTIES 35

NATIONAL CORPORATIONS AND PREMIUM WINERIES 4l

STABILIZATION AND THE BANK OF AMERICA ^3

INDUSTRY ORGANIZATIONS AND ECONOMICS 46

ACQUISITIONS BY HEUBLEIN 48

CURRENT AND FUTURE MARKET TRENDS 51

APPENDIX A Summary of Interview with Dante Forest 1 53

APPENDIX B
APPENDIX C

APPENDIX D

Petri Wine Company and Affiliates

United Vintners, Inc. (from Heublein Inc.
Annual Report, 1969)

Corporations (from Time. Vol. 6l, April,
1953)

55
61
62

INDEX

(For Wines and Grapes see page 6?)

PREFACE

The California Wine Industry Oral History Series, a
project of the Regional Oral History Office, was initiated
in 1969, the year noted as the bicentenary of continuous
wine making in this state. It was undertaken through the
action and with the financing of the Wine Advisory Board,
and under the direction of University of California faculty
and staff advisors at Berkeley and Davis.

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 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 .

Three master indices for the entire series are being
prepared, one of general subjects, one of wines, one of
grapes by variety. These will be available to researchers
at the conclusion of the series in the Regional Oral History
Office and at the library of the Wine Institute.

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 Willa K. Baum and is under the
administrative supervision of James D. Hart, the Director
of The Bancroft Library.

Ruth Teiser
Project Director
California Wine Industry
Oral History Series

1 March 1971

Regional Oral History Office
4-86 The Bancroft Library
University of California, Berkeley

ill

INTRODUCTION

For Horatio Alger stories, it is hard to beat that of Louis
Petri. Taking over from his father he built the Petri Wine
Company (finally United Vintners) into a gigantic California
wine producer. Here he tells the story frankly and generally
quite accurately.

Petri *s memory is surprisingly good for many details. His
slips are minor and not critical. He is, for example, correct,
I believe, in recommending the development of "fanciful" names.
Paul Kasson s was "Emerald Dry" not "Emerald Green" and it
wasn f t entirely "fanciful" since the grape variety from which
it is produced is called "Emerald Riesling."

Petri emphasizes his early training in chemistry.
Obviously this was of great assistance to the company when
they finally went into the wine bottling business.

History will probably evaluate Petri *s observations on
the influence of U.S. and state laws on wine mergers as highly
significant. Probably the account of his formation of Allied
Grape Growers and of the acquisition of Italian-Swiss Colony
are the most important. The denouement of this story led
eventually to the present Allied Grape Grower-United Vintner
(Heublein) arrangement. How much it benefits the grower is a
good question that history will soon answer. It is interesting
to have Petri *s acknowledgement that eventually 56 members of
his family were involved in his business

The concept and philosophy behind the wine tanker Angelo
Petri is ample evidence of his willingness to gamble. The
decrease in railroad rates on wine subsequently is ample
evidence of the effect of the Angelo Petri.

One minor question. This writer doesn t know what created
the 1956-1970 interest in table wines except consumer Interest.
Whether the interest In table wines in this period was due
to sick-to-death attitude towards young dessert wines or to
increasing quality of California table wines is a question
for historians.

Petri states, at least twice, that he thinks the
acquisition of small wineries by large companies will be
advantageous to the maintenance of wine quality. One hopes
so. Finally, we have Petri f s testimonial to the prosperous
future of the California wine industry.

Mr. Petri is gracious and generous to his former associates
at the top management level. One finishes his account with
the feeling that Petri was an imaginative and energetic
executive with a heart but also with an ability to look at a
business deal with a hard look. What comes through in the
interview is his determination and stick-to-itiveness.

Maynard A. Amerlne

Professor, Viticulture and Enology

1 August 1971

101 Wickson Hall

University of California at Davis

INTERVIEW HISTORY

The letter asking Louis A. Petri to participate in the
wine industry oral history series went to him on January 30 &gt;
1969. On February 21 the first of four interview sessions
was held. In it Mr. Petri f s family background was discussed
and, since he did not have all details in mind, during the
following weeks he refreshed his memory and the interviewer
checked the San Francisco city directories, so that there was
some reworking of information at the second session on April
30.

Delays followed because of Mr. Petri f s business affairs
and absences from the city, and finally because he became ill.
Shortly after he was out of the hospital the remaining two
sessions were held, on September 4 and 10,

All interview sessions were held at Mr. Petri f s comfortable
office at 615 Montgomery Street, San Francisco. He spoke
easily, although frequently interrupted by phone calls.

The adjectives energetic, nervous, quick -minded, informal,
and likeable all apply to Louis Petri. In his office attending
to his business affairs, it is easy to see him as a man willing
to assume responsibility, make decisions, and undertake
challenging ventures with enjoyment.

In the initial transcript of the tape recording, the
Interviewer reconciled the details of family history in the
first two sessions, made some minor corrections, and turned
the typescript over to Mr. Petri on October 25 Discussion of
it followed. He felt that he had spoken too informally,
sometimes ungrammatically, but agreed to let the interview
retain its original conversational quality. He did make a few
deletions and numerous changes, adding many specific details.
The editing of the transcript was completed April 22, 1971
Mr. Petri furnished photographs and the accessory data that
make up Appendix B and Appendix G.

At Mr. Petri s suggestion, Dante Foresti was interviewed,
on April 21, 1969. Appendix A is a summary of that interview-

Ruth Teiser

Interviewer
9 August 1971

486 The Bancroft Library

University of California at Berkeley

(Interview #1 - February 21, 1969)

THE PETRI FAMILY

Telser:
Petri :

Teiser:

Petri:
Teiser:

Petri :

Teiser;

Would you start with your grandfather, Raffaello
Petri?

My grandfather was a Diamond Jim Brady. He wore
a big diamond stick pin and had a fancy gold-headed
cane, and everywhere he went he always wanted the
best, whether he could afford it or not. Dressed
immaculately. He was a bon vivant.

He came here I believe it was in the year 1889
or 1890. That year might not be exactly right,
within a year or two. As a young man before he came
over, he worked in a winery in the Tuscany region of
Italy, which is a good wine area.

Let me see when I found the family first in the San
Francisco city directories, his sister was here.
Wasn t it his sister who was Cherubina?

Yes, that is correct. Cherubina Nieri.* I can t tell
you whether she came first or. . .

She was listed in an 1882 directory as Cherubina
Petri at 1405 Dupont, then from 1883 on for a good
many years at 1^0? Dupont, the same address as "Petri
Cigars and Tobacco."

That sounds right,
dates than I do.

You seem to know more about the

Then in 1890 there is a listing for "R. Petri," a
partner in Vincenzo Duvalle & Co. , proprietors of the

*Nee Petri.

Teiser: Toscano Hotel at 619 Broadway. Later he was a

proprietor of the New Toscano Hotel at 526 Broadway.

Petri: That seems correct. Later he had a hotel half a
block up Green Street from Columbus Avenue, the
Cosmopolitan Hotel, and it s now the Montclair
Restaurant. He came over here and actually went in
the hotel business. He really wasn t in the wine
business the first day he came here. The hotels were
sort of boarding house type hotels. He naturally
served, wine with every meal. Very quickly he began
to go to the Napa Valley to buy wine in bulk, that is
in barrels.

He served his boarders their meals early, and by
around 6:00 or 6:30 he had them all fed and then he
would serve a special dinner where he would sell meals
to the outsiders, and to them he gave a better grade
of wine, if you will, that he had bought in the Napa
Valley. He had an excellent palate, and an excellent
ability to select wines. Those wines were so good,
especially after he had aged them in the basement of
the hotel, that people began to buy them. When the
customers were ready to go home, they would take a
case or two of his wine with them. That business
began to grow, and so pretty soon he went into the
wine business directly, using the basement of his
hotel as a winery.

Teiser: Was he bottling it, selling it in bottles?

Petri: Yes, mainly in bottles, bottling the wine in the

basement. Actually I can still recall that, before
Prohibition, he had two wineries but he still did
quite a bit of bottling in the basement of the hotel
that was on Green Street. At first his business was
essentially the hotel business, but the wine business
became more important to him than the hotel. Now do
you have anything on Dante Forest!?

Teiser: He was a partner in the hotel?

Petri: Yes. He was a partner with my grandfather in both
the hotel and the wine business. This man is still
alive. He was a very young man when he came to work
for my grandfather, and because he worked hard and
well, my grandfather gave him a small part of the
business.

Teiser: He s first listed, as a partner in the hotel in 190 7 ,
and. as a partner in the wine company first in 1910.
That s the first year R. Petri & Company is listed as
being in the wine business.

Petri: I guess that s right. Dante is still alive, and after
Prohibition Dante moved from San Francisco to Escalon.
He became a partner in the Alba Grape & Fruit Company.
It owned 6*K) acres of vineyard there together with a
small winery. He still lives there.

Teiser: I see. When did your grandfather buy his first
vineyard or winery?

Petri: Actually he never had a producing winery until just
shortly before Prohibition. And that was on Sexton
Road, right near Escalon, California. Not the Alba
property. I believe it was called the R. Petri
Winery. He only had it for about two or three years
before Prohibition. He sold this vineyard and winery
to the Emerzian family right after Prohibition. Before
that he operated purely, if you will, as a broker of
bulk wine, and as a bottler. He bought wine from
others. Where there is now a woodworking cabinet shop
on Green Street just east of Grant, Avenue he had a
wine storage depot. That winery must have had a
capacity of about a quarter of a million gallons. I
have heard the story many times that right before
Prohibiton became effective people with jugs were lined
up for many blocks to buy the wine. [Laughter]

And the interesting thing is that my grandfather
had about a half a million gallons of wine when
Prohibition was voted in, and right up to the last
hour they sold the wine. They started maybe at 25 or
30 cents a gallon. The last of it was sold at a
couple of dollars a gallon. He came out of it with a
considerable amount of money. And, as I said before,
they were lined up for blocks, people with jugs, as if
there would never be another gallon of wine produced
in the world.

Teiser: What about his brothers and sisters?

Petri: Before he came to San Francisco his sister Cherubina
had come before him Cherubina and his brother Amadeo
went into the cigar business. That business was on
Dupont Street, now called Grant Avenue, actually in
the same location where I was born.* It was a cigar

*0n October 13, 1912,

Petri: store in the front, and a few Italian ladies were in
the back making Italian style cigars. That was the
start of the cigar business. Then when my father
came to San Francisco, he actually went to work for
both his father and his uncle, Amadeo. They were
two separate entities, the wine and hotel business
and the cigar business, and my father worked for both
of them.

Telser: Let me ask, how did your father come to be born in
Marseille?

Petri: Because his parents were on a trip to Marseille and
he was born there. But they went back to Italy
shortly after he was born. My grandfather came over
here first, and after he made a few dollars he sent
for his family. There were four in my grandfather s
family. There was Raffaello and Amadeo, and there
was Carlotta and Cherubina. Two brothers and two
sisters.

Teiser: Your father remained in Italy through his early years?

Petri: Yes, through his early years. That is correct, [on
the telephone to his secretary, Miss lola Guaraldi]
What year was my father and what year was my mother
born? My father, 1883. And my mother 88. Very
good. Thank you. (lola has been working for the
family about 45 years. She was my father s secretary
before me. She probably knows as much about the
family and its business as anyone. )

My mother* was born here in San Francisco. Part
of the family had moved over already. When her mother
came here she was pregnant. Her mother was Carlotta
Guidi. As I said before, my mother was born in San
Francisco, but her father became very ill shortly
after they arrived. He and the family turned around
and went back to the old country. He wanted to die
in his native land, Italy.

So the family was already here by 1888. I never
thought of that before. They went back, maybe in
early 1889. She [my mother] was, oh, less than a
year old when they went back. And then my grandmother

*Born Amelia Guidi,

Petrl: Carlotta remarried in Italy, and when my mother was
about 12 years old, my uncle Amadeo [Petri] and
Caterina, his wife, went to Italy and brought my
mother back to San Francisco with them. They raised
her, because my grandmother in Italy wanted my mother
to be reared in the United States. The man that my
grandmother married did not want to come to the United
States.

Teiser: And your father* came here....

Petri: Let s see, my father was about well, he was here

before my mother came back. He was just a young boy.
It was about 1898 or 1899. His first Job in the
United States was in Elko, Nevada. He worked for a
good friend of the family who had a hotel there. I
believe he worked there for about four years and then
came to San Francisco. After he arrived here, he
went to work for both his father and for his uncle
Amadeo. My father was a great man. He worked hard
and helped make both the wine and cigar business
successful.

Teiser: I wish we had been able to interview your father.

Petri: Yes, I wish you could have. I m sure you would have
enjoyed it. He was ill for so many years before
[his death in 1961], He had a series of strokes,
and with the last one he was in the hospital for five
years .

Teiser: To go back to the Prohibition period, what happened
then to the San Francisco property the family owned?

Petri: The one property we were stuck with was my grand
father s lease on the Cosmopolitan Hotel property.
For years, even after my grandfather s estate was
settled, we had trouble. But finally we were able
to find someone to assume the lease. They built the
present Montclair Restaurant on the property.

*Angelo Petri. He died October

1961.

Mr. and Mrs. Angelo Petri with their sons Albert (left) and Louis (right)

Petri cigar company float constructed for the Panama Pacific International Exposition of 1915.

PROHIBITION YEARS

Telser: What happened to the vineyard property at the time
of Prohibition? It was a vineyard and winery?

Petri: Yes, At Escalon there was a small winery, the one I
told about on Sexton Road, and, I think, about 100
acres of vineyard. That was sold immediately after
Prohibition.

Teiser: Weren t such properties a glut on the market
immediately after Prohibition?

Petri : There was a pretty good market for grapes immediately
after Prohibition, because the type of grape raised
in that area what they call wine Juice grape, the
ones that are used to make wine they were in good
demand. Actually some of those farmers in the area
made a heck of a lot more money during Prohibition
than they did before Prohibition.

There developed a great metrket for home wine
making in New York and all the principal centers,
because all the Italians, Frenchmen and other wine-
drinking people, wanted their wine and the law allowed
them to make 200 gallons of wine [each year per
household]. The law allowed families to group their
permits and make their wines together. Some of the
tenement buildings had pretty good size wineries in
their basements.

Teiser: Was this in New York mainly?

Petri: Well, New York and other big cities such as Chicago
and Philadelphia. The bootleggers would buy the
permits, if you will, from the owner or give him 50
gallons of wine for free for the permit. They would
then have all this wine that supposedly belonged to
all the tenants in common, for sale.

But all the people of Latin extraction wanted
their wine. The law allowed it. And [grapes] being
packed in boxes and shipped all the way from
California made the price quite high. Thus some of
that land became very valuable. The juice grape
growers made good money.

Teiser: So your grandfather...

