Tuesday, July 31, 2012

Woodinville: The Wine Country Next Door

About four years ago we wandered into a quiet wine bar called Purple in a strip mall near Woodinville’s old Hollywood School building. It was a fun spot, we had a terrific late lunch, a wonderful conversation with the bartender and vowed to return soon. Of course, we did not. Last week, we finally did return and found that the entire strip mall and a couple of houses nearby had been taken over by wine tasting rooms, Purple was jammed and wineries had moved into the historic grade school nearby.

In the four years we procrastinated about returning to Woodinville's Purple, an additional seventy wineries set up shop in Woodinville, most in the Hollywood District and what the wine community calls The Warehouse District, where much of this wine is made. Others are dotted about the landscape though well concentrated around the city.

Later, we’ll get into some of the reasons why they are all here, but the outcome is terrific. I’ve always envied the close-in wine experience that northern California has where a dash from San Francisco to Sonoma is an hour and a half, or the experience in Walla Walla where many of the tasting rooms are located in the downtown. Now we have something close by as well, even if I wasn’t paying attention to it.

We’ve always had good wine close by in Woodinville, just not enough variety. Since the 1970s, Ste. Michelle and a bit later Columbia Vintners and DeLille Cellars provided a lovely nearby wine experience, but wine tasting needs lots of new tastes.  Tasting is about discovery.

Among the reasons for this explosion of tasting rooms was a law passed in the 2003 state legislative session that allowed vintners to have two tasting rooms. For a small winery on the east side of the state that meant your one-to-one relationship with the customer was subject to the limits of Benton City’s charm. A new economic impact study of the state’s wine industry sets out the numerical values of a more urban location. The study reports that about about 30,000 wine country visits occur annually to the central and south central Washington homes of Washington wines in Yakima, Prosser, Benton City and Walla Walla, while 500,000 people a year make their way to Woodinville.

This is valuable to some established desert wineries who now have a visible presence on the west side of the state – Covey Run, DiStefano, Facelli, J.Bookwalter, Silver Lake, Long Shadows, among others. It is also extremely useful to Woodinville wineries with active special event venues, like DeLille, where its winery is completely booked for weddings and other major events that lock out the taster. DeLille tried to make tasting by appointment only but the events still overwhelmed their ability to bring people to their lovely venue and splurge on a few bottles of very special wines.

But the greatest beneficiaries are, of course, the dreamers, the garageistas who want to throw it all in and make 2,000 cases of the best wine nobody has ever heard of – yet.

After lunch– we were just able to get into Barking Frog before it closed its lunch service – we strolled back and forth across the parking lot of the strip mall, meeting some of these people, hearing how they got into the wine racket and how they had thrown everything into the pot, committed to the wine life as nothing before. It was very sweet and we grew attached to them, aided by mostly generous pours.

Later that week, I went to the website called ‘Woodinville Wine Country,’ the association site for many Woodinville wineries, and read through each website, 57 in all. While websites do not necessarily offer a window into the soul, they often speak in the true voice of the owners who put them up. I noted the start dates of the wineries, which showed the growth pattern of the industry here. Of the 57 wineries listed on Woodinville Wine Country site, 37 had started after the year 2000. Of that number, ten got underway after 2006. Ten of the wineries listed on the site started business during the decade of the nineties, four during the 1980s and two before 1980.

Some of the stories of the 57 are lovely. There are lots of love stories in the wine business, and not all centered on a particular grape. Two of the new winemakers described their beginning with a honeymoon in northern Italy, one couple deciding, in a kind of half-baked way to start a wine store, followed by a shrug and a shout – “hell, let’s sell our own wines! ”Another was a corporate pilot who flew a couple of established winemakers back to Seattle and, by flight’s end, was smitten. A guy and his brother-in-law cashed in a Wisconsin dairy farmer’s life and started making wine in Walla Walla. Another story is Guardian Cellars, a winemaker who has a day job as a cop. Many apprenticed somewhere in the wine business, fronting in the tasting room, spending their vacations as a volunteer at crush. Some came from brewing to the vineyard, others were second or third generation wine kids. A large number of them had a combination of University of California at Davis, Washington State University, South Seattle Community College and the Boeing Wine Club associated with their journey.

Best typo of the 57? “Give us a swirt!”

