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Oenophile Featured

10:31am EDT December 21, 2004
Anthony Terlato argues against the notion that Chicago isn't wine country. While the city may not be known for growing grapes, it is one of the country's top 10 cities for drinking wine.

And in the 50 years since his father opened a wine shop on the corner of Clark Street and Ridge Avenue, Terlato, chairman and CEO of the Terlato Wine Group, has immersed himself in nearly every aspect of the wine industry, building an enterprise comprising eight businesses specializing in the marketing and production of higher-end wines.

"One out of (about) every nine bottles of wine sold over $14 retail comes from our company," Terlato says. "We're in the upper strata of the luxury part of the wine business. Out of every 100 people, three people are a potential customer. That's how narrow it is.

"It's easier to identify our customers, and the competition at that level is by far smaller," he says. "There are a lot of low-priced wines, and the fight at the low end is severe. When you're selling a product that is price-sensitive, the battle rages, but when you're selling quality and the people understand the quality, there's not the battle anymore."

Terlato has received numerous awards for his contributions to the wine industry, including the decoration of Cavaliere Ufficiale, Motu Proprio, awarded for contributions to the Republic of Italy. Sandro Pertini, president of Italy, conferred the honor on Terlato in 1984. He was the first American in the wine industry to receive this decoration.

"I started to import Italian wines in 1972," he says. "And we made some Italian wine brands very famous that had not been in the United States. In 1979, I discovered Santa Margherita Pinot Grigio in Italy. Today, pinot grigio is the largest selling white wine in America. I have to assume that Sandro Pertini was pleased with the attention that was brought to Italian wines in that period."

In January 2003, Wine Enthusiast Magazine honored Terlato as its Man of the Year.

And in June 2004, Terlato was recognized by Wine Spectator magazine with its Distinguished Service Award.

"That really means quite a lot when your industry recognizes your work," he says. "What I suppose makes it important (are) the people who have received it before me, people like Robert Mondavi, Angelo Gaja, (Ernest and Julio) Gallo, Piero Antinori and Julia Child. I look at them as legends that are really special.

"And if the Wine Spectator deems that I made some contributions that are important, I feel very honored."

Smart Business spoke with Terlato to learn how he, along with his two sons, runs their wine empire.

How have American attitudes toward wine changed in the last five decades?

When I started, it was difficult to find wine on tables in restaurants. In those days, they would refer to those wines as sour wines. It was a time of Christian Brothers, sherry, port, Muscatel in gallons.

One of the first wines we distributed in Chicago was Robert Mondavi. I remember in the '50s, he said someday people in this country are going to have wine on the table every time they have dinner, just like they do in Europe. And what he said at that time came true.

The sociability of wine is now becoming apparent. When you entertain at home, it's a symbol of success to some degree for many.

What have you done to take advantage of those changes?

We have only one focus, and that's quality. Whatever were the quality wines of the '60s, '70s and '80s, that's the only segment we ever stayed in. All we did was deal with better and better wines. We went from retailers to distributors to producers, but the only focus was quality because that is the only constant.

How have you evolved the Terlato Wine Group over the years?

We're still importing, we're still marketing, we still have our own vineyards and we still produce our own wines. It was a natural evolution. We started in the retail business in 1955. We had a very successful retail store. As a retailer, we were able to influence the drinking habits of people perhaps three miles each side of the store.

When we became distributors and were selling in the Chicago area, we were able to influence perhaps drinking habits of people 30 miles each side of where we distributed. When we became a United States importer, we were able to influence the drinking coast to coast. When we became wine producers, we can influence what the world drinks. It's a natural evolution.

Each one is very invigorating. We represent some of the finest wines made by some of the greatest wine producers of the world, and that's marvelous -- Angelo Gaja, Michel Chapoutier, Santa Margherita, Pio Cesare. We represent so many wonderful producers that are world-famous; that's a pleasure. Producing our own wine is a great pleasure because we can do exactly what we want. We can make them the way we want.

What does it mean for you to be able to work with your sons?

Nothing can be more rewarding. One of the greatest pleasures I have is to see both of my sons' cars parked in the driveway every day when I come to work. They're a pleasure to be with. We enjoy each other's company.

We've been working together for (nearly) 20 years. We're in perfect harmony; we look at the business the same way. We look at the future in same way.

How is planning for the future different for you than for other businesses?

We're in a business where we really have to think about years ahead. We represent a wine called Brolio, which is a chianti. The family started the business in 1141. Francesco Ricasoli, who is the 32nd baron to own the property, (recently came to visit).

That's the business that we're in. It's not quarterly results that we have to deal with. And most businesses that were started in 1141 don't exist today. When we make plans, we don't have to think about a year or two or even three. We can think in terms of 10; we can think in terms of 25; we can think in terms of 100.

What will it mean for us to own this Rutherford Hill vineyard 100 years from now? What did Ricasoli in 1141 think when he bought the 200 acres of vineyard in Tuscany?

We're able to have a long-term vision on what we do. We don't have to respond to boards, and we don't have to be driven by the bottom line. The only decisions we make are for quality and long term. If it doesn't fit those two criteria, it's not a decision we take.

What is your relationship with wine producers?

All our contracts with our suppliers are for 20 years. That's our requirement. If we're going to take a brand, we're going to have it for 20 years. And, of course, we have to perform over that period. As long as we perform, that brand is ours.

When a winery comes to us, they come because they expect the sales team to be able to put their product in the market. We must be disciplined in the way we approach each winery's needs -- what they need now and what their plans for the future are. What are they going to look like 20 years from now?

At the same time, it's our business to bring them the reality of what exists in the marketplace. Most of the people who are producing wines, even if it's in Napa Valley, they don't know everything that's going on in the marketplace, all the subtleties that are going on, all the new people that are coming in, all the price things that are going on.

We represent 37 wineries. Sometimes it's like having 37 wives. We have to please each one of them; each has different needs. And each one of them is looking for what is important to them. We have to have the discipline to be able to say, 'Yes, you're able to do this, and we can achieve these goals for you.'

HOW TO REACH: Terlato Wine Group, www.paternowines.com or (847) 604-8900