Petri: He sold out. He completely retired. He had his money
and he completely retired. He died in 1923 I believe.
And now here starts the other end of the story that s
interesting.

The Gella family, who later owned the Roma Wine
Company, were the agents in the East for "both our
cigars and wine before Prohibition. Incidentally,
J. B. Cella is my father-in-law.*

Teiser: Oh, that was how there had been a connection.

Petri: Yes. After the wine end of my grandfather s business
grew, and my father became active in the selling end
of the business, my father began travelling to the
East to sell wine and cigars. On one of his first
trips, my father met the Cellas John Battista and
Lorenzo (Lori) Cella and they started buying wine
from us. I don t know what year that was, but I know
that my father was in New York with the Cellas right
before I was born and that was In 1912.

Teiser: Was it all bottled here or was some...

Petri: No, it was all bulk in barrels. We bottled here

under our Petri label for sale locally, [shows old
bottles] You see how old that is. [Laughter] This
one, if you look closely, is dated 1918, right before
Prohibition. You cannot read the dates on the others.
I ve had many people call me up and offer me more
[old bottles] that they find when somebody dies and
they clean up the basement. At first I used to give
them a case of good wine or something for a couple of
bottles, but then you get too many.

Well, as I said, my father started travelling
East and selling wine and cigars. The Cellas became
our largest customers. My father had some other
accounts; I remember Dad telling about the accounts
in Philadelphia, Boston and St. Louis. Yes, my
father did a good job of selling wines and cigars.
As I told you before, we went out of the wine business
with Prohibition but remained in the cigar business.

By the way, there is someone you should talk to.
I believe you met him here with me the other day. His

* Louis Petri married Plori Cella in 1935.

Petri: name is Benjamin (Benny) Mortara. He came with the
cigar company during 1919 and retired in 196^. He
started as a bookkeeper and retired as vice president
and controller. He has been a tremendous help to the
family both in the cigar and in the wine business.

Then when Repeal came, the cigar company decided
to go into the wine business. A year or so before
Repeal we leased three plants, all in the northern
part of the state, and started producing table wines.

Teiser: Where were they?

Petri: There was one at Forestvllle, California, which is
now an electronics plant.

Teiser: What was it called? Did it have a name?

Petri: I don t remember its name before, but it became Petri
Wine Company. And also a plant just south of St.
Helena, which is now what is called the "big co-op."
I don t know what its name is St. Helena Co-op or
something "the big co-op" they call it, which is
presently under contract to Gallo. Then we had a
smaller plant south of Callstoga. These two plants
were part of the Mt. St. Helena Calistoga Wine Company,
as a subsidiary of the Petri Cigar Company. This
corporation was merged with the Petri Cigar Company
in September 1933. (Incidentally, the one at
Calistoga for many years was under contract to Gallo,
but is now under contract to United Vintners.)
Besides we bought wines from many small wineries in
the northern area, because our own plants weren t
sufficient.

EARLY POST REPEAL YEARS

Petri: Then about a year after Repeal we bought the Alba

Grape & Fruit Company at Escalon, in order to acquire
a plant in the southern part of the state so that we
could make dessert type wines. We thought when we
first entered the wine business that the market would
be mainly table wines. That was what the business
was before Prohibition, and that for practical purposes
was all that my grandfather sold. This was proven
wrong very quickly because the big business became

Petri: port, sherry and muscatel, you know dessert wines.
So we made a deal with Louis Martini (who at that
time was not in the Napa Valley but was at Kingsburg,
California, making dessert wines.) We bought all of
our dessert wines to start out with from Louis
Martini, which is interesting. Here they all tie
in together. [Laughter]

Teiser: I see in the 19^-1 directory there was still a Petri
Cigar Company.

Petri: D.b.a. [doing business as] Petri Wine Company.

Teiser: But later the name was changed officially to the
Petri Wine Company?

Fetri: It wasn t changed to Petri Wine Company for quite a

while afterwards. As the wine business became larger
than the cigar business, and every time you had
official documents to sign (and there were plenty)
you had to put "Petri Cigar Company d.b.a. Petri Wine
Company," we reversed it and made it "Petri Wine
Company d.b.a. Petri Cigar Company."

Teiser: This is as of 1950?

Petri: Yes, around. 1950.

Teiser: What happened to the cigar business finally?

Petri: Oh, the cigar business stayed in existence until we
sold out to Allied Grape Growers in 1959 &gt; at which
time my brother Albert bought it from the corporation.

(Interview ,f2 - April 30, 1969)

Teiser: Your father, Angelo Petri, at what point did he come
into the wine business, and. what were his accomplish
ments in it?

Petri: Well, I think I told you last time that when dad

first came to San Francisco, he really worked both
for his father, who was in the wine business that
was the R. Petri Wine Company at that time and he
worked for his uncle, his father s brother, Amadeo,
in the cigar business, known as Petri Cigar Company.

Angelo Petri In his office, with portraits of his uncle, Amadeo Petri (left) and his father,
Raffaello Petri (right).

Petri: He was the one who, as the businesses grew, did all
of the travelling. He went to New York and Chicago
and other places and sold the cigars and the wine
to wholesalers, if you will. And I think I told you
last time of the connection "between the Cella family
and the Petri family. The Cella brothers, J. B.
Cella and Lorenzo Lori Cella, took on in New York
the sale of the wine, which they bought in bulk, and
also our cigars. They bought the wine in barrels
and re-bottled it in New York. They also sold some
of it in barrels.

Teiser: What labels were they selling your wine under then?

Petri: I believe only Cella. And the cigars were under our
own label Marca Petri cigars. Well, at the time of
Prohibition, we went out of the wine business, but
continued on in the cigar business. My grandfather
died, oh, not too many years [later]; I think it was
about 1923.* My father kept working with my great
uncle, Amadeo, in the cigar business. Amadeo died
not too many years later, probably about 1925- So
we were only in the cigar business and grew considerably
in this business all through the time of Prohibition.

Then when Repeal looked like it was inevitable,
they went and leased wineries north. They misjudged
the business at that time, as any old winemaker would
have, and thought that nothing but table wines would
be sold. They leased three plants, one in Forestville
that s in Sonoma County near the Russian River and
two near St. Helena in the Napa Valley. They started
to produce wine at the time of the repeal of
Prohibition. Now I m just a little foggy as to
whether these wineries had any wine on hand when we
leased them, or whether we bought only plants. I
don t know whether we started from complete scratch
or whether they had some wine on hand.

Right after Repeal, the big seller at that time
was dessert wines, you know, high alcohol wines, and
we unfortunately were not in the dessert wine field.
We didn t have a dessert wine plant. And that s when
they took over the Alba Grape and Fruit Company. The

"June, 1923.

Petri: Alba Grape and Fruit Company, as I told you before,

had a small winery together with 6^0 acres of grapes,
near Escalon, California. The vineyard was, for
practical purposes, all wine Juice varieties, and
before Repeal the company shipped the grapes East.
With the second crops and the stripping from the
vines they made some wine. But the wine was of poor
quality. When we bought the company there was about
300,000 to 350,000 gallons of wine. The wine was
real bad and unsaleable. Most all of it had to be
dumped down the sewer.

Teiser: Why was it so bad?

Petri: Well, it was made from grapes that were left over
after they had shipped the best, and the wine Just
wasn t taken care of. It was really bad. I remember
that was about the time that I entered the business.
Oh, some of it was distilled to make brandy, but most
of it was dumped. The tanks that the wine was stored
in hadn t been properly maintained or prepared before
use. This was true of lots and lots of wine in
California at the time of Prohibition. People were
making wine from what was left over on the vines,
from second crop grapes that were moldy and bad
grapes. There weren t too many people that had kept
this type of old wineries going during Prohibition
that made good wine.

We cleaned up the winery, bought some good
equipment and started producing our own dessert
wines. But before our own wines were ready, we were
buying our dessert wines from Louis Martini, who
since has become quite famous, as you know, in the
Napa Valley. Louis start in the wine business was
not in the Napa Valley, it was in Kingsburg, which
is right below Fresno. He had a fairly large plant
there, and produced dessert wines.

Teiser: Did he make good dessert wines?

Petri: Excellent. Louis, in my opinion, is one of the best
enologists and winemakers in the state of California.
Incidentally he s about 82 years old at the present
time. He decided that the future well ahead of
everybody was in good premium wines in the Napa
Valley and was one of the first (other than the few
existing wineries such as Beaulieu and Inglenook) to
go to the Napa Valley you know, one of the first to
really go to the Napa Valley and produce premium type

Petri: table wines, for whioh the Napa Valley is now quite
famous .

Let me say that Escalon is one of the real
centers of good grapes of better quality than you
get further south in the [San Joaquin] valley. Even
during Prohibition it was a big shipping market for
what they called wine Juice variety grapes, the ones
for home wine making. It was a. good area for it,
and it still is. Well, our Escalon plant has become
the prime plant for United Vintners for the production
of the less expensive type of table wines. The grapes
in this area are, in the main, non- irrigated, and
then too this area has cooler weather than there is
further south.

Telser: What did you label your table wines?

Petri: Well, at the very start of our bottling, which

didn t occur until maybe four or five years after
the repeal of Prohibition, it was mainly under the
Petri label. And as a second label, we had one called
Albano. We wanted to call it Alba, but we couldn t
get the name, so we came close to it with A-1-b-a-n-o,
Albano .

Teiser: And what did you call the wines? Burgundy...

Petri: Yes, burgundy, Zinfandel. The generics. We did not
sell any varietals to start with, neither did anyone
else in the industry. It was burgandy, sauterne,
port, sherry, muscatel, angelica. Zinfandel would
be closest to a varietal as such, but most wines were
not sold under the name of the grape. Still today,
most of the commercial wine is sold that way. What
I call "commercial" is the regular bottling of
Italian Swiss Colony, Gallo, and others. They re
trying, to a degree in something like a rose to call
it a "Grenache rose" because there are plenty of
Grenache grapes. Both Gallo and United Vintners
have been pioneers in so called natural fruit
flavored wines. These are known by such names as
Thunderbird, Bali-Hai. Paul Masson has been a
pioneer in creating their own fanciful names for
table wine such as "Emerald Green."* More of this is
needed in the Industry.

Getting back to our start in the bottling of
wines, we took a part of the large cigar manufacturing

* Emerald Riesling. See Introduction.

Petri: plant we had in San Francisco at Battery and Vallejo,
901 Battery Street, and made it into a winery. We
took a large part of the basement and about half of
the first floor. It was a rather large building; we
employed about four hundred people to make cigars
in that plant. We installed about 300,000 gallons of
storage tanks. The wine was brought down from the
wineries in tank trucks.

To start out with, in San Francisco, we sold
wine to grocery and liquor stores in 5, 10, 15, 25
and 50 gallon barrels. Customers brought in their
own Jugs and bottles and the wine was sold directly
from the barrel. My uncle Paul Petri, my father s
brother, who Incidentally is still alive, was sales
manager at that time. He did a great job of selling
wine to the grocery and liquor stores. We had a
distributor in Oakland called Vick s Distributing
Company that with my uncle s help did one hell of a
good job for us.

We did not do any bottling for four or five
years. The first bottling we ever did was a private
labelling for a restaurant in Los Gatos called
Ferranti s, good friends of ours. I remember I made
the sale. We used to go to Los Gatos a lot because
Dad had a summer home there. I sold them 200 cases
under their own label. I remember that I took a
couple of cigar makers and we hand-labelled it. In
the meantime we began selling large quantities of
wine to eastern bottlers in tank cars.

FROM BULK TO BOTTLED WINES

Petri: Our first real entrance into bottled wines really

was when the can companies went to all the wineries
and wanted wineries to put wine in cans. I d say
about oh at least ten of them were subsidized by
the can companies, especially American Can Company,
to put in canning plants and can wine. I rebelled
at the idea [laughter] of putting wine in cans, and
this is when I made a deal with Owens-Illinois Glass
Company whereby they made a light-weight bottle that
generally was competitive in price with cans. I
have that label somewhere "Little John" you see
that label on the wall? [points to framed label]

Petri: I went to Safeway with that idea, with that little
bottle, even before we started bottling.,..

Telser: What was it, a tenth?

Petri: It was 12 fluid ounces. Incidentally, it is certainly
wrong that we here in the United States [now] have
to put a full fifth 25.6 ounces while all the
imported wines come in at 24 ounces. Well, the 1.6
ounces makes a big difference both in tax, the cost
of the bottle, the cost of wine and everything else.
The industry had to and still has to sell a full fifth.
The government allows the importers to bring in a 24-
ounce bottle. It just isn t right.

Teiser: Your "Little John" bottle was 12 ounces then?

Petri: Yes, it was 12 ounces. The full fifth and tenth law
came in later. Cute little bottle. I ve got one
home some place. Well, I went to Safeway with a
sample, to try to sell them the small bottle rather
than the can. They started buying it from us. Safeway
at that time was buying wine in every division and
most districts from different bottlers. I managed
to sell them the idea of having one source for their
wine business. I ended up getting all of Safeway s
wine business under their private label called
"Pidelis."

Later we got real fancy and made a little
Pidelis 12-ounce bottle, which was a big hit. So,
as I say, our real big entrance into the bottling
business was when I was able to sell Safeway their
Fidelis private label for their whole operation.
It s a funny thing, I don t have one here [on the
shelves]. I have many at home. I probably should
have one here. After our start with Safeway we
slowly began to get into our own bottling, essentially
Petri. And you san see there [pointing] the first
two labels we came out with. Those two there. This,
the Vintage label was the more expensive, and this,
the Double A, was in between in price, and then we
had the Albano as the more competitive wine. We
were one of the first companies to go out and get
modern designers. We hired designers for the label
and bottle designs...

Teiser: You got Jo Sinel?

Petri: Jo Sinel was the designer of those two packages you
see there. One was tapered, the other had a breast.

Well, Just shortly after we put our plans Into
effect, along came World War II. We kept on with
Safeway for a while, but then we parted company with
them.

[Interruption for telephone conversation]

Louis Martini... Well, as I said, we broke off
with Safeway, and during the war, we put the great
majority of our wine in bottles under the Petri
label. We moved essentially from the tank car
business to bottled wines.

Now you were asking me about my father. My
father was very active in the business when we first
started. I came in the business about let s see,
it was in about March or April of 1935 the year I
left school. I was studying medicine at the
University of St. Louis. I fell very much in love
during the summer of 193^, with a girl I married in
1935. As I told you before, her name is Plori and
she is a Cella. I came home for the Christmas
vacation in 193^-, and went back to St. Louis after
the vacation, but the glamour of both families
getting into the wine business and my strong desire
to marry Flori made me decide to quit med school
and come home.

