The biggest new wine out of France last year was born in the mind of an American: Joe Gallo. That's Gallo, as in E&J Gallo Winery, America's biggest wine producer and a company many people still associate with California jug wines like Carlo Rossi. Three years ago, Joe, co-president of the company and son of legendary co-founder Ernest, returned from a trip to Europe and asked his consumer-research team to explain his French paradox: that most Americans still rated French wines as the best in the world but the French were rapidly losing market share to Australia and Italy. Why? The answer had less to do with anti-French sentiment than with France's wine-classification system, which Americans find too intimidating with its hard-to-decipher appellations, châteaux and mis en bouteille à la propriété. If the wines could be made more approachable, Joe concluded, Americans just might snap them up.
French wine couldn't be considered a smart investment at the time. Sales had been shrinking for years, and by 2003 Americans were asking for freedom fries--hold the steak au poivre. But Joe devoted Gallo's huge resources to the challenge. First, the Modesto, Calif., company found a French partner--wine cooperative Sieur d'Arques, in the southern Languedoc area, the region that produces much of France's lower-priced vin ordinaire. Sieur would harvest the grapes and make the wine; Gallo would handle marketing and distribution. Then, after sending a crew of Gallo researchers and Grey Advertising executives to southern France, Gallo coined an evocative name--Red Bicyclette--and devised a friendly label with a fun cartoon of a Frenchman in a beret riding a red bike with a dog trailing behind him, a baguette in its mouth. Voilà: French charm with none of the intimidation factor. (Compare that label with, say, the one for Domaine de Montcalmès Coteaux du Languedoc AOC, a wine from the same area.) The back label was just as friendly: "Bonjour! Welcome to Red Bicyclette, from a little corner of the very best place in France." Three types of Red Bicyclette (Syrah, Chardonnay and Merlot) hit stores in the summer of 2004 and sold 140,000 12-bottle cases in six months, single-handedly slowing an eight-year decline in French-wine sales in the U.S.
After coping with a post-9/11 slowdown and an oversupply of grapes, the global wine market is regaining the tremendous growth it enjoyed in the '90s, and one leading reason is Gallo. The world's second largest wine company, with estimated sales of $3 billion (after publicly held Constellation Brands, whose series of acquisitions brought sales to $4.1 billion), family-run Gallo has the industry's top research and marketing staff and has become legendary for seizing on consumer trends--whether they were jug wines in the '70s, Bartles & Jaymes wine coolers in the '80s or development of new premium wines like Gallo of Sonoma ($10 to $65 a bottle) in the '90s. Since 1996, Gallo has quietly launched foreign ventures, most notably Black Swan, produced with Australia's Brian McGuigan winery. The brand sold 1.2 million cases last year, second in Aussie wines only to Casella Wines' Yellow Tail.