The most common word used, without a doubt, was “passion.” The second most common word would be“quality,” for the kind of wines they want to make. Another very common word of this group was “sourced,” meaning they had no vineyards and would get their grapes from people who did own vineyards and grew the best grapes.

It is easy to like these people, easy to like their wines and easy to worry about how their dreams will work out. They face an array of issues in today’s wine business led by the continued fall out of the recession on the premium wine business and too many winemakers chasing too few grapes.

Among the impacts on the industry of the Great Recession’s was consumers moving away from super premium wines, those more than $15/bottle and ultra-premiums, those over $30. Many wineries either sold lower or held back inventory hoping for a quicker recovery from the recession than we have experienced. While these higher priced wines are making a recovery in 2012, they are still not back at pre-recession price levels. Another recessionary impact is that the value of many properties went down, making it harder to use land to leverage financing.  2010 and 2011 were difficult years for the wine industry, particularly in California. There were 18 defaults of growers or wineries in the Napa Valley in 2010. In 2011, 31 wineries in California, Oregon and Washington sold, some of them distressed sales, though others associated with generational change.

Another major issue is the growing shortage of the fruit these winemakers want to buy. The average cost of a ton of grapes in Washington state is about $1,100 a ton, but the premium red grapes these winemakers want to crush cost four times, even ten times as much, because of the quality of soil they grow in, their well-earned name and cultivation techniques that reduce the volume of fruit but concentrates the flavors in the remaining clusters.

One rule of thumb says that a ton of grapes will make about 600 bottles or 50 cases of wine. For a winemaker trying to make 2,000 cases a year, that means 40 tons of grapes, or about $160,000 just for the fruit, assuming you can get it. Once you’ve bought fruit, you then have to get it across the state to Woodinville. 

The size of the California industry and demand for fruit have made shortages a major issue. Last year, California added 400 wineries and very few new vineyards.  The good side of this phenomenon is that recession struck wineries desperate to sell will be let down gently –provided they own grapes.

Even in a time of high demand, we are not growing enough grapes because new grapes take lots of time to reach maturity and require a lengthy financial commitment, expensive land and don’t forget the water. All of these things are in very short supply. It takes three years before you can harvest a grape and five, even six years before the vines are in full production. According to a University of California at Davis study, a generic 35 acre farm with existing vines that you want to take out and replant with 30 acres of a more desirable grape, will cost $160,000/acre over three years to produce just one ton of grapes/acre in year three. Assuming $4,000/ton for those grapes, your income over three years is $120,000 against $4.8 million in cost. By the way, the UC Davis study doesn’t count the cost of the winemaker's salary.

While the Columbia Valley is one of the most desirable areas for growing fruit in the state, water there is a real difficult part of the equation. It’s very hard to find water for additional grapes in the Red Mountain AVA around Prosser, one of the state’s high end grape producing areas. While there is water in the Columbia Valley, there are many competitors for it, like federally protected fish. The only sure way to use additional Yakima water is to save substantial amounts of it from current uses. The Department of Ecology and the Kennewick Irrigation District have embarked on a plan to divert Yakima water further east into the Irrigation District’s delivery system, establish an aggressive conservation campaign while reallocating former farmland water in urbanizing areas, all to create about 3,000 acre feet of new water that would be used, in part, to irrigate 1,750 acres of new wine grape production at Red Mountain and add some additional water for salmon in the Yakima River. The best case scenario has this being done by 2015 at the earliest with a cost of $15,000,000.

These great wine growing areas are also heavily allocated over significant periods of time to existing wineries, who buy blocks of grapes for long periods of time and have them tended just so. We once bought a wine tasting dinner at an auction donated by an owner of a farm in the Red Mountain AVA. We tasted wines produced from grapes growing within a few feet of one another, but farmed differently and made with the style of the different wine makers. We tasted these grapes as relatively new vintages and ones that were many years old. The way they performed over time, the craziness of wet springs and dry harvest and other weird weather, the style of the winemakers, all conspired to splash, across the tongue, the incredible magic of wine. I guess I digress, but the rather woozy point here is that those winemakers are not going to give up those beautiful grapes anytime soon to a growing group of winemaking newbies. Sourcing great grapes, the single most important step in making great wine, is one of the first problems as they shut the garage door and head for Woodinville.  

The recession shows through in the grape acreage stats. In 2010, just over 1100 acres were planted after several years of 3,000 acre/year plantings.