After I came home, Dad arranged for me to get
some special instructions from some of the great
professors at the University of California. I took
special courses from [Albert J.] Wlnkler, [Maynard]
Amerine, and [William V.] Cruess. They were and
became great in the field of enology and viticulture.
At first I remember that I set up a laboratory in
the laundry room of our home. Then we built a
laboratory. I guess I really started as a barrel
washer, if you will, but during spare time and at
night I was analyzing the wines from all the plants.

Teiser: This was at a time when the University was giving

kind of crash courses to people in the wine industry?

Petri: Yes, but I did not go during the daytime. I went
at night. I worked during the daytime, and. I had
some special courses at night that I told you about.

Petri: I knew my chemistry; after all I was freshly out of
school as a chem major, and I was pretty good in
chemistry, so it was just a matter of learning how
to do TTine analyses and learning something about
wine making. I also started a few research programs.

Then during the war, when we were selling most
of our wines in bottles, we established a tight
allocated system. Put it this way: an extremely
legitimate allocation system. Special deals were
available where we could have made a lot more money.
We allocated every gallon of wine we could make as
fairly as we could and sold every case or gallon at
the O.P.A. established prices, so that when the war
was over with, we had a good system of distribution
of our products throughout the United States.

During the war I was very active in Washington,
I was on just about every committee that had anything
to do with the wine and distilling industry. I spent
half of my time in airplanes commuting back and forth
to Washington, and very nicely I flew on priority.
I was on the O.P.A., the price committee for both the
wine and the distilled spirits, I was in charge for
the West Coast of making alcohol from molasses, which
unfortunately all ended up In the hands of Russia,
Yes, I was in charge of setting up the wine industry
to make molasses alcohol with their stills during the
off season. This alcohol was used as antifreeze by
the Russians. I was on the N.B.A. or N.R.A., one of
those initials, which allocated all scarce materials,
such as glass, screw caps, cardboard boxes, out of
Washington. And because of this type of work and
because I was married and had a child, I was not
called into the armed services.

Before the war, actually, we started acquiring
other companies, and I think if you look up there
[at framed photographs] and go down through them, I
can tell you what they are. The first one, the
picture up on the top, was where we bought out a
50 per cent interest in the Margo Wine Company.
[Interruption for phone call] That was my brother.

Teiser: Your brother s name is?

Petri: Albert. He s my older brother. I only have one

brother and no sisters. He s three and a half years
older than I am. He was in the cigar business. We

Petri: ran them pretty much as separate businesses. However,
naturally we all worked together because essentially
it was a family business. Now there is somebody else
you should talk to who has been in the business for
a long time, and is still in it. He s Just ready for
retirement. He*s in Europe at the moment and will
be back in June. He is Mr. Bianchini, Lelio Neil
Bianchini. Now, Bob that is his nickname was in
the business before me. When I came into the business,
I really worked under Mr. Bianchini.

ACQUISITIONS AND THE CREATION OF ALLIED GRAPE GROWERS

Petri: Now, about the acquisitions we were talking about.
The first acquisition we made was a big bulk wine
customer we had in the state of Pennsylvania. The
state of Pennsylvania is a monopoly state, as you
know. We first started doing business with him by
making a deal on a cost-plus basis, but it became very
complicated. We ended up by buying half of the company
from a Mr. John Margolis. A few years later we ended
up buying the other half from him.

Teiser: What was the name of the company?

Petri: Margo Wine Company. It owned the Margo label, which
was the biggest selling brand in the state of
Pennsylvania, and is still a very Important brand.
And, strangely, the company also owned the name
Greystone for the state of Pennsylvania. Margolis
had been buying wine from what was then Fruit
Industries and managed somehow or other to get the
right to the name Greystone, only for the state of
Pennsylvania. The old Fruit Industries, which is now
the California Wine Association, owns it for the rest
of the world.

Teiser: So then you came into the Greystone label for
Pennsylvania?

Petri: We came into the Greystone label for Pennsylvania.

Now, right before and that picture s not up there
Dad did this one just shortly before I began travelling
for the company. We bought out half of what was
Sunny Hill Wine Company in Chicago, which was a large
bulk customer of ours. A n d we ended up eventually

Petri :

Teiser:
Petri :

buying all of it. On that, interestingly enough,
there were two people involved. One of them moved
to California, a man by the name of Joe Gazzara.
Mr. Gazzara, who died about six or eight months ago,*
bought the Crest View Winery in California, after we
bought him out. Our philosophy at that time was,
well, if we had these big customers, we didn t want
to have to continually fight over prices and stand
the danger of losing them. If we became partners
and worked together it made for a better deal for
everybody concerned.

Did either of these produce wine?

No. They were strictly bottlers. Sunny Hill was
the biggest brand in the Chicago area, and Margo was
the big one in Pennsylvania. Well, the next
acquisition, let me see, oh yes during the war
there s not a picture of that up there we bought
out the Tulare Wine Company, located just north of
Tulare. This was sort of a screwball deal. The
state of Washington, which was a monopoly state,
gave us a contract to bottle and sell them the full
gallonage of wine that came with the plant.

No relation to

Who had owned that?

A man by the name of Frank Giannini.
the Giannini s of the bank.

And it was an actual wine producer?

It was an actual wine producer and it was a fairly
good sized plant. First we bought the winery, then
we bought 1280 acres, two sections, of land that
surrounded the winery, from the same family. Mr.
Giannini had a son-in-law by the name of Fred
Lagomarsino who was the general manager and was some
sort of a partner with him. I believe he was more
involved in the winery than he was in the vineyard.

This was table wines?

Some table wines, but essentially dessert wines. The
wine business in those days was essentially dessert

*July 9, 1968

Petri: wine you can get the statistics. If my memory serves
me right, dessert wines were about 75 per cent of
the total wine market. But as you know now, the sale
of dessert wines has declined and the sale of table
wines has climbed tremendously. This is wonderful
for the industry. As a matter of fact table wine
sales are now greater than dessert wine sales.

Then our next acquisition was when we bought
out the Mission Bell winery from the Arakelian
family, headed by Mr. K. Arakelian.

Teiser: What s his real name? I ve never heard him called
anything but "K."

Petri: I think it was Krlkor. It s an Armenian name.
Everybody called him "K, " but I think that was
Krikor. Shortly after we bought out the Mission Bell
winery, which was a real big winery, we turned around
and sold Tulare Wine Company to K. Arakelian s son,
Eddie [laughter]. We then sold the winery and most
of the vineyards.

We found that trying to be farmers in a large
scale was not profitable. We found it was cheaper
to buy grapes than raise them. When we bought the
Arakelians out we began to be a pretty good sized
operation. I remember that we crushed about 100,000
tons of grapes the year we bought the Arakelians.
Naturally, our sales grew with each acquisition.
And this was when we began to run out of money. It
wasn t so much what we paid for the plants, but every
ton of grapes that we bought had to be paid for, and
then we had to age the wine. The turnover of our
money was slow. It was because of this that we got
the bright idea of forming Allied Grape Growers.
But that had a very peculiar start. It started very
bad, but ended up the greatest deal that we ever
made.

It started out when I got a group of large
Thompson Seedless growers in the Madera area together.
There had always been a problem of getting enough
Thompson Seedless grapes at the beginning of the
season, and getting them in fast enough so that you
could make a stockpile of high proof alcohol to have
available later to fortify wine grapes that came in
later in the season. So to get people to give us the
Thompson Seedless grapes, I made a three-year contract

Petrl: on about 20,000 tons of grapes. We agreed to pay

the grower on a ^~ to-1 formula. That is, on a fresh
basis one-fourth of the price that they got for
their raisins. Well, as the thing turned out, the
raisin market got extremely hot during that period
of time and we were paying a much higher price for
Thompsons than what other wineries were paying. The
growers were really getting rich on us. So at the
end of the second year of the deal, early 1959 &gt; I
proposed to the "^ to 1" growers that they form
Allied Grape Growers, a co-operative, and through a
very complex formula we converted their contracts to
Allied Grape Growers, All of them and some other
growers formed Allied Grape Growers. The original
sign-up was for about 30,000-35,000 tons of grapes,

Teiser: What part did you have in the formation of Allied
Grape Growers? Beyond the original suggestion.

Petri: I conceived the idea and helped them set up their
co-operative. The idea was that after they had
formed a co-op, the grower gave title to his grapes
to Allied, who in turn gave us the grapes to make
into wine. Then we had a very complex formula with
them whereby we shared the profits from the sale of
the wine. We paid Allied on a deferred basis over
an 18 months period. The deal was really a partner
ship. Allied supplied the grapes and were paid on
a deferred basis; we invested in making the wine and
selling it with our brand and through our organization.
As part of the arrangement they bought our Escalon
and Madera plants from us at a very low price book
value and paid for them over the next six or seven
years. Allied withheld from the grower monies to pay
us. It worked out great. They received enough money
over market to buy the plants for free.

Teiser: Had such a thing ever been done before?

Petri: No, it was an entirely new concept. It was an
immediate success. Right after the first crush,
growers were knocking at the door to become members
of Allied, It grew fast and by the end of the third
year the Allied sign-up was about 60-70,000 tons
of the 120-130,000 ton total we were crushing, about
half or our requirements. It was about then that I
bought Italian Swiss Colony, which was about the same
size as ourselves.

Teiser: In the meantime, had you been liquidating acreage?

Petri: The only large acreage that we ever owned was the one
around Tulare. We planted that, I believe, during
the years 19^3-*l4 during the war. Strange part of
it, it was planted by German prisoners of war. There
was a prisoners 1 camp near Tulare at the Tagus Ranch,
and the Army made German prisoners of war available
to agriculture. We tore out all the old vineyard
and we planted it to better grape varieties. But as
I said before, we sold these vineyards. And when
we bought K. Arakelian, who was one of the largest
grape growers in the state they had about 8,000
acres we did not buy the vineyards. We bought only
the winery and a section of land and vineyard
surrounding it.

Teiser: Had you earlier leased vineyard acreage?

Petri: No. We had the 600 acres around the plant at Escalon.
Most of this was also sold off. With the Arakelian
deal, we ended up with a section of land around the
winery, 6^0 acres; we sold most of that off. No,
we were not vineyardists.

ACQUISITION OP ITALIAN SWISS COLONY

Teiser: When did you buy Italian Swiss Colony?

Petri: May 29, 1953. That was a real, real big one. Well,
Italian Swiss was Just about equal to us both in size
and sales. We were the two largest vintners in those
days. Mr. Gallo was really Just beginning to grow
in the wine business.

Teiser: What was the ownership at that time?

Petri: National Distillers owned Italian Swiss Colony. They
had a big winery at Asti, and another large plant at
Clovis, California, and a smaller plant at Lodi,
California. It had two bottling plants, one in
Chicago and another in New York. They had many
labels. Beside Italian Swiss Colony they owned
G & D, which is the initials for Gambarelli &
Davitto. This was a very large bottler that they
had bought in the New York area. The plant in Lodi
was called Shewan and Jones, which when they bought

Petri: it out was owned by Lee Jones. Incidentally, the

brand name "Lejon" which they owned was put together
from the name Lee Jones to make it French sounding.
I bought the Italian Swiss Colony Company on
extremely favorable terms.

Teiser: What were the circumstances?

Petri: National Distillers was a very large corporation

that was very big in the distilled spirits business.
One of the original founders of National Distillers
was Seton Porter who died a short time before I
bought Italian Swiss Colony. A man named Jack
Bierwirth, after Porter s death, became the chief
executive officer of National Distillers. He wanted
to expand into the chemical field and wanted to make
National Distillers a tremendous chemical company
(which it is today) even though it was one of the
biggest in the distilled spirits. He had management
in California that was not satisfactory to him, and
then too when you have Wall Street trying to run the
every-day wine business from that far ax-ray, such as
buying grapes, it didn t work.

For example, when the grape and wine market was
high, they were buying wine and grapes; when the
market was low, they were out of the market. They
were just doing it backwards because they were trying
to run it from New York, and they were not successful
in doing this. I remember that there was a tremendous
drop in the price of wine during the year following
the end of the war. They lost $11,000,000, if my
memory serves me right, or was it $9 &gt; 000, 000?
Schenley lost a fortune too. One of them lost nine
and the other lost eleven, or some such astronomical
figure. Our company managed to break even during that
period, but they lost their shirts. It was after
that that they wanted out. He fired the people he
had running the operation in California. He brought
out a man by the name of Adolph Heck, made him
president of Italian Swiss Colony shortly before I
bought it. Adolph Heck now, and his three brothers
and sister, own Korbel.* So as I say, I bought
Italian Swiss Colony, and then worked like hell to
enlarge the co-op because we needed more grapes. Oh,

*F. Korbel & Brothers.

Petri: let me tell you this. They sold it to me at a real
good deal. Totally, we paid about eleven and a half
or twelve million dollars for it. Six million of
that Mr. Bierwirth gave us twenty years to pay and
he did not charge us interest. [Laughter]

Telser: He did want you to have it.

Petri: Yes. Funny thing, it isn f t twenty years yet, and
those notes are still floating around. They ve
been sold all over the place because when we sold
out to the growers, those notes had to be paid off.
There wasn t any sense in paying them, so I was able
to work out a deal with Bierwirth where we bought
U.S. government bonds that matured roughly at the
same time as the notes and put them into an irrevocable
trust with one of the big New York banks. Strangely,
I happened to be reading a statement of a company
called Mallory and saw that they bought some of the
bonds with excess cash they had.

Now, I would like to go back Just a little.
Before we bought Italian Swiss Colony our table wine
business grew and our company became rather famous
for its table wine, especially the red wines, Marca
Petri, Vino Rosso Pastoso, marca meaning "brand" in
Italian. Our cigars were sold under the Marca Petri
name. I m sure you know vino rosso means red wine
and pastoso means mellow, tasty, full-bodied. So
our dry wine business grew. We needed more and more
wines from the north coast counties to blend in with
the dry wines we made at Escalon. We needed heavier
wines to blend with our southern valley wines. So
we went up north and we bought out or made screwball
deals with about, oh, seven or eight little wineries,
some of them small co-ops, and used their wines for
blending.

When you speak of north, what do you mean?

North coast counties. Prom Uklah on down; Mendoclno,
Sonoma and Napa. Those three areas. Well, we ended
up with a bunch of small wineries and then when we
bought Italian Swiss Colony, we sold and closed most
of them.

Teiser: Who did you sell them to?

Petri: We made all kinds of deals. One of them was Larkmead.

Teiser:
Petri:

Petri: Larkmead was a co-operative. We made a deal with
them whereby their grapes went into our co-op,
Allied. The plant we ended up selling to Hans Kernel.
He is now rather famous as a champagne producer.

The plant we had at Forestville, which was one
of our original plants in the north, is now an
electronics plant of some type, I forget the name
of the company, but if you drive up to the Russian
River, it s right on the highway. There was one at
Gloverdale, which was also a co-operative. We crushed
their grapes at Asti and sold the plant. It became
a big prune dehydrating plant. They took out all the
tanks and equipment and it became a dehydrator. We
just couldn t afford all the overheads of all these
small plants, when we had that tremendous plant we
acquired at Asti.

