Looking to create a new winery? Here’s your checklist for success
I’ve been flying airplanes for 45 years now, and that span of experience has made me an utter and complete adherent of the checklist. And it’s not just because I’m inherently forgetful. The simple fact of the matter is, it can be dangerous to forget something in the air. Pilots have a time-honored maxim: It’s better to be on the ground wishing you were in the air than to be in the air wishing you were on the ground.
To reiterate, there are two kinds of pilots: those who’ve had a gear-up landing…and those who will. That may be the most important part of the aviator’s checklist in my mind (gear down), but there are many others just as crucial to a smooth flight and safe landing.
When you’re starting a new winery from the ground up, a checklist is almost equally essential in getting off the ground (as it were), from inception to successful startup. The checklist is important simply because there are so many things that can go wrong. A startup winery is almost as vulnerable as a startup restaurant—and the average new restaurant doesn’t last six months.
Brooks Firestone once told me that, when he was setting out to build his Los Olivos winery in the early 1970s, the first question consultant Andre Tchelistcheff asked him was, “How much can you afford to lose?” It wasn’t so much the “losing” that gave Firestone pause, but the notion that it was going to take at least a full decade before he was going to break into the “profit” column. But he went on ahead, and the rest is history. “I figured that if I could sell something round and black that nobody wanted [automobile tires], I could sure as hell sell wine!”
That sort of optimism—coupled with an inherent love of wine, food and agriculture—is what draws people to this most “lifestyle” of businesses, because wine is a business that draws from myriad sources: Science and agriculture are but the most obvious, along with business, intuition, religion and a whole range of artistic expression.
August Briggs
So, you have some loose millions burning a hole in your pocket. Let’s get down to it.
“Our initial budget was about $2 million six years ago, and we were able to do it for close to that amount,” says August “Joe” Briggs, whose handsome little winery (August Briggs) on the Silverado Trail, just south of Calistoga, looks like it’s been there for decades.
“That was the look we were after,” confides Briggs. “It’s funny to have people drive up for the first time and ask how long our winery has been here. You can tell they think it’s been here for quite some time. And then I tell them, ‘It’s new!’”
“It helps,” Briggs continues, “that we’ve had our label out in the marketplace for several years prior to actually building the winery. While I was working as a winemaker and consulting, I was making a little wine for our label, and it really seemed to catch on.” The label has a distinctive dandelion, implying the wish one makes when blowing on one.
Early in 2002, Joe and his wife, Sally, discovered their perfect two-acre parcel, with access to the Silverado Trail, and bought it for approximately $350,000. And, while it might seem like a long, drawn-out process, they were actually lucky to get through all the permits and other governmental red tape in just two years, completing the 8,000-square-foot facility in the spring of 2004. “We worked with local people for design and construction, and that really paid off,” says Briggs.
“Our architect, Hal Taylor, didn’t change a thing we wanted. I think it took us about 30 minutes to design the winery on my kitchen table. I told him we wanted that ‘weathered’ look, and he told us how we could do it. When we first put up the redwood walls, it looked so nice that everyone wanted us to leave it natural. But we knew it wouldn’t stay that way, so we whitewashed it. It turned out perfect. With the ‘rusted look’ roof, it looks like we’ve been here forever!”
Joe says construction—including permits, well and septic—came in at $1 million even. “I planned on $400,000 for equipment—tanks, refrigeration, catwalks, barrels—and we were just over on that. But I didn’t want to skimp on any of that; no point in working with inferior equipment. The roadwork was on estimate, but the septic system was twice the original budget, and wood had gone up about 30 percent. But most of what we’d planned for turned out just about right. We did add copper gutters, instead of tin. Looks good, eh?”
As to winemaking, Briggs, who sources from 20 different vineyards within Napa, Sonoma and Lake counties, says, “I like to let the grape supply dictate the wines I make. Each place and variety has something different to deliver and something interesting to offer. My main focus is to have fun with the wines.” He does, and the wines are pretty damned good, from Pinot Noirs to Petite Sirahs, all dense and flavor-packed.
Mutt Lynch Winery
Chris and Brenda Lynch decided to pursue their own little niche market when they cobbled Mutt Lynch Winery out of their mutual careers in the business (Chris in wine marketing, Brenda on the cellar side of the wine equation). A Navy brat who grew up in the Bay Area, Chris studied economics and French at UC Davis. “But it wasn’t until I went to France for a couple of years to play professional basketball that I began to learn about the wonder of wine,” he says. “I lived with a French family, and all of a sudden it was real food, grown in their garden, with local wines that really tasted good.”
Brenda grew up in Southern California (“My dad was with the Los Angeles Police Department”), then attended San Diego State on a volleyball scholarship. A knee injury ended her career, and she took a desk job at Gallo in Modesto, where she met Chris (he was in the marketing department). Long story short, they married in 1990 and four years later moved to Sonoma County, where Chris worked for Kendall-Jackson and Brenda for Z-Moore. “At Z-Moore, [owner/winemaker] Dan [Moore] moved me into the cellar when he was away for a week, and I just loved it!” she says.