A consumer squeeze on wine producers, the growing shortage of grapes, the cost and financial risk of producing new grapes, the difficulty of distribution, along with the maturing of the state’s wine industry all come together to induce consolidation. Precept Wine, once a small outfit who then partnered with a wine entrepreneur in 2003, is now making a million cases a year. It recently purchased Canoe Ridge and Sagelands in Washington as well as Ste. Chapelle in Idaho. In addition to these three, Precept owns Apex, Waterbrook, HOUSE, Washington Hills, Willow Crest, Primarius and Sawtooth Estate in the Pacific Northwest. It is the largest private winemaker in the region and has 15 vineyards totaling nearly 4,000 acres, about 8% of the state’s total wine grape acreage and 11.5% of the state’s producing vineyards. Their focus is on the $15 bottle market and further expansion.

In addition to Precept, Gallo has now entered the Washington market with its purchase of Covey Run and Columbia, a company that is the ultimate image for these new young winemakers, a direct descendent of a Laurelhurst garage in 1962. Who knows where it all leads, but Gallo and Precept will certainly acquire more brands in the state, but can they carry the weight of new grape production?

There’s another force for consolidation, coming a bit down the road because Washington winemaking is still a relatively young industry.  Many of the industry’s founders in Washington are getting older and ready to shift the business to another generation or sell to a company that is crazy to get its grapes.

Perhaps the most newsworthy sale in Washington state last year was the Betz Family Winery to an Arizona entrepreneur. Betz wines are among the very best produced in the state and Bob Betz is a Master of Wine, one of perhaps 300 people worldwide with that certificate. Betz is one of the many gifted winemakers who emerged from Ste. Michelle over the years.

A survey of the California growers and winemakers by the California Wine Institute revealed that 60% of them said they contemplated generational or ownership changes taking place by the end of this decade.  We should expect that is well.

On one of our trips across the parking lot of the strip mall, we were holding a tooth brush from Dusted Valley winery, a benefit of being a new member of the Stained Tooth Society, aka their wine club. We talked to a friend of my wife’s from Washington State University, a former tech industry and now wine industry entrant celebrating her one year anniversary of selling William Church wine in the Hollywood District strip mall. We also made a beeline for DeLille, a wine we enjoy. We thought it cost less than it once did and responded in kind, buying a couple of bottles more. 

We left Hollywood to catch JM Cellars before it closed, a lovely space on top Bramble Bump, a hill across the railroad tracks from the Columbia Winery Chateau and capped with a small house in a forested perch once owned by two very serious plant people, who brought home and tended exotics, mostly trees, from around the world.

Margaret and John Bigelow are, in many ways, the success story so many of these young winemakers have in mind. Both were tech business people, both yearned for a better lifestyle – the same hard work but richer emotionally –and started making wine in their basement in 1998. Soon, they were preparing a place to make wine in the light of day, atop Bramble Bump.

They wanted to get to 2,000 cases, a kind of magical accomplishment that carries some respect. But John needed to know more. On top of his voracious reading and seminars at UC Davis and elsewhere, he added work in Walla Walla, apprenticing during the summers to some great winemakers.

Not yet ready, in ‘03 he returned to the tech biz for three years while he continued to prepare and make wines at night and on weekends. In ‘06 he returned to winemaking full-time. The ability to make good wine is the ultimate calling card and, in 06, a call came from the Leonetti people in Walla Walla, Washington state wine royalty, to be sure, and they wanted to know if the Bigelows were interested in owning a piece of a new vineyard they were starting up -- then came a timely call from an investor, Mike Bezos, Amazon Jeff’s stepfather.

Their place is modest, but somehow it shines. You don’t realize that the house is a modest split level home from the early 60’s, but it is painted dark gray and updated with iron work, cool glass and all encompassed by the exotic trees. The fact that the father of one of the owners lives upstairs gives its shine a human scale luster, a glow you won't get in a corporate giant.

The wine, by the way, was wonderful and we set outside with a glass of pinkie boy and let the sun wash over us until the groom and his father-in-law arrived for the wedding that would be happening within the hour. Because of the location, parking is at a premium, so a valet helped shoo us out.  The guy bringing out our car was someone who worked as an analyst at the financial services company where my wife also works.

“I’ve been doing this for years,” he says. “I love anything about the wine business. And the owners are great- they treat us like members of the family.”


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