But what we did at each of these locations,
especially those that were far enough away from Asti,
was that we put in what we called "crushing depots,"
which was an innovation in the industry at that time.
Instead of the growers hauling their grapes to Asti,
which in most instances was a long distance, in little
small pickup trucks or whatever he had to deliver
them in, we had. the grower deliver his grapes to the
little crushing depots which were nearby. There the
grapes were crushed and put into a tank and as fast
as there was enough must in the tank to fill a tank
truck, the tank truck moved the must to Asti. Instead
of moving the grapes, we moved, the crushed juice
that is must which was much better for the grape,
easier for the grower and. all of the other things
that go with it.

Now, one other thing that we originated in the
industry, and. my cousin Bob Bianchini would be the one
who did that one. It was the gondola dump type of
truck. The gondola truck now d.rlves up to the crusher,
and after you brace the truck on its side with a
couple of jacks, the gondola tank which is on a hinge
is picked up by an overhead crane hook, and the whole
gondola load is dumped into the crusher, instead of
having to have people standing in the grapes and
shoveling them into the crusher. This was the common
practice in those days. Today where growers are close
to a winery they have small gondolas that go through
the rows of the vineyards, and they pick the grapes
right into the gondolas, and. haul them on the highway

Petri: to the winery and dump the grapes right into the

crushers. The grape is only handled one time, put
into the one gondola and delivered directly to the
winery.

Teiser: Picked into the gondola?

Petri: Well, either picked directly into the gondola or

otherwise the grapes are picked into boxes and the
boxes are dumped into the gondola as it passes
through the vineyard.

Teiser: How many acres of land were there with Italian Swiss
Colony?

Petri: Not too much. There s 1200 acres of land total, of
which about 500-600 acres were in grapes. This was
at Asti. But unfortunately that vineyard, even with
the tremendous amount of money we spent on it trying
to bring it back, wasn t and still isn t too good.
It just was not taken care of too well during
Prohibition. The topsoil had eroded, washed away,
and there just isn t enough topsoil left to make a
good vineyard out of it. The grapes are excellent,
but the cost of producing the grapes there is
astronomical.

Teiser: You mean, the tonnage per acre is low?

Petri : The tonnage per acre is low. The quality is

excellent, as most all low producers are. They had
very little acreage. Italian Swiss Colony, like
ourselves, were not big vineyardists. However, this
is generally true of the whole industry. There are,
however, co-operatives, that were owned by growers.
This is especially true around the Lodi area. Just
about every winery in that area is a co-operative.
These growers owned their own wineries and made
their own wine from their own grapes.

The wine industry is essentially broken down
into two parts: the co-operative which is owned by
growers who produce and market their own wines, and
the winery that buys most all of its grapes from
growers .

In the Napa Valley there s one other type of
winery that s a little different. It is the estate-
bottled producer. Here the winery must own its own
grapes and must produce wine only from its own grapes
to be able to call them estate-bottled.

THE WINE TANKER ANGELO PETRI

Petri: Well, let s see. What did we do next? Oh, yes, the
railroads kept raising their rates to the wine
industry. There was no other way to move wine long
distances other than by rail. The trucking laws
were against us because some states had and still
have weight limitation for trucks. Trans -continental
trucking is still a very difficult thing on any
product that is heavy such as wine. The railroads
really were making life miserable for all of us.
Every time they had a rate increase, the wine
industry would get the full rate increase. We all
protested, but it fell to deaf ears. The railroads
in those days--but they have somewhat changed their
philosophy now and I think we had a lot to do with
helping to change their philosophy they got as much
as they could out of every product. They got whatever
the tariff would bear. Well, this was where we got
the bright idea of building the wine tanker, which
was named after my father, Angelo Petri.

I knew most of the railroad people. We
threatened them that unless they gave us some rate
reductions we would build the ship, but they never
thought that we could or would do it. But we did
it. We built our wine tanker. There s a picture of
it [pointing], a 23,000 ton tanker. It has two and a
half million gallons of stainless steel tanks and
about one and a half million gallons of standard oil
tanks. As to the stainless steel tanks, there are
no cross- Joints, they are all free-standing tanks,
just like this glass; no bracing on the inside. On
the outside of each tank there s what is called a
cofferdam, which gives it the strength from the
outside. Each tank is like a large stainless steel
bottle. It was a very expensive type of a ship to
build.

A very strange thing about the ship. It was a
T-2 tanker, or I should say half of it was. We
bought half a ship in Seattle. It was a T-2 tanker
that on its third voyage during the war split in half
in the middle of the northern route to Europe. The
Navy went out and sunk the front end of it and towed
the back end, which was in good shape, to Anchorage,
Alaska. It s the only ship in history, so I m told,
where the bow hit the stern. [Laughter] The front

Petri :

Teiser:
Petri :

Teiser:

Petri :

end. smashed into the hind end of it. It was used all
during the war to generate electrical power that was
supplied to the big Army camp in the Anchorage area.
It was pulled up on shore, as a matter of fact. Well,
when the war ended, it was towed down to Seattle to
be junked, and salvaged. When I heard about it, they
had already sold the power plant to some experimental
atomic energy plant that was going to build in
Montana, and Bethlehem Steel had bought the steel
plating that was on it, but I managed to buy it for
about $300,000.

Then came the big gamble to tow a half a ship
from Seattle to San Francisco [laughter] but she
made it. Bethlehem built the ship for us. The ship
cost about seven and a half million dollars. The
government gave us the equivalent of about a million
dollars of subsidy because to this day, in case of
war, those stainless steel tanks would be invaluable
to haul chemicals. We signed a contract at that time
that at any time the ship could be confiscated from
us for war purposes. The big thing that the ship has
done is that the rail rates now are less than half
what they were before we built the ship, the railroads
having come to their senses. It has saved the
industry and consumers millions upon millions of
dollars because the higher rail rates would have had
to be added to the cost of the wine.

You just transported your own wines then?

For practical purposes, yes, we transported only our
own wine. It made seven trips a year.

To where?

We had a wine depot in Houston, where we owned two
barges, and we barged from Houston to Chicago, where
we had a bottling plant.

What did the wine go from Houston to Chicago in?
the same tanks?

No, no. It was transferred. We had a wine depot in
Houston where wine was stored and we owned two barges
with glass-lined tanks. Glass-lined tanks for the
barges were satisfactory because there wasn t the
heavy movement in the rivers that we had at sea. The
waters were smooth. You had to go through some pretty

Petri: rough waters around Hatteras and. those areas and the
motion would have cracked any linings other than
stainless steel, so we built the tanks in the ship
of stainless steel. After about a year of operation,
I made a deal with Corn Products. After we dumped
off our wines in Houston, we then carried corn sugar.
Corn Products added Just enough water to the corn
sugar so that it would flow it into our tanks, and
from Houston we transported the corn sugar to Yonkers,
New York. Our own plant was at Newark, New Jersey.

At first we had a real, a very difficult problem
in finding return cargos. We could get all the
chemicals we wanted for the return cargo, but we
never dared put chemicals into the same tanks that
carried wine. The only thing we would, put in was
something that was edible, Just for fear of any
possible contamination. However, the answer finally
came when we made a deal with some big alkali
company to carry soda ash to California. Now soda
ash is what we used to clean the tanks before we
refilled them [laughter]. To this date, the main
cargo on the return trip is soda ash, which is used
extensively here In California for everything from
glass making to just about every food processor,
including wineries, as a cleansing agent. The ship
has been a very profitable venture, profitable
especially against what the rates would have been.
She s still operating.

She nearly foundered on us once. This made
headlines throughout the world. She was going through
the Golden Gate during a real heavy storm and she was
fully loaded right down to the maximum. She was
drawing 35 feet of water. She hit that sand bar
across the Gold Gate and lost her rudder and. her
propeller [laughter]. But the anchors held her right
off of Fleischhacker Zoo, right before she would
have been grounded. She was towed back to San
Francisco and was back in service within a very short
period of time, about four weeks. They put on a new
anchor, rudder, propeller, and made some other minor
repairs.

Oh, I nearly forgot, most of the motors were
shorted out, because it hit what they call a "green
wave" that must have been very tall, because about
35 feet above the water line there is an air vent
that cooled the whole electrical panel. Well, anyhow,

Petri: water got through the vent. Maybe only 20 or 30

gallons of water, but enough water went through the
vent to short out the whole electrical system. As
a result she had no power. Well, she didn t have
a propeller [laughter] and she didn t have a rudder
and no power. And so it was Just one of those
miracles that the anchors held. When the anchors
finally held, she had only about three and a half
feet of water under her. It was Just one of those
lucky things that she was saved. However, she was
fully Insured. Naturally, the insurance company
repaired it. The day she went back into service was
the day I went in the hospital with a heart attack
[laughter]. I remember that quite well.

THE SALE TO ALLIED AND OTHER VENTURES

Petri: Let s go back to Allied now. Allied, had grown. It
had grown considerably. And we had grown. We had
then grown to where we were selling in the vicinity
of 300,000 tons of grapes [made] into wine. This was
in 59 shortly after the ship was commissioned. The
profit-sharing formula that we had was a very
difficult one to put into practice because no matter
how you try to figure out the profit-sharing, depending
on the weather, the size of the crop and its
commercial value, either we or they got the best of
it. And every year this became a more difficult
problem. The more they and we grew, the more
difficult the problem became. So, one day... I remember
exactly. We were meeting with the executive committee
of Allied trying to again figure out the formula.
That year was an especially difficult one. We were
at the Sun Dial Motel in Modesto.

And I said, "You know, gentlemen, there s only
one answer to all of this. Either we ve got to buy
out all of your vineyards, or you ve got to buy out
our company; otherwise we re going to have to part
company soon, because this whole deal is getting
impossible. Every year one or the other of us, no
matter what the predetermined formula is, seems to
think he has gotten hurt. This is and. I believe will
always be true. It s too much of a fluctuating
business. If rains come the price goes down. How
can you figure a fair average market price basis when
grape prices fluctuate as much as they do?"

Signing the agreement between United Vintners and Allied Grape Growers, 1959.
Left to right, standing, Tilden E. Genzoli, Walter E. Vincent and Buddy T.
Iwata; seated, Louis A. Petri, Robert C. Mclnturf.

Petri: So, in unison, that executive committee said,

"How much?" [Laughter] So it wasn t too long after
that that we sold out, our family sold out, our
entire interest to Allied Grape Growers, that small
co-op that started with that raisin deal [laughter].
And so... anyhow we sold out to them. They put no
money down. It was to be based on a ten-year
pay-off. The sale was for $2^,000,000 on a ten-year
pay-off. I had to sign an employment contract,
maximum allowed by law, for seven years. I agreed
to run the operation for them for seven years, which
I Just about had to, because I wanted to make sure
that they earned enough money to pay us. [Interruption]

Well, we sold out to them. There were acceleration
provisions within the contract. We made enough money
for them, purely from their own earnings [so that]
they were able to pay us off the $24,000,000 in about
seven and a half years instead of ten. Now this was
before the tax laws changed. Therefore they were
able to pay us off with tax-free dollars, and*...
[buzzer. . .]

(Interview #3 - September 4, 1969)

Teiser: Let me ask you about a couple of things that happened
before the sale to Allied Grape Growers, just scraps
of things. In 195^, you considered a merger with the
Blair Holding Company. What was the purpose of that?

Petri: Well, actually, Blair Holding Company was an offshoot
of the Bank of America-Transamerica split, because
the government ordered them to split. And one of the
things that also had to be spun off from Transamerica
was the Blair Holding Company. .Every stockholder of
Transamerica got Bank of America and Blair Holding
Company stock. There was a lot of dissension among
the management and directors of Blair, and I was
asked to go on the board of directors. The company
had many valuable assets, but was poorly run. After
a while, I tried to take control of the company
through a proxy fight, but I lost.

*See also pp. 35-37-

Telser: This was personal, not a matter of,..

Petri: No, this would have been for our company. The proxy
fight was over our wanting to merge our company with
the Blair Holding Company. The real purpose back
of it all was that our company was getting big. We
had all of our family fortunes locked into the
company. They had something like 56,000 stockholders,
if my memory serves me, because they had the same
number as the Bank of America and Transamerica at
the time of the split. We would have owned about
50 per cent of the company and would have had control.
Based on independent appraisal and evaluations made,
we were as big as they were. It got to be a very
nasty proxy fight. There s no use going through all
the reasons why we lost it. I wish I could do it
again today. I think I d know how to do it. But
maybe it was just as well. But if we had merged
with them, my family would have had shares in a
publicly held corporation that were readily saleable.*

Teiser: Then in 1957 you were considering public financing
of some sort again. What was that?

Petri: Well, I went to many underwriters and tried to find
one that would underwrite us so that we could go
public, but [being] strictly a wine company, in
those days, they would have discounted us so much
that it wasn t worthwhile to go public.

Teiser: In your attempt to take over, I guess, majority

interest in S & W was that what you were trying to
do?

Petri: Well, yes, what I wanted to do was diversify our

company. In this case I did manage to get control
of S & W. I did that, as I said before, to get
diversified so that we could go public. At the same
time, I was also trying to buy a glass company. But,
when I was in the middle of all this, along came our
chance to sell out, lock, stock and barrel to Allied.
We decided this was the best deal.

But before the sale I did want to diversity and
that s why I took control of S & W through some stock
maneuvering, you know, where you make offers, public
offers, to the stockholders. We acquired a 51 per cent
ownership of S & W. And then I sold S & W to Di Giorgio.
I had to" sell it because the co-op couldn t buy it.
The CO-OD would have to be an agricultural entity.

*and therefore our money would not have been locked
into a family-held corporation. [added by Petri.]

Petri: So they couldn t buy S & W as part of our company.

Telser: Oh, was it as a result of that that you made the
marketing agreement with Di Giorgio, or was that
something separate?

Petri: That was something separate. We needed more grapes
and they had a winery and plenty of grapes. They
really became the same as a member of Allied. Then
later we bought their Santa Pe division from them.
What we really did was to make a deal where they
made the wine at their plant at Delano. The grapes
used were placed into the Allied pool and they were
paid a fee to make the wine. Then we franchised the
Santa Fe label and. all other labels they owned from
them. There were many labels such as Padre, Vai and
others. Later we bought out all the labels from
them. We built a large bottling and warehousing
ot&gt;eration in Los Angeles and bottled and sold
directly to the retailer all the Santa Fe, Italian
Swiss Colony and Petri and other labels we owned.
One of the labels we bought from Di Giorgio was Vai.
Mr. Jimmy Vai was one of the great guys in the
history of the wine business.

Teiser: You got his label?

Petri: Yes.

Teiser: He s still down there in the wine business?