Eventually the couple set out to start their own brand with a “dog” theme. Their winery dog, Patch, is an ex-racing greyhound they rescued from New Zealand. They employ whimsical pooch-based labels and were recently named North America’s “Most Renowned Dog Winery” by Modern Dog magazine. (As if all the rest didn’t keep them busy enough, the couple now has a year-old pair of twins, a boy and a girl.)
“The first thing on our ‘low capital’ winery checklist was to find a space,” says Chris. [They share space with Deux Amis Winery out on Dry Creek Road.] “Finding a space we could share helped us reduce rental outflows and share the cost of equipment. This is as much about people and relationships as the physical space. Too many times, ‘partners’ in co-ops end up fighting, and someone always loses.” Mutt Lynch Winery has been in the same space, with the same co-op partners, since 1996. This speaks to the critical nature of picking the right folks to work alongside.
Number two—and one of the hardest startup tasks, according to Brenda—was finding good grape sources. “It’s a little easier today, but back in the mid- to late-1990s, it was pretty tough finding high-quality Sonoma County Zinfandel and Merlot for our $15 to $20 per bottle wines. We didn’t want to be too costly, and good grapes are expensive.
“It’s a lot like finding the winery space: It’s about picking the right folks to partner with to make certain the relationship is continuous. There’s nothing worse than launching a vineyard-designate wine for a vineyard you don’t own, then having the vineyard manager tell you at some point down the road there’s no fruit to be had. We’ve been sourcing the same Zinfandel from Dry Creek Valley since 1997, which says to me we picked the right people to work with.”
Since Mutt Lynch Winery also produces some blends, Chris and Brenda also needed to include access to high-quality bulk wine on their checklist. “Several of our wines are blends that we make with purchased wine,” says Chris. “So again, the ability to secure the right quality of bulk wine, year-in and year-out—and to be able to count on it for future vintages—is a key aspect of capital management on a shoestring.”
“Having a quality bottling setup is vitally important,” adds Brenda, “because you can take years of work and effort on a wine and have it turn bad in a matter of minutes. It’s not worth having an amazing wine in-barrel turn to crap because the bottling was poorly done. That said, the expense of having your own bottling line, which you only take out of the closet for a few weeks a year, is all out of proportion. So the key is to find a mobile bottling line that’s run by professionals. We chose Mobile Wine Line, which is now operated by the founder’s son, Harry Hakala, who really knows what he’s doing.”
Despite all the “virtual” winery planning and “low capital” ways, it still takes capital to grow a brand, says Chris. “Planning for inventory costs is crucial, and having enough savings or bank sourcing is fundamental to withstanding the ebbs and flows of growing any business.”
Details, details
Both Chris and Brenda shake their heads when it comes to compliance, the nightmare of the wine industry, and its menacing, Medusa-like tentacles that are the direct result of Prohibition and its continuing hold. “Every state has different regulations [that govern the sale and distribution of alcoholic beverages]. Even here in California, we have to jump through state and county regulatory hoops,” says Brenda in exasperation.
“This actually goes back to the beginning, in a sense, because the absolute first step anyone starting a new wine brand needs to take is to develop their commercial strategy—both their marketing brand and their proposed ‘route to market.’ Believe it or not, we did a five-year strategic plan when we started, including brand strategy, target consumer and route to market. It’s even more important today that a prospective producer has secured distribution prior to even crushing their first grape. It’s a ‘dog eat dog’ world out there—no pun intended—for new brands.
“And compliance is an ongoing, monthly struggle. It takes me two full days each month just to tread water. Just to produce wine requires a whole stack of licenses: Licenses to buy an agricultural product; licenses to crush grapes and ferment wine; and then there are all the licenses needed to sell the finished product. Aieee!”
Brenda points to a binder nearly three inches thick. “That’s all the California nonsense. Then you have monthly reports to every other state you sell to, each of which requires a separate distributor. Understand, they rarely have any specific desire to sell our wine. In Arizona, I talked with 18 distributors—and every one of them said, ‘no.’ It’s actually easier to find good grapes now—if you’re willing to pay the price—than it is to find a decent distributor.
“Another big difference is, when we were starting, there were plenty of people making so-so wines. Now, there are a lot of top-end wines. The competition is really fierce, which makes it easy for distributors to be very picky. It’s everyone’s fantasy to come here and be the next Screaming Eagle, but I can name a guy who came up here, bought good grapes, hired [super consultant] Heidi Barrett…and he’s now out of business. The trick, I think, is to do it like we did. Start small and build your business slowly. Unless you’re a bazillionaire, that’s the only way to go.”
