Still, the future isn't without challenges for Gallo. Wine sales soared in the 1990s--perhaps it was all those celebratory dot-com business dinners--and continued long-term growth looks likely. Table-wine revenue for California vintners alone jumped from $2.5 billion in 1991 to $6.4 billion last year. But revenue growth for California wine has slowed in recent months, as recession-stung consumers hunt for the best prices. Wine producers from Argentina, Australia, France, and Italy have made a big push into the U.S. market, because the strong U.S. dollar lets them offer good wines at great prices. Meanwhile, U.S. competitors such as Beringer, Constellation, Kendall Jackson, and Mondavi are acquiring wineries and deepening their market penetration.

What this means is that retailers and consumers have more choices in wine than ever before. Gallo's rapid brand expansion is a smart move, yet it can easily backfire into a wasteful and costly endeavor without solid category management and good retailer relationships. It's imperative that retailers stock the right mix of Gallo products so that bottles move rather than collect dust on their shelves. "We've been challenged more lately by conglomerates that want that good relationship with retailers," says Peter Abate, VP of sales and marketing analytic solutions, who works closely with Kushar. "Technology plays a big part in that relationship today, more than ever before."

Gallo in recent months has provided retailers with some of the best-put-together product and demographic information available in the food and beverage industry. The winery buys copious amounts of point-of-sale data collected at retail stores from companies such as A.C. Nielsen, Information Resources, and Spectra. It also collects information about wine inventory and sales from its 430 distributors through its ERP Sales Management Information System (SMIS), via a secure Internet link to distributors' business systems. It then packages that data in a meaningful way, updating it weekly so that retailers can make educated choices about where to place wines and which wines to stock and distributors can see what's happening in the Gallo supply chain. SMIS also lets Gallo see what's happening in the distribution chain.

Gallo's IT team of Glasgow, Abate, Kushar, Youga, and Mike Chase drives change.

That means Walt Sumner, beverage director at Quality Food Centers Inc., a chain of 85 markets in the Northwest, can open up a data file Gallo sends out weekly by E-mail and see what sold well at each of his stores last week and what didn't, as well as what sold at competitors' stores. He can also access demographic information such as the estimated average income for a store's customer base. With that information, Sumner knows how many $20 bottles of cabernet sauvignon he should stock in proportion to $6 bottles of chardonnay at any given store. Or he can spot a store that regularly sells a lot of seafood and try an on-site cross-promotion with salmon and white wine, and then check sales data the following week to learn the results. "It's the first time I've seen this kind of technology put together in a practical use," says Sumner, who adds that beverage companies usually provide piecemeal data that's difficult to analyze and compare and is often several weeks old.

Also this year, Gallo created for retailers software templates for planning shelving and displays for its beverages based on stores' dimensions and layouts. Sumner creates those plans based on the knowledge he gleans from the data Gallo provides, and then shoots them off to store managers over the Internet. "It's amazing stuff," he says. "I used to be a Gallo detractor, because they used to sell their own agenda. But they've become more customer-oriented. Now they ask me what I want, and then they actually go out and do it."

Gallo's tight relationships with distributors have always been a problem for its competitors, and IT is making those ties even stronger. Federal laws governing alcohol forbid winemakers from selling directly to retailers, so wineries live and die by distributor relationships. The relationships have become even more important because of recent consolidation in the beverage-distribution industry, which has reduced the number of sales channels for wineries. "Distributors are also more demanding of us because as they get bigger, they require more support," Kushar says.

The distribution of wine is complex, because each state has its own laws about liquor. You can buy wine at grocery stores in California, but only at liquor stores in New York. States also have different laws about sizes of wine displays and the use of coupons. This year, Gallo launched a Web-based system that lets distributors view a full-color, digital catalog of retail point-of-sale marketing materials that are legal in their states, and print and produce those materials locally. Previously, distributors had to sift through a barrage of brochures from Gallo, call and order what they wanted, then wait for the materials to arrive in the mail.

The winery also made available a Web-ordering system written in Java and linked to a Gallo mainframe that provides details on when new wines will be released and what's available in inventory, and that lets distributors place orders online. "The system tells you right away whether you've secured the inventory or not," says Bill Barrett, general sales manager for Q.V. Distributors Inc., which orders nearly 100,000 cases a month from the winery. Distributors also can specify rail or truck delivery for shipments. For example, if a wine Barrett wants to get quickly isn't in inventory and won't be released for three days, he can send an online request for that order to be sent by the faster, yet more expensive, method of truck. Gallo and its distributors can also track shipments online.

Distributors have access to the same sales and demographic information Gallo prepares for retailers, and as the industry's middlemen, they're often the ones presenting that data to retailers. The sales data that Gallo pulls from distributors' business systems, cleans up, and sends back to the distributors helps them make decisions about their own sales strategies. And, using its SMIS and distributors' sales data, Gallo automates distributor reimbursements. When Gallo wants to increase sales of a particular wine, it offers distributors incentives of a few dollars for each case sold to retail. The system calculates and approves those incentives each month for distributors, replacing the previously used paper process.