Petri : Well , that f s the nephew.

Teiser: I mean, the family?

Petri: Yes, and they are using the Vai label. We never
disputed it.

Teiser: He uses the label again?

Petri: Yes, we never disputed it. It didn t mean that much
to us.

Teiser: Funny how labels travel.
Petri: Yes.

WINE MARKETING PATTERNS AND COMPANY STRUCTURES

Teiser: I wanted to ask about the general pattern of marketing
of wines. I understand that you and Gallo changed
the pattern.

Petri: We very definitely did. We promoted table wines

versus sweet wines. We promoted better wine making
methods. Other than research done by the University,
both Gallo and ourselves did more research than
anyone else and maybe even more than the University.
We carried forth and perfected what the University
did in a test tube so to speak, and made it practical.
The whole concept of truly merchandising of product
the same as nearly anything else such as canned goods
or other grocery products, was done by Gallo and
ourselves. We were the true leaders in it.

Teiser: California Wine Association at an earlier stage had

apparently tried to do the same thing and never could
get it started.

Petri: They never got off the ground with their labels.

They should have been by far the dominant people in
the wine industry. They started out Tilth everything
running for them. They had the labels. They had the
wineries, and they had the grapes. And they also
had the basic financing because they had lots of
product when Repeal came and were able to sell it
and make a lot of money. I hate to be the one
criticizing them. I would prefer you do not use such
critical statements. Otherwise there s no use my
talking the way I m talking about people and companies.

Teiser: Well, you ll see the transcript. I ve talked to

people involved in the California Wine Association
and they ve said stronger things than you said. But
if peonle in the industry such as you, who are now
out of it and have some perspective, can t give
analyses. . .what I mean is that they are very valuable
and will continue to be. I know none of you want to
say mean things about each other, but many of you
have given such analyses, which explain why certain
things came up when certain changes were made. Again,
because you and Mr. Gallo are comparable and because
I ve talked to Mr. Gallo and have some idea of what
he s done both of you tackled the relationship with
growers in new ways, each differently, didn t you?

Petri: That s correct. He really has developed a pattern.
He sort of marries the growers. When the industry
has a surplus, a grower is either married to Mr.
Gallo and the Gallo set-up, or otherwise Gallo just
doesn t buy from him. He does not want to go the
cooperative route. He and I have discussed this
matter many times. His is a very small family.
Essentially, Just Ernest and his brother Julio, and
one other brother who is in the grape-growing
partnerships. He didn t have the complexity of
having a large family, as I did. He is able to
hold his family together much easier than I could
and can do things much easier than our family was
able to. We had... well, we ended up with 56 members
in the family as stockholders in our company.

Teiser: Is that right? Of course, you ve had diversified

holdings in your company, a longer peiod of business
holdings .

Petri: But essentially we were in the wine business. We

went out, but then retracted, as I told you before.
However, we were in the cigar business at the same
time.

Teiser: Thinking about his relationships with the growers,
outside of his own family holdings, Mr. Gallo s
solved it one way, and as I say, you solved it
another.

Petri: I solved it basically by going co-operative.

Teiser: That co-operative, for example, how does it compare
to Mr. Setrakian s?

Petri: Oh, it was at least fifteen times bigger. First of
all, Setrakian s is a small-knitted co-op, only has
a few members. And it is essentially for production
of their own grapes, making wine and brandy from
their own grapes.

Teiser: It s not a typical one then?

Petri: Yes, it is typical. It s a true co-op, but it

doesn t have as many members that is as many small
and large growers such as we had. When I left the
company I think we had 1800 grower-members in Allied.
I don t think Setraklan has over 25 or 30 members.

Teiser: I think that Mr. Gallo Indicated that he thought

that the day of the co-op was over, and others have
too.

Petri: Well, yes, it is for practical purposes. Allied,
for example, has sold out and generally the other
co-ops have not been successful. The only one that
was truly successful was Allied.

Teiser: Why do you think that is?

Petri: Because it had brands to sell its wine with. We

sold them the brands , sold them Italian Swiss Colony,
Petri, Lejon, and many other brands. The other
co-ops have just not been able to get off the ground
against the type of competition that Gallo and
United Vintners can give them. They don t have
strong brands. The one coming closest to having a
brand would be Guild, and it is not a very strong
brand. And very honestly, I think that Gallo is
correct, that the basic day of the co-op is over.
Unfortunately, one of the things with a co-op is
that when growers want to become businessmen and
want to start trying to run things too much, then
they re going to start getting into trouble.

THE BUYING AND SELLING OP PROPERTIES

Petri: Allied, as you know, has sold United Vintners to

Heublein. Allied still owns 20 per cent of United
Vintners. Well, 18 per cent actually. It was 20
per cent and they changed it to 18 per cent. And it
gets 20 per cent of the profit that United Vintners
makes. Allied Grape Growers is still in existence
and under a long term contract is supplying grapes
to United Vintners. Allied, as I understand it,
gets market prices for the grapes and 20 per cent
of United Vintner s profits.

Teiser: Which means essentially that that problem is solved?

Petri: Yes, and they made a lot of money. They paid our
family $2^,000,000 for United Vintners, and they
sold out at the equivalent of about ^38,000,000 to
$40,000,000. So there are a lot of rich growers
in the state. [Laughter] They ve got a tremendous

Petrl: amount of Heublein stock, both common and preferred,
and they never put up a penny. The $2^,000,000 that
they paid us all came from profits.

Teiser: Let s go back, if we may, to where you had sold to
Allied Grape Growers. You told why, but what were
the terms of that sale?

Petri: Well, it was $2^,000,000. It was payable, actually,

over close to ten years, but there was an acceleration
clause in the contract. It could be paid sooner than
that if certain things occurred, and actually they
paid us off in about eight years, the last payment
being a couple of years ago. It was all paid from
earnings. The tax laws were very much in their favor
at that time, the tax laws have subsequently changed.
They did not have to pay taxes on the retains so they
were able to use tax-free dollars to pay us. In
short, the growers put their grapes into Allied, were
paid market prices for the grapes, and now they ve
ended up as a group with 38-^-0 million dollars.

Teiser: After you sold, your function continued...

Petri: I signed a contract of employment. This was a

condition. It was a seven-year employment contract.
And I left the company just about at the end of the
seven years. I was chief executive officer. I was
president, and then I made [B. G.] Solar! president
and I became chairman of the board, but chief
executive officer. I was chief executive officer
to the day I left the company.

Teiser: So they wanted you to continue running it, and you
did.

Petri: I did. Well, it was practically a condition, and
what the heck. I wanted to make sure we got our
124,000,000. [Laughter] That s for sure. Now,
interestingly enough, the end of that story will
probably be the end of this month or the first week
of October. When Allied bought United Vintners from
us, they did not have enough grapes of their own
signed into the co-op, so we formed a corporation
of the identical stockholders called Grape Factors.

Teiser: Which stockholders do you mean?

Petri: The identical stockholders of the United Vintners

Petri: who sold out to Allied. They formed a new corporation
called Grape Factors. Grape Factors for the first
five or six years supplied the additional tonnage of
grapes that they were short of in their sign-ups to
satisfy their sales. Grape Factors supplied them as
participating non-members. We participated in all
pools in the same way as members, but because we
were not growers, we could not be members. We ended
up with a tremendous amount of retains, and actually,
Grape Factors (as of today) owns about 18 per cent
of United Vintners, which we have as a separate deal-
sold to Heublein. And that deal is closing this
month. [Laughter] And that s the end of the story
of our dealings in the wine or grape business as a
family. With it has gone even the vineyard that we
owned at Uklah. Grape Factors owns a great big
vineyard at Ukiah, about 500 acres, which has been a
member of Allied. Everything has gone over to
Heublein. We have sold it all to Heublein. And, as
I say, that transaction will take place in a very
short time.

Teiser: I think you mentioned that you had purchased certain
of the Cella holdings. We haven t gone over it.
I have 1961 with a question mark. Was that the year?

Petri: It was just about then, yes. It was Just about two
years after we sold to Allied 1961 is about right.

Teiser: How did that come about?

Petri: Well, Mr. [J. B.] Cella and his brother Lori had

died, and it was just a natural. They had a lot of
grapes and the type of wine sales that fitted right
into United *s picture. And they were willing. They
did not need the money Immediately, so they were
perfectly willing to wait over a period of time for
their money. They took the same terms as we did,
and it worked out absolutely beautifully for both
sides. They were specialists in the production of
special wines. For example, the Taylor Wine Company,
which is a very large wine company In the East they
supplied them with a tremendous amount of special
wines for blending with the wines they made in the
East.

Teiser: So it was no longer, as it had been very much
earlier, the Roma Wine Company?

Petri: Oh, no, no. They had sold out Roma. The Cella
family sold Roma to Schenley and then went back
into business as Cella Vineyards. The Cella family
worked for Schenley for a while and then went back
into the wine business on their own. They formed
the Cella Vineyards and became specialists in making
special types of wine. They also had a very large
concentrate business, a lot of which they made from
their own Salvador grapes. Salvadors make excellent
heavy bodied concentrates. Mogen-David was one of
their large customers as was Manischewitz. They
grew a lot of their own grapes to make these special
wines. After both the senior Cellas had died, the
rest of the family was willing to sell, so we bought
them out. It was a good deal for all concerned.

Teiser: What did you buy?

Petri: We just bought the winery at Reedley, California,
and took over their business. They signed into
Allied all of their grapes.

Teiser: So they simply merged...

Petri: Yes, it was sort of a merger. They became the

largest grower member of Allied. United did well
with it. It gave United a different type of
business, a business that they had very little of.
Cella had about 50-60 thousand tons of real good
business that was profitable. As I say, it was a
good deal for everybody concerned.

Teiser: We mentioned the Blair deal, but you certainly became
adept at financial management.

Petri: Well, I should never have lost the Blair deal, but
we won t go into why. [Laughter]

Teiser: That s not what I meant. I meant you must have
learned tremendously. . .

Petri: Yes, I have. But I ve had some real fine help.
John F. Forbes & Company, who are a large C.P.A.
firm here on the West Coast, were of tremendous help.
The head of John F. Forbes is Scott Dunham. He is
one of the finest tax men in the United States. He
worked very closely with me. Then, too, there is a
man named George Bangle who did all of our accounting
work. He too was of great helr&gt;.

Petrl :

Teiser:

Petri :
Teiser:
Petri :

Teiser:

Petri:
Teiser:

Petri :

Teiser:
Petri:

Yes, I seem to have done pretty well and if I
can brag a little, I am director and also chairman
of the Finance Committee of Foremost-McKesson. It
is one of the largest companies in the United

States $1,600,000,000 in sales last year,
chairman of its Finance Committee.

And I m

Oh, my Lord, I knew you were on the board, but...
And you re also on the board of the Bank of America?

That f s corr e ct .

Have you been active on that?

Yes, I am active on both boards. I attend every
meeting I can. I m sorry I missed one recently
when I was in the hospital. [Laughter] That s about
the only reason that keeps me away. Actually, I was
out of the hospital but the doctor didn t want me to
fly down to Los Angeles. The meeting was in Los
Angeles, so I didn t go down.

I talked the other day with Mrs. [Claire Giannini]
Hoffman, and I was amazed at her information and
analysis of the recent past.

Yes, she s quite a woman. She s on the board of the
bank. I ve known her for most of my life.*

This brings up another family that I know you ve
known all your life, the Paganlni family of Security
Lithograph. Did they make your labels?

Yes, they made our labels. They own this building
that we re sitting in. [Laughter] Our families
have been very close friends. As a matter of fact,
Bud Paganini has a boat, and this weekend we re going
up the river on his boat. He has a beautiful 57-foot
Chris Craft. Charlie, his brother, and I were in
the same class together at St. Ignatius High School.

Was there anything special about their labels?

They were a very fine label house. They made our
labels from Just about the day we went into the wine

*See also pp.

Petri: business. But they always gave us good labels, good
prices. They also helped us in the design of many
of our labels.

Teiser: Yes, what about the design of labels? Did they have
them designed, or...?

Petri: Well, I was one of the pioneers in hiring someone
like Sinel; we also hired Landor. I had Landor...

Teiser: You had Walter Landor?

Petri: Oh, yes. One of the first jobs that Walter ever did
was for us.

Teiser: One other thing I have here in my notes, and this
goes back when you bought Italian Swiss. I read
somewhere that you were bidding against Mr. Gallo,
in effect. Is that right?

Petri: That is true. He was trying to buy it actually...
[Laughter] I don t know how this is all going to
sound after a while. He had Italian Swiss Colony
under option, but couldn t quite make up his mind.
It s a long complex story. Maybe I had the idea
before anybody else. I was in the hospital
recuperating from a back operation the day I heard
of the break-up within the Italian Swiss Colony
organization.

Teiser: What break-up?

Petri: When they fired General [John R. ] Deane and Solari.
National Distillers fired General Deane and Larry
Solari.* I was told by Harry Caddow, who was then
the general manager of the Wine Institute and I was
president, the very day this happened. I immediately
went to work trying to see if I could buy it because
I knew then that they were going to want to sell it.
But unfortunately I was in the hospital and I
couldn t do a hell of a lot about it. Gallo got
there before us, but in the end I managed to buy it.
[Laughter]

Teiser: That really hasn t been his method of building up.

Petri: No, he has not gone the acquisition route. What

he did was to plow back every cent that the family
made. His big growth really came about after we sold

*B. C. Solari

Petri: out to the growers. See, the growers had to pay us.
They could, not spend all the money they wanted or
should have for merchandising, advertising and
selling. Remember they had to pay us. Gallo had
nobody to pay so he just plowed everything back into
his business. He was never bigger than United
Vintners during the time I was there, but today he f s
bigger than United Vintners. Not a hell of a lot,
but by a few percentage points.

NATIONAL CORPORATIONS AND PREMIUM WINERIES

Teiser: You purchased Inglenook in 65 was it, or 64?

Petri: Well, there s a picture of John Daniel and me signing
the papers. I should put dates on all of those
things.* [Laughter]

Teiser: How did you happen to do it?

Petri: Well, it is very simple. Some fellow, who at one

time actually used to work for me, Lou Gomberg,** came
in and said that John Daniel was willing to sell and
he thought an awful lot of me and thought one of the
first ones he should approach was me. Lou Gomberg
acted as an in-between. I liked it very much so it
didn t take very long to buy it. I bought it
naturally for United Vintners. It had just the image
that we needed and that would help us. The premium
wine field is now the fastest growing field of the
wine business. Inglenook was owned half by John
Daniel and half by his sister. I think she has a
married name. I don t remember. She lives around
Lodi and raises quarter horses. They re rather
wealthy and still own a lot of vineyards. John
Daniel signed all of his premium grapes into Allied.

Teiser: So he became one of your co-op members?

Petri: Oh, very definitely.

