CORPORATIONS: Biggest on the Vine

Among California’s clannish winemakers, Louis Petri, 40, has long been marked as a young man headed for big things. Last week, as boss of his family’s Petri Wine Co., he more than fulfilled the vintners’ expectations. For a reported $16 million, he bought National Distillers’ famed old Italian Swiss Colony Wine Co., the nation’s third largest producer of domestic wines. In the deal, Petri acquired Italian Swiss’s wineries at Asti, Lodi, and Clovis, Calif., bottling plants at Chicago and Fairview, N.J., New York’s Gambarelli & Davitto distributing organization, and one of the best-known labels on the domestic vine. At one leap, Petri went from fifth to first place among U.S. vintners, with a total capacity of 46 million gallons.*

Vintage Vintner. In Italian Swiss Colony, Petri got one of the oldest vintage winemakers in the U.S. Founded in 1881 by Genoa-born Andrea Sbarbaro as a collectivist colony modeled after the cooperative theories of John Ruskin and Robert Owen, Italian Swiss Colony’s skilled winemakers 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. bought Italian Swiss in 1942 as a hedge against wartime restrictions on whisky. But, after the war, the U.S. wine market turned sour, and has stayed that way ever since. Accordingly, National was glad to sell out.

New Blood. If anybody can squeeze a respectable profit out of Italian Swiss Colony, Louis Petri should be the man to do it. Behind him is a family tradition of winemaking started by his grandfather Raffaello, who began a small winery in the San Joaquin Valley in 1886, built it into one of the best-known vintners in Cali fornia. During prohibition, the Petris got out of the business, and made Italian-style stogies in Tennessee, got back in again after repeal by buying three California wineries.

By 1935, the company was selling so much bulk wine in kegs that Louis Petri quit St. Louis University’s medical school to start rolling barrels in his family’s San Francisco warehouse. He soon convinced his father that keg distribution was outmoded, launched a program to bottle the company’s wine under the Petri label and distribute it nationally. (Today, less than 10% of Petri’s output is in bulk.) He also expanded Petri’s more profitable sweet wine business while holding on to Petri’s dry wine market. By 1945, having learned the business from dirt to decanter, he took over as president.

Petri soon showed a shrewd eye for a smart deal. In 1949, he bought up the big Mission Bell winery in the San Joaquin Valley for $3,250,000, thereby doubled Petri’s storage capacity to 20 million gals. He also figured that it was more profitable to distribute wine than to grow and crush grapes. So in 1951 he helped organize 300 small-and medium-size San Joaquin growers into the Allied Grape Growers, Inc., a cooperative to which he sold all his wineries in the valley. In return, Petri got exclusive marketing rights to Allied’s output, which last year made up 95% of Petri’s tonnage.

Wineman’s Choice. Last week, after a frost in the San Joaquin Valley nipped vines and sent the price of sweet wine in bulk up to 37½¢ a gal. (from a low of 32½¢), many a vintner thought Petri had made a smart buy. To swing the deal for Italian Swiss Colony, he had borrowed from the Bank of America. That the bank was willing to plunge into the precarious winemaking business was a pat on the back for Petri.

*Previous Big Five U.S. winemakers, in order of capacity: Roma (30,000,000 gals.); California Wine Association, a growers’ cooperative (29,650,000 gals.); Italian Swiss Colony (26,000,000 gal.); Wine Growers’ Guild, a cooperative (22,000,000 gals.); Petri (20,000,000 gals.).