Gallos Cancel $650,000 Worth of Time Inc. Ads

Ernest and Julio Gallo didn’t like what happened after they gave Fortune magazine an exclusive peek inside their wine empire and responded Thursday by saying that they had canceled $650,000 worth of advertising in Fortune and other Time Inc. publications.

The Gallos had cooperated with Fortune in the preparation of the largely favorable cover article, including personal photographs and rare on-the-record interviews, which appeared in the Sept. 1 issue of the magazine.

But unlike the oceans of wine produced at Gallo headquarters in Modesto--about 40% of all the wine produced in California--the Gallos did not retain control over the finished product. According to Gallo spokesman Daniel J. Solomon, the article contained “many vicious and damaging inaccuracies.”

A spokesman for Time Inc. said Fortune magazine stands by the accuracy of its story.

The Fortune piece described Ernest Gallo’s sons in less than ideal terms, calling Joseph’s judgment “uneven” and characterizing David as given to “occasionally bizarre” behavior. It also claimed that Ernest and Julio’s father, Joseph Sr., had in 1933 chased Ernest and Julio across a field with a shotgun--a story the Gallos have long denied. The incident was portrayed as having occurred shortly before Joseph shot to death his wife, Susie, then took his own life.

“Not content with reporting the facts of the Depression-induced tragic deaths of the Gallos’ father and mother, which occurred in Fresno in 1933, more than 50 years ago,” Solomon said in a statement, “Fortune incorrectly stated that Ernest and Julio’s father also ‘chased them across a field with a shotgun.’ The fact of the matter is that Ernest and Julio were in Modesto, more than 100 miles away, when the tragedy occurred.

“Contrary to Fortune’s implications,” the statement continued, “Ernest Gallo’s sons have been making major contributions to the rapid growth of the winery for more than a decade. Joseph has been totally responsible for the winery’s entire sales department (both domestic and international), which is acknowledged to be one of the very best in the United States. David has been totally involved in managing, marketing, advertising and the image-building public relations and communications programs of the winery.”

The canceled ads had been scheduled to appear over the next several months in the Time Inc. publications, including Time and Sports Illustrated as well as Fortune. Solomon valued them at $650,000. Industry sources estimate that Gallo’s ad budget amounts to about $25 million a year.

Separately, the Port Commission of Portland, Ore., announced an agreement to sell five acres of land to Gallo Vineyards, a winery subsidiary. Port officials said Gallo intends to invest $2.3 million in acquiring the site and building a 50,000-square-foot warehouse for distribution of wine and wine-related products. Gallo bought Al C. Giusti Wine Co., a Portland wholesaler last year, and has been operating from Giusti facilities.