Teiser: Is he still?

Petri: Oh, yes.

Teiser: So it was both an idea and a practicality.

*May 1964.
** Louis R. Gomberg.

Petri: That s correct. It was a most amazing thing to me
that John would, sell. I never dreamt that he would
be willing to sell, but sure enough he did. He d
decided that he and his sister should sell, take
life easier.*

Teiser: That s the route of a lot of them are taking now.
What do you think? Is the day of the family owned
winery gone? Who s going to produce premium wines?

Petri: Well, Beaulieu was sold Just the other day to

Heublein. I helped put the two sides together. I
actually think that Heublein will do better for
Beaulieu in many respects than the family could. They
can invest a lot more money in such as planting
premium grape varieties. Then, too, they have a
wonderful merchandising organization. The premium
wine business is a very difficult field. There is
a long and expensive period of aging. You take for
example Cabernet Sauvignon, you ve got to age it
four or five years. You ve got your money locked up
for four or five years. To grow, you ve got to plant
vineyards. By the time you plant the vine to the
first gallon of wine that you can bottle, it s nine
or ten years. Look at the long investment that it
takes.

Teiser: Will Heublein, and will the other large companies,
do that?

Petri: Yes, I believe they will. They knew this when they

bought. They re willing to spend this kind of money.
When United Vintners bought Inglenook it was part of
a family of growers. The first major sale of this
type after Inglenook, I guess, in the Napa Valley,
was Beaulieu. Almaden has sold out to National
Distillers. Almaden is not in the Napa Valley. This
is quite a switch, since National Distillers sold us
Italian Swiss Colony [laughter], and then they go
back in the wine business. But there again, they
wanted to go back into the premium wine field.**

*John Daniel (who continued to use the designation
"John Daniel, Jr." after the death of his father,
John Daniel, Sr. , in 1953) died July 13, 1970.

**See also pp.

Louis A. Petri during
interview, September 10,
1969. Photographs by
Ruth Teiser.

(Interview #4- - September 10, 1969)

STABILIZATION AND THE BANK OF AMERICA

Teiser: I m quoting from an article you wrote in the
January , 19^0 , Wines and Vines. ...

Petri: How many years ago is that? That s 29 years ago,

Teiser: It says, "Co-operatives, such as the Central
California Wineries, will bring stability by
preventing distressed stocks from reaching the
market and. ruining the whole price structure,"

At that time, I presume, you were much in favor
of such a stabilization plan. Do you want to speak
of Central California Wineries?

Petri: Well, we, that is our company, were never part of it,
The industry, however, was in bad shape. The Bank
of America, in order to help the wine industry,
helped form the Central California Wineries. As I
said before, the market at that time was truly
distressed. We had tremendous surpluses of wine
and grapes. Prices of wine had gone completely to
hell. Through the leadership of the Bank of America,
using their Burke Critchfield, and a man by the name
of Lou* I can t remember his name; it ll probably
come to me in a moment. They formed an association
and put many of the distressed wineries together
into one co-operative selling association. They
spent quite a bit of money. They designed bottles
and labels and placed all the wine in one pool and
began marketing through the association. They spent
a lot of money advertising and merchandising.

We were very much in favor of it (even though
we were never part of it) because we figured this
would help bring some stability to the Industry.
Nobody could make money with the market as distressed
as it was at that time. One of the reasons, as I
recall, that the association broke down was that the
government stepped in and complained that this was
a violation of the anti-trust laws, that this
association was in fact a price-fixing vehicle. They

*See p.

Petri: acually indicted just about all of us [laughter],

including the Bank of America. The whole thing was
eventually dropped by the government,* As time went
on, the economic situation got better, and so because
of pressure from the government, Central California
Wineries was dissolved and everybody went their own
way. But it was really more of a co-operative
selling venture and not a true co-op such as Allied.
Oh, yes, I recall the name of the other man it was
Lou Golan.**

Teiser: Walter Taylor I think was....

Petri: Yes, Walter Taylor. Yes, Walter Taylor was the head,

the general manager of the California Wine Association.
They were a co-operative. Yes, he, Walter Taylor,
became active in [Central California Wineries],

Teiser: I wanted to ask... I know that your father was a

director of Bank of America and that you have been
since 1956, I believe. Does this have any relation
ship to the Bank of America s interest in financing
the wine Industry?

Petri: Well, I don t think it did any particular harm. My
father was a very close friend of A. P. Giannini,
and became a director right after the big Walker
fight. My father was a director for 25 years minus
two meetings. They gave him a 25 year pin when he
was in the hospital. He was one of the leaders in
helping to fight the eastern interests led by a
Mr. Walker*** that were trying to take control of the
Bank of America at the time. That was about 40 years
ago. My father became incapable of serving on the
board because he had had quite a number of strokes
and was quite ill. Clark Beise, who was then
president, asked me to serve. That was around 1956.
Yes, it s been about 13 years that I ve been on the
board .

Teiser: Have you been the consultant on wine Industry
questions?

Petri: I ve been called in quite a number of times to give
advice on agricultural problems, including wine and
grapes. They certainly have been wonderful to our
family. They financed us from the very beginning,
as they did and are sill doing for just about everyone
in the industry.

*See San Francisco Chronicle. April 13, 1950: "Tapp

Asked About Wine Organization at TA Hearing."
**Louis Golan.

Teiser: Beginning in the valley, was it?

Petri: Everywhere. You name the family in agriculture
north or south and it probably got its original
financing from the Bank of America. The Bank of
America was really the first bank to finance
agriculture on a large scale. Financing of agri
culture was always thought of as a gamble. There
was always the gamble of weather and other hazards.
The bank was the first one to really finance farmers
and their crops small and large farmers. It made
California. Not only as to the wine Industry but
as to all other types of agriculture. If somebody
had a bad crop one year, all right, so they made it
up the next year. They would carry them over. But
in those days, going back now to the early 1900 s,
banks just didn t want to finance agriculture. They
just wanted to finance the big tycoons of industry,
and not the little fanner. But the Bank of America,
through A. P. Giannini s leadership, financed
agriculture. The larger wine industry financing by
the Bank of America really occurred when Mario
Giannini was the head of the bank. He was the son
of A. P. Giannini and he was the brother of Claire
Giannini Hoffman. Mario died about 15 or 1? years
ago.*

Teiser: He lived for just a few years after his father s
death, didn t he?

Petri: Yes, for about four or five years. However, he was
a very sick man and spent very little time at the
bank. He practically worked 2^4- hours a day, not at
his office but at his home. He had that blood
illness what do you call it? hemophilia?

Teiser: But he did have an effect on the bank s course?

Petri: Oh, very much. I think he did as much for the Bank
of America to make it the great institution it is as
anyone other than his father. His father was a great
genius; his father was the one who put it all
together and made it a great institution. Mario
Giannini really went all out. He went so far that
the government made him retract. The empire would
have been twice as big if the government hadn t

*L. M. (Mario) Giannini died in 1952.

Petrl: stepped in and stopped them.

Teiser: You knew him?

Petri: Oh, I knew him quite well.

Teiser: What kind of person was he?

Petri: Great man. Truly a great man. Very, very brave

"but humble man. One who lived a life of continual
sacrifice. His wife is still alive and we re quite
friendly with her. She has a home in Palm Springs,
so do I, and we get together quite often. I also
know their two daughters.

Teiser: No sons in the family then?
Petri: No.

INDUSTRY ORGANIZATIONS AND ECONOMICS

Teiser: To skip to another chapter your years as president
of the Wine Institute. What do you consider the
main significance of your service in the Wine
Institute?

Petri: Well, I was the last of the honorary presidents.

When I became president, the Wine Institute was in
really deep trouble. This was during a period when
the economics of the wine industry were real bad.
It was in the years 1952 and 1953- Amongst the many
problems we had a problem with one of the great men
of the wine industry, Harry Caddow, who was general
manager of the Institute from its start, but who
unfortunately became ill and was no longer able to
function efficiently. It was my unfortunate task
to retire Harry Caddow graciously and put the Wine
Institute back on track. It was when I was president
that we hired Don McColly. I don t remember the exact
figures, but when I went in as president, the Wine
Institute had perhaps somewhere in the vicinity of
70 per cent of the industry as members. When I went
out, it was closer to 90 per cent. So we were back
to being a harmonious institute.

Teiser: Did you go in just after the California Wine
Association pulled out?

Petri: Let s see, I think you re right. The California Wine
Association had pulled out already. Before I went
in. But quite a few others had. There was a lot of
dissension in the industry when I went in. I helped
to remove some of the dissension and get people to
oome back into the Institute. I think the big thing,
however, that helped was that the industry began to
prosper during that period.

Teiser: Did your concept of the Wine Institute and its
functions differ from other members .

Petri: Well, that is a difficult question to answer. I was
very active in all kinds of stabilization r&gt;rograms.
I was chairman of a couple of them. I acted on all
of them. I was always trying to find some means of
equalizing the supply of grapes. It was most
unfortunate that the wine industry has always been
to a lesser degree today, but always has been and
probably always will be to some degree the scavenger
of the industry.

Grape growers make as many raisins as they want
to and ship as much table grapes as they can, and
then whatever is left over, at one price or other,
ends up in the wineries. Therefore, because the
wineries take the surplus of the other branches of
the grape industry, its stability is much more
volatile. And this is why I ve always been very
much in favor of the co-operative, where a grower
had a firm home for his grapes and that was it.
That s why I m in favor of what Gallo has been doing,
where he will buy from people who are faithful to
him and that s it. Ideally it is best if someone
has a home for his grapes in whatever branch of the
industry he chooses to be in, but doesn t because
of a rain or something else try to find a home in
the wine industry only during the year he s in trouble,

Teiser: Since more so-called varietals are being encouraged
those are not adaptable to raisins, are they?

Petri: No. Raisins are essentially made from Thompson

Seedless and to a lesser degree from Sultanas. I d
like to tell you something that absolutely amazed me
the other day: table wine sales finally exceeded
dessert wine sales. I predicted, 25 years ago, that
this eventually would happen. I m delighted to see
it happen. As the industry makers more and more

1*8

Petri: standard type table wines, they need more and more
of the you don t call them varictals as much as
you call them wine-type variety of grapes. They can
be grown in the San Joaquin Valley that has always
been most famous for its Thompson Seedless grapes.
Thompson Seedless still makes a decent white wine.
However, it s a light-bodied wine. But it s a
necessary grape for the production of dessert wines.
When you make a gallon of, let us say, muscatel,
half of the grapes that are used to make a gallon
of muscatel have to go through the stills to be
made into alcohol. It is one of the most efficient
grapes. It makes more alcohol per ton than any other
grape.

ACQUISITIONS BY HEUBLEIN

Teiser: I wanted to ask you to detail the Heublein I don t

Petri:

know whether you would call it "sale" or "merger,
How it came about.

Well, I didn t have too much to do with it at the
start.

Teiser: Who thought of it?

Petri: As I understand it, a fellow by the name of Lou

G-omberg and I gave you his name the other day in
relation to the Inglenook deal Lou Gomberg has
been a wine industry consultant. He used to work
for the Wine Institute. Then he became a wine
consultant to many members of the industry. Then I
hired him as ray assistant, but he was still a
consultant for so many other people and I hope he
reads this [laughter] that finally we made a deal
that he might as well go back in the consulting
business, and I would become one of his larger
clients. He is a very capable man. I like Lou
Gomberg very much. As I understand it, Lou Gomberg
was commissioned by Heublein to try to get them one
of the larger wineries such as Gallo or United
Vintners, that is, one of the large ones, because
they were very much interested in getting into the
California wine business. This was after I had left
United Vintners. And I understand that Gomberg went
to United Vintners, and because most members of the

Petri: management and of the board of directors liked the
idea they decided to pursue it.

I got very much involved in the deal after they
had started negotiations because I had a very close
relationship with most members of the board of
directors of Allied. I sat in on many of their
meetings because they wanted me to advise them, and
then too we owned Grape Factors. Later, as I told
you before, I was helpful to Heublein in nutting
them together with Beaulieu Vineyard, Ted [Theodore
A.] Kolb is my attorney and he was also the trustee
of Beaulieu Vineyard, I. think that the Beaulieu
sale was a great thing for the industry. I know
that a lot of people don t like to see these great
corporations coining into the wine industry, but to
a degree it is necessary.

Teiser: I think you said, last time you were speaking, that
one of the advantages of the large companies was
their ability to finance the holding of wines,
aging of wines.

Petri: Yes, the aging of wines, the ability to Invest in
merchandising, advertising and the promotion of
wine. Remember this about all family businesses
I guess that I m philosophizing to some degree but
it s going to be practically impossible in the United
States, as is true today in England, for a family
to own its business over too many years. The gap
of one generation to the other, which is maybe
20-22-23 years you can t accumulate enough cash to
be able to pay the government the inheritance taxes
that they re going to want and at the same time be
able to hold a family business together and. expand
it. Oh, one or two generations can do it, but then
as there are more children, and the ownership gets
more and more spread, it becomes more and more
difficult for families to hold on.

I think unless it s a real small winery, it s
going to be very difficult, especially in the
premium wine field where it takes lots and lots of
capital to grow. In most instances, you ve got
to plant your own grapes, and. as I said the other
d.ay, if you plant Cabernet Sauvignon grapes, before
you can put one gallon in a bottle, it s very close
to ten years before you can market the first gallon
of wine. You have invested lots and lots of dollars

Petri: in that first bottle of wine before it produces any
income. It s ,30 ing to take big corporations with
lots of money to do these types of things, to really
develop the premium wine industry in California.

Teiser: Well,, I think a question in many minds is, will the
big comnanies find it to their interest to make very
high quality wines?

Petri: Prom what I have seen to date of the big corporations
who have come to California, for example, Heublein
everything that they are doing is to improve the
quality. From the day that I had anything to do with
Inglenook, I did everything possible to inrorove the
quality of Inglenook. And that cost money. Actually
I think John Daniel was in that position in life
that he either had to start plowing a lot of money
into Inglenook or sell it. I believe this was one
of the reasons why John Daniel sold. We were big
enough as United Vintners to have plowed lots of
money into the operation.

After we bought it we built a fine fermenting
cellar, with stainless steel fermenting tanks that
had hot and cold controlled fermentation. This was
especially needed for white wines. We built a
modern bottling room so that the wine could be
bottled under excellent sanitary conditions. We did
everything in our power to increase the age before
we marketed the wine. We tried to get more varietal
grapes signed into the winery, which we were able to
do, due to the advantage of the co-op sign up. Now,
after I left, United Vintners did do certain things
with Inglenook that I very much disagreed with.
They went into the generics, which they should never
have done .

Now Heublein, both as to Inglenook and Beaulieu,
is doing everything it can to elevate the brands.
And frankly they would be the biggest fools on earth
to have come into this industry unless that s
exactly what they do, ajnd are willing to invest to
do it. I can tell you that I know that they paid
a goodly amount of money for Beaulieu. What fools
they would be if they bastardize or lessen the
quality or mass -merchandise something like Beaulieu.
In order to do this, they re even keeping B. V.
[Beaulieu] at this moment as a completely separate
entity, completely out of United Vintners.

Teiser:
Petri :

Teiser:

Petri :

I can see how they might have bought it just for the
label.

Well, you just don t create labels. You don t
create images. Especially you don t create fine
images such as Beaulieu overnight.

I mean, I suppose someone looking for short-term
gains could have used the label briefly for...

Oh, you could have taken and milked out Beaulieu
over eight or ten years and made a lot of money out
of it. You could do that with Inglenook too. You
could also do it with Louis Martini, Wente, Krug
and others. But the type of people who buy these
fine wines are sophisticated, they are gourmets and
true wine lovers. They understand wines, and you
give such people a couple of bad bottles of wine
[laughter] and they are not going to buy it again.

The only comparable thing I can think of is the
Jack Daniels whiskey distillery. Is that a valid
parallel?

To a very great degree, that is correct,
always maintained its quality.

It s

CURRENT AND FUTURE MARKET TRENDS

Petri: I see a tremendous, truly a tremendous future in the
California premium wine field, as I do also for
California brandy, California vermouth (irtiich has
practically run the European vermouths out of
business in the United States). Then too, California
champagne sales are growing tremendously.

Teiser: What about flavored wines? We haven t discussed
them much. I know you went into them a little.

Petri: Yes, they have a good growing market. There are
many flavors that people like that can be put in
wine. The business started in a very peculiar way,
and I think we can all thank Mr. Ernie Gallo, who
found a twist in the law and started producing them.
He first came out with Thunderbird, which was very
successful. Actually, Thunderbird was essentially

Petri: what the cheaper alcohol buyer, if you will the

buyer of inexpensive wine liked. He bought white
port and added, to it a little lemon or lime juice.
This basically is what Thunderbird is white port
with lemon flavor. But from that start there has
developed moderate priced cocktail type wines. They
are in a variety of flavors.

As a matter of fact, in the last Heublein s
financial statement I have a few extra copies of
it here; I can give you one they describe their
concept of flavored wines. I don t remember their
exact wording, but it was well nut. 1*11 give you a
copy.* Flavored wines have a good growing market.
They started as a novelty wine for the cheap alcohol
buyer. But many of them are now used as a cocktail
wine by many people, especially the younger
generation. The same people who can t afford the
prices of whiskey have also become large users of
table wine, which is really great for the industry.

Teiser: We re getting to the end of this tat&gt;e. This has

been a most interesting interview. Do you have any
general comments on the industry?

Petri: Yes. I m really delighted that the wine industry
has made such tremendous strides. Each year it is
hitting new highs in sales, and its public image
has also been hitting new highs.

*See Appendix C.

APPENDIX A

(Summary of interview with Dante Porestl, April 21, 1969)

Dante Forest! was born in Italy in 1883. Before he came
to San Francisco at the age of seventeen, his father had been
working as a carpenter, and had lived at Raffaello Petri s
Toscano Hotel. He was an original shareholder in the Italian
Swiss Agricultural Colony. He returned to Italy where he
died when Dante was twelve.

"Before my father die, he say to me, Dante, you go to
America. That s your country." Consequently, after learning
to be a cook in Italy, young Dante came to the United States.
He worked in San Francisco and nearby communities as a cook.
After the 1906 earthquake he met Raffaello Petri. On a ferry
boat, he heard someone calling Mr. Petri by name, and he
introduced himself. He later went to see Mr. Petri, and
subsequently worked with him in the construction of the
Cosmopolitan Hotel and restaurant in San Francisco. He became
a partner and did the cooking. It had 5^ rooms and served
meals to many more people than it housed.

Wine was bought in puncheons and bottled for sale. When
World War I started in Europe, imports were cut and the market
for domestic wines became very strong. Dante Forest! and
Haffaello Petri began selling wine in volume, shipping it and
various foods as well to many places in Northern California.

"But then I have to sell all this wine and get out,
because Prohibition, you know, stop everything."

Prior to Prohibition, Haffaello Petri and Dante Foresti
had bought a l60-acre vineyard and winery in the northern San
Joaquin Valley that they soon sold to the Smerzian family.
Then Foresti went into partnership with J. B. Cella and a man
named Podesta and bought the vineyard and winery near Escalon
that later became a Petri premise; it was there that the
interview took place, at his home on the winery grounds.
Under the name Alba Grape and Fruit Company, they also bought
the Homa Winery near Manteca and a winery at St. Helena.
J. B. Cella, who resided in New York, was eastern agent.
Podesta, who handled the company s books, died within a few
years. Subsequently Angelo Petri became a partner. The
company was licensed to operate during Prohibition as a
winery, and it also shipped grapes east by the carload. They
were picked by Chinese workers who also packed them and were
excellent packers.

After Prohibition, "when the wine came back, I told
Louis [Petri] (he was study to be a doctor) ... Let s get
in the wine! ... Some day you ll be the biggest wine man in
itl My god it happened.... We form a company. Was no
more Alba. Was the Petri Wine Company."

It was a subsidiary of the Petri Cigar Company, in which
he had long held an interest.

- j -^~ k 1

PBTBI \V
AttD AFFILIATE

^ST^BY^MlLllISjrilSS
PSTPJ

The present company was originally incorporated in 1912 as
the Petri Italian American Cigar Company. The name was first
changed in 1922 to the Petri Cigar Company, then in 19W8 to Petri

"Sine Company.-

The present corporation did not enter the wine "business
until 1933 "but has "been producing and distributing cigars continuously
from its inception. The B. Petri T?/ine Company, however, headed "by
Baffaello Petri, v;as in the v/ine "business from the late 1880 s until
prohibition. Eaffaollo Petri retired in 1918 and died in 192H.
In 1933, the present corporation, headed "by Angelo Petri, son of
Baffaello Petri, entered the wine "business and it has "been actively
engaged in the production and distribution of v;ine, since that time.

During the first five yearzh^ne present company was in tho
wine "business, it sold all of its tvine in "bulk. In 1938, it entered
into a contract with Safeway Stores Incorporated to "bottle v;ine for
them under their own private label. At the same time, it began
distributing bottled wines under the Petri label through wholesalers
in a few selected markets in the United States. In 19^+2, the bottling
contract with Safeway Stores was terminated and the company entered
into an extensive marketing program to promote the Petri label on a
nationwide scale. At the present time, the company is selling wine
only in bottles and has discontinued the sale of bulk wines. All
of its products are sold to distributors and State monopolies. At
tho present time, it owns only one direct branch operation located in

San Francisco and distributing the company s products in the San
Francisco-Bay area. This "branch operates as a separate corporation,
doing "business under the name of the Petri Distributing Company.
The company previously owned and operated "branches in Chicago, new
York, and Los Angeles, "but closed them in favor of operating through
independent wholesalers.

As of December 31, 1950, the company owned 510 acres of
land of which only 60 acres are planted to vineyard. It did, how
ever, own and farm approximately 1,900 acres of vineyard. During
the last four years, it has "been slowly liquidating its holdings and
is continuing to do so.

The company is also engaged in the production and marketing
of Toscani type (Italian Stogie) cigars under the d"ba of Petri Cigar
Company. It is the third largest producer of this typo of cigar in
the United States. It has a very dominant position in the sale of
Toscani type cigars on the Pacific Coast and the Territory of Hawaii
and is one of the four important selling "brands in the "balance of the
United States. It is estimated that the company does a"bout 20# of
the total Toscani type cigar "business in the United States. Up to
19^, the cigars were produced in San Francisco, at which time the
production of the cigars was moved from San Francisco to Clarksville,
Tennessee, whore the company .presently employs a"bout 200 people.

The present wine operation has "been "built up over a period
of years "by the purchases of many companies. The following is a
chronological "brief history of the various purchases of the company:

(1) The !ont Helena Calistoga \vine Company, controlling interest
purchased in 1933, remaining interest in 193H. Dissolved
in 1936. This company had throe small wineries under
lease in Napa and Sonoma Counties. The leases on two of
the wineries were allowed to expire "but the lease on a
winery at Forestville, California, was maintained until
at which time the winery was purchased.

(2) ATba G-rapo & Fruit Company purchased in 1934. A snail winery

and 640 acres of vineyard in Escalon, California. The
present winery at Escalon has resulted from many additions
to this winery.

(3) Sunny Hill Wineries, Chicago, Illinois, half interest purchased

in 1936 and remaining half in 1941. It operated as a
separate corporation in tho distribution of Petri "bottled
and "bulk wine in the Middle East. In 1942, the name was
changed to Petri Wine Company of Illinois which corporation
was liquidated in 1947 at which time the sale of Petri
Wine was given to wholesalers in the area.

(4) Major Wine Distributors, Inc., of New York City was purchased

in 1942. The name was changed to the Petri Wine Company

of New York. It operated as a separate company distributing

Petri Wine in the metropolitan area of New York up to

June 30, 1950, at which time the corporation was liquidated

and the ?etri line given to a wholesaler.

(5) Brans er Wine Company, San Francisco, California - Controlling

interest was purchased in 1942 and remaining interest in
1943. The name was changed to Petri Distributing Company
of California, and it is operated as a separate corporation
in the distribut ion of Petri Wine in the San Francisco-Bay
area.

(6) Tulare Wine Company, Tulare, California. Purchased in 1944

and liquidated in the satne year. The winery was acquired
"by Petri for additional productive facilities. The winery
was sold to the Argun Wine Company in 1949 after Petri
acquired K. Arakelian, Inc.

(7) Gianni. ni Vineyards of Tulare, California. Purchased in 1944 -

Approximately 1,280 acres of vineyards and "bare land
surrounding Tulare Wine Company of Tulare. All "but
approximately 240 acres of this land has "been sold.

(S) K. Arakolian, Inc. (.lission Bell Wineries) . Purchased
April 28, 1949.

(9) llargo Wine Company, Philadelphia, Pennsylvania - Half interest
purchased July 1, 1950, "by the K. Arakelian, Inc.

K. ARAKELIAK, INC. (ffiSSIOM BELL WIKEBTSS)

Tho company was founded in 1922 "by Krikor Arakolian and was
owned "by him and members of his family up to Hay, 1949,, at which
time, the Petri Wine Company purchased all outstanding shares of the

corporation. It operated continuously through prohibition, selling
sacramental wines, grapes and. raisins. After the repeal of pro
hibition, the company inaugurated an intensive nationwide campaign
to sell its wine. Bottling "branches were opened in "both Hew York
and Chicago. For the last five years, the company has sold approxi
mately 5,000,000 gallons of wine per year. Its main "brand, Passion
Bell, has "been well established in several of the major markets of
the United States. ;

During the shortage period created "by the war, the company
sold various of its "brands at high prices. In 1947 they reduced
their prices to levels lower than established "brands. For example,
in New Yorlc, up to Petri s acquisition of the company, a Quart of
Mission Bell dessert wine sold to the consumer for ,85^, whereas Petri,
Eoma, Gallo and Guild were selling at 98^ per quart.

The Petri ine Company acquired all of the oustanding stock
of K. Arakelian, Inc., on April 23, 1949, It has instituted many
changes in the methods and policies of the company. Briefly they
are as follows:

. .

(1) To discontinue "branch "bottling and distributing operations"
and to "bottlo all wine in California. It has DC on felt

that considerable savings could "be effected in having only
one "bottling overhead and that "by "bottling in California
the company would have "better control over the quality of
its products. The Chicago operation was closed as of
August 31, 1950; the New York operation is presently in
the process of "being closed and all operations should
cease "by April 1, 1951.

( 2 ) To concentrate sales _anA .promotional efforts to _raa.1or .wing

narket.% A great deal of money has "been spent in promoting
the sale of Mission Sell wine in many markets whoro the
foreseeable potential does not justify the expense.

( 3 ) To discontinue tho sale of. .lot? or priced seoondary "oranfln

and sizes r^icL conaontrate^all ..SGl.lin..q; r efforts on I-Tirnj.o^
Bell.. The high overhead of "branch "bottling operations
created a vicious cycle v;horain volume "became the all
important factor, and in order to obtain tho necessary
volume, much wine was "being sold at prices, which showed

To raise the, level of prices BO t ?.s to "be aor/ierehat _oompara bla
to ."brands .such as G-allo, G-uild, Italian Ry/isn Colony, etc..
Heretofore liission Bell was selling "between 10$ and 15/2
lower in price than other comparable "brands. The prices ^
have "been raised so that at the present time Mission Bell
is selling at about the same prices as Gallo, Italian Swiss
Colony and Guild,

(5) To redesign the packages and add items x to the,., line, no as ...to

realce it more complete. The "bottles, labels and cases have
"been completely redesigned and Vermouth g.nfl Italian type
dry red wine have "been added to the line.

(6) To eliro j.nate^ du olicating; overhead so _ that all functions other

than, sales are cora nined ^?ith Petri. The corporate office
presently located in iladera will "be shortly combined isith
that of Petri ine Company in San Francisco. .

MABGO WUffi C021PA$fY

The company "was established "by Edward Black during prohi
bition, selling sacramental wines. Upon Hr. Black s death in 1934,
John A. largolls was appointed general manager of the company and has
"been its active head since. The company was incorporated in July,
1935, under the name of Bisceglia Brothers Corporation, ^hich name
v;as changed to the Margo Wine Company on January 1, 19W7. The great.
majority of its "business is done with the Liquor Control Board of the
Commonwealth of Pennsylvania. ror the past four years, its sales to
the Liquor Control Conurdssion of Pennsylvania have averaged over
600,000 cases per year. Approximately 22% of its "business is under
the Grey stone la"bel \vhich is sold at premium prices. The popular
priced v, ine is sold under the i&rgo label. It is leasing a 35,000
square foot "building centrally located in Philadelphia. There is a
storage capacity of approximately 150,000 gallons and "bottling
facilities for 4,000 cases of v;ine per eight hour day.

As of July 1, 1550, Potri 7/ine Company, through its wholly
owned subsidiary, K. Arakelian, Inc., acquired 50# interest in the
iargo Wine Company, the other 50# is ov/ned "by John A. Margolis.

A number of contracts ware entered into, the important ones
"being:

(1) A five-year contract whore by K. Arakelian is to

produce all of ITargo Wina Company s requirements
at a price "based on a mathematical fomula.

(2) A five-year employment contract -with John Jl&rgolis.

(3) A ten-year stock pool agreement under which each

party has a purchase option on the shares of the
other party.

SALES , i AKfl KAlffCTTIFq

GKNEBAL

During 1950, Petri Wine Company, K. Arakelian, Inc., Petri
Distributing Company of California, and Margo "Jlne Company, topethor
sold 12,379,969 gallons of wine. This is 10.31g of all the California

wines sold in the United States and is 9.61# of all ^inos (including

imported wine and wines made in states other than California) sold in
the United States. During the 1950 vintage season, the winnries of
Potri and K. Arakelian, and certain wineries unfler production contract,
crushed the equivalent of 115,000 tons of grapes. This is slightly
less than &lt;*% of tho total 1950 estimated crush in California.

Young & Rioicara, Potri s advertising agency, has recently
made a summary of the available market surveys and statistical
reports that they and othors have prepared. A nuranary of their
findings may "ba "briefly stated as follows:

Of tho twenty one markets surveyed Petri was first
seller in sovon, second seller in six, and third
seller in five.

From Heublein Inc. Annual Report, 1969

United Vintners, Inc., Heublein s
newest subsidiary, is riding the crest
of a growth market for flavorful,
moderate-proof alcoholic beverages.

In the 12-month period ended |une
30, 19(&gt;&lt;), United Vintners exceeded
projections in both unit sales, up 7.1
per cent, and dollar volume, 11.3 per
cent. After-tax earnings for United
Vintners were up by a sizeable
amount in spite of an increase of
some $3 million in the cost of grapes.
This is partly due to price increases
but is also the result of a better
product mix. Champagnes, brandy
and premium wines, for example,
had a total increase of 25 per cent
in case sales.

Wine consumption in the U.S.
totaled 216 million gallons in fiscal
1969.

unueu is snaring in me increasing
wine demand at all consumption
levels because it has a product range
from ran; estate bottled vintages to
popular priced varieties.

Its Inglenonk estate bottled wines
are recogni/ed as wines of premium
value. Al tin; same time, United Vint
ners Italian Swiss Colony brand en
joys substantial popularity in the
fast-growing trend toward lighter,
often slightly flavored, cocktail-aper
itif wines. These beverages, appeal
ing to moderate family usage and
informal entertainment, are believed
to be the wave of the future.

Among the more notable entries
under the Italian Swiss Colony ban
ner is Mali Mai, a fruit flavored wine,
with an alcohol content of less than
12 per cent. Us growth pattern is out
standing. Market surveys reveal that
Mali Mai s consumer base is com
posed largely of young adults using
wine regularly for the first time.

United also has several strong con
tenders in the growing market for
sparkling wines with its Lejon Cham
pagne, Sparkling Burgundy and Cold
Duck, a combination of champagne
and sparkling burgundy. Demand for
sparkling wines outpaced United
Vintners production capacity but
nevertheless the Company achieved
a 33 per cent growth in this category.
A new production facility is planned
for completion in 1971.

United Vintners has been given re
sponsibility for Heublein s imported
wine business, the Vintage Wines
Company. The consolidation of the
imported and domestic wines busi
ness was virtually complete by the
close of the year. Victor A. Bonomo,
an experienced marketing executive,
was named president of United Vint
ners in March.

Growing public interest in wines
was evident in the first wine auction
ever held in the U. S. which Vintage
Wines Company conducted in Chi
cago last May. The auction attracted
widespread attention as a result of
extensive news media coverage. One
benefit from the auction was the new
values set for wines in this country,
particularly California premium
quality wines.

APPENDIX D
From Time, Vol 61, April 27, 1953

CORPORATIONS

Biggest on the Vine

Among California s clannish winemak-
ers. Louis Petri, 40. has long been marked
as a young man headed for hip things
La.-&gt;t week., as boss of his family s I etri
Wine Co.. he more (han fulfilled Ihe vint
ners expectations. Fur a reported $16 mil
lion, he bought National Distillers tamed
old Italian Swiss Colony Wine Co.. Ihe
nation s third largest producer of domes
tic wines. In the deal. Petii acquired
Italian Swiss s wineries at ASH. Lodi. and
Clovis. Calif . bottling plants at Chicago
and Fairview. N.J.. New York s Gamba-
relli & Davitto distributing organization,
and one of the best-known labels on the
domestic vine. At one leap. I etri went
from fifth to first place among U.S. vint
ners, with a total capacity of .(6 mil
lion gallons.*

Vintage Vintner. In Italian Swiss Col
ony. Petri got one of the oldest vintage
winemakers in the U.S. Founded in 1881
by Genoa-born Andrea Sbarharo as a col-
lectivist colony modeled after the cooper
ative theories of John Ruskin and Robert
Owen, Italian Swiss Colony s skilled wine-
makers gained a reputation for fine dry
wines. Although it still makes dry table
wines, the bulk of Italian Swiss Colony s
output is now sweet dessert wines, which
are easier to make, and appeal more to
American palates.

National Distillers Products Corp.

* I rcvious Bis Five I" S. winemakers. in order
if r;i|&gt;HCity. Roma (.10,000.000 gals.); Califor
nia Wine Association, a crowors coo|&gt;erative
I I9,i&gt;$o.ooo unls. ) ; Italian Swiss Colony I 26,000,-
ooo gals I ; Wine (1 rowers Guil l. a cooi&gt;erative
i : ooo.ooo Kals.): Pttri (. o.ooo.ooo gals.).

bought Italian Swiss in 1042 as a hedge
against wartime restrictions on whislcx
But. after the war. the I .S. wine market
turned -our. and has stayed thai way ever
since. Accordingly. National was cl.id t"
sell out.

New Blood. If anybody can squeeze a
respect, iblt profit out of Italian Swiss Col
ony. Louis I etri should be Ihe man to do
it. Behind him is a family tradition of
wincmaking Marled by his grandfather
Raliaello. who heuan a small winery in the
San Joaquin Valley in iSSo. built it into
one of the best-known vintners in C..II
fornia. During prohibition, tlie Petri- L I
out of the business, and made li ili.ui-
style slot ies in Tennessee. ot b;u k in
again after repeal by buying Ihu-e .ill
fornia wineries

My IN o5 the company was selling MI
much bulk wine in kegs that Louis IVm
quit St. Louis I nivcrsity s medical sdiool
to start rolling barrels in his family &lt; s.m
Francisco warehouse. He soon convinced
his father that keg distribution was out
moded, launched a program to bottle the
company s wine under the Petri label and
distribute it nationally. (Today, less ihan
10% of Petri s output is in bulk. 1 ! He ilso
expanded Petri s more profitable sweet
wine business while holding on to IViri s
dry wine market. By 1945. having learned ;
the business from dirt to decanter, he took i
over as president.

Petri soon showed a shrewd eye for a
smart deal. In 1940. he bought up the big
Mission Bell winery in the San Jn.iquin
Valley for $3,350.000. thereby doubled
Petri s storage capacity to 20 million
He also figured that it was more proin
to distribute wine than to grow and . ",i*li
grapes. So in 1951 he helped orgam/r ;..o
small- and medium-size San Joaquin I-IM
ers into the Allied Grape Growers. ln&lt; j
cooperative to which he sold all hi- win
eries in the valley. In return, Petri tot
exclusive marketing rights to Allied - out-

PKTKI S PI.TKI
From dirt to decanter.

put which last year made up &gt;i-, f , of
Petri s tonnage.

Winemon s Choice. Last week after a
t rn-1 in the San Joaquiii Y.illev hipped
vine- :nul -enl (he price of -weet VMIIO m
!&gt;ulk up to ^7 ,r a g;il ilium .. l&lt;iv. ol
&lt;- .&lt; . many a vinlner thought IViri had
made a -mart buy To -wing the deal fr
Italian Swiss Colony, he had Ixinowed
Irom the Bank of America That the b.mk
wa.s willing to plunge into the precarious
\\inemaking business wa&gt; a pat on the
back for Petri.

TIME, APRIL 27. 1953

INDEX Louis A. Petri

Alba Grape & Fruit Company, 3, 8, 10, 11, 53, 54, 57

Albano ( label ) , 12 , 14

Allied Grape Growers, 9, 17, 19, 20, 24, 29, 30, 32, 34, 35,

36, 37, fa., 49
Almaden [Vineyards], 42
American Can Company, 13
Amerine, Maynard, 15
Angelo Petri, (ship), 26-29
Arakelian, Eddi e , 19
Arakelian, K. , Inc. 57, 58, 59, 60
Arakelian, Krikor, 19, 57
Argun Wine Company, 57

Bangle, George, 38

Bank of America, 30, 31, 39, 43, 44, ^5

Beaulieu [Vineyard], 11, 42, 49, 50

Beise, Clark, 44

Bethlehem Steel, 27

Bianchini, Lelio Neil (Bob), 17, 24

Bierwirth, Jack, 22, 23

Bisceglia Brothers Corporation, 59

Black, Edward, 59

Blair Holding Company, 30, 31, 38

Branger Wine Company, 57

Caddow, Harry, 40, 46

California Wine Association, 33, 44, 46, 47

Cella, Flori. See Petri, Flori (Mrs. Louis), 7, 15

Cella, J.B. (John Battista), 7, 10, 37, 53

Cella, Lorenzo (Lori), 7, 10, 37

Cella Vineyards, 38

Central California Wineries, 43, 44

Cosmopolitan Hotel, 2, 5, 53

Crest View Winery, 18

Critchfield, Burke H. , 43

Cruess, William V., 15

crushing depots, 24, 25

Daniel, John, Jr., 4l, 42, 50

Daniel, John, Sr. , 42

Deane, General John R. , 40

Di Giorgio [Corporation], 31, 32

Double A (label), 14

Dunham, Scott, 38

Duvalle, Vincenzo, & Co., 1

Emerzian family, 3, 53

Ferranti s Restaurant, 13
Fidelis (label), 14
Forkes, John F. & Company, 38
Foremost-McKesson, 39
Foresti, Dante, 2, 3, 53-54

Gallo (Winery, E. & J.), 8, 12, 21, 33, 34, 35, 40, 4?,

48, 51

Gambarelli & Davitto, 21
Gazzaro, Joe, 18
Giannini, A. P. , 44, 45
Giannini, Frank, 18
Giannini, Mario, 45, 46
Giannini Vineyards, 57
Golan, Louis, 43, 44
Gomberg, Louis R. , 41, 48
Grape Factors, 36, 37, 49
Greystone (label), 1?
Guaraldi, Miss lola, 4

Guidi, Amelia, 4. See Petri, Amelia (Mrs. Angelo)
Guidi, Carlotta, 4, 5
Guild [Wine Company], 35

Heck, Adolph, 22

Heublein [Inc.], 35, 36, 37, 42, 48. 50, 52

Hoffman, Mrs. Claire Giannini, 39, 45

Inglenook [Vineyard Company], 11, 41, 50

Italian Swiss Agricultural Colony, 53

Italian Swiss Colony, 12, 20, 21, 22, 23, 25, 32, 35, 40, 42

Jones, Lee, 22

Kolb, Theordore A., 49
Korbel, F. & Brothers, 22
Kernel, Haus, 24

Lagomarsino, Fred, 18

Landor, Walter, 40

Larkmead [Vineyards], 23, 24

Lejon (label), 22, 35

"Little John" (bottle), 13, 14

Major Wine Distributors, Inc., New York City, 57

Marca Petri (label), 23

Margo Wine Company, 16, 17, 18, 57, 59-60

Margolis, John A., 17, 59, 60

Martini, Louis M. , 11, 15

Masson, Paul [Vineyards], 12

McColly, Don, 46

Mission Bell (label), 58

Mission Bell Wineries, 19, 57

Mont Helena Calistoga Wine Company. See Mt. St. Helena

Calistoga Wine Company
Montclair Restaurant, 2. 5
Kortara, Benjamin (Benny), 8
Mt. St. Helena Calistoga Wine Company, 8, 56

National Distillers, 21, 22, 40, 42

New Toscano Hotel, 2

Nieri, Mrs. Cherubina, 1, 3, 4

Owens-Illinois Glass Company, 13

Paganini, Bud, 39

Paganini, Charlie, 39

Petrl (label), 32, 35

Petri, Albert, 9, 16

Petri, Amadeo, 3, 4, 5, 9, 10

Petrl, Amelia (Mrs. Angelo), 4

Petri, Angelo, 4, 5, 7, 9, 10, 15, 26, 44, 53, 55

Petri, Carlotta, 4, 5

Petri, Caterina (Mrs. Amadeo), 5

Petri, Cherubina. See Nieri, 1, 3, 4

Petri Cigar Company, 8, 9, 5^ 55, 56

Petri, Cigars and Tobacco, 1

Petri Distributing Company, 56, 57, 60

Petri, Plori (Mrs. Louis A.), 7, 15

Petri Italian American Cigar Company, 55

Petri, Paul, 13

Petri (R. ) & Company, 3

Petri, (R. ) Wine Company, 9, 55

Petri, (R. ) Winery, 3

Petri, Raffaello, 1, 2, 3, 4, 6-7, 9, 10, 54, 55

Petri Wine Company, 8, 9, 54, 55-60

Petri Wine Company of Illinois, 57

Petri Wine Company of New York, 57

Podesta, _ , 53

Porter, Seton, 22

Drices, wine, 58, 59

Prohibition, 3, 5, 6-8, 10, 11, 25, 53, 54

raisins, 20, 47

Roma Wine Company, 7, 37, 38, 53

S & W, 31, 32

Safeway Stores, Inc., 14, 15, 55

Santa Pe ( label ) , 32

Schenley [Distillers], 22, 38

Security Lithograph Company, 39

Setrakian, A., jk

Shewan and. Jones, 21

Sinel, Jo, 14, 15

Solari, B.C., 36, 40

Sunny Hill Wine Company, Chicago. See Sunny Hill Wineries,

Sunny Hill Wineries, Chicago, 17, 18, 57

Taylor, Walter, 44

Taylor Wine Company, 37

Toscano Hotel, 2, 53

Transamerica, 30, 31

Tulare Wine Company, 18, 19, 57

United Vintners, 8, 12, 35, 36, 37, 38, 4-1, 42, 48, 50

Vai (label), 32
Vai, James L. (Jimmy), 32
Vick s Distributing Company, 13
Vino Rosso Pastoso (label), 23
Vintage (label),

Walker, Elisha, 44

Wine Institute, 40, 46, 47,

Winkler, Albert J., 15

Young Rubicam, 60

Wines Mentioned in the Interview

angelica, 12

"Bali -Hal", 12

burgundy, 12

Cabernet Sauvignon, 42

Emerald Riesling, 12

Grenache rose, 12

muscatel, 9, 12

port, 9, 12

sherry, 9, 12

"Thunderbird", 12, 51, 52

Zinfandel , 12

Grape Varieties Mentioned, in the Interview

Cabernet Sauvignon, 49

Grenache, 12

Salvador, 38

Sultana, 47

Thompson Seedless, 19, 47, 48

Ruth Teiser

Born in Portland, Oregon; came to the Bay Area

in 1932 and has lived here ever since.

Stanford, 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

since 1943.