Wine Making and Winery Ownership in BC - A pastime for the wealthy?

After being in this industry for more than 15 years and observing how things work, I'm beginning to suspect that making wine for a living in this jurisdiction is an activity reserved for the rich.

This in itself is not a revelation.
I'm not talking about the day-to-day labour in the cellar or the vineyard.  By wine making I'm suggesting the ownership of land and facilities in order to do so.
It's becoming clear that the regulations for operating and licensing a winery favour those with substantial financial clout and basically keep people of modest means from playing any significant role. I think some of those restrictions have been created for the sole purpose of restricting the number of players in the field and to promote the BC government's long time agri-tourism push.

And this kind of environment limits innovation, new blood and a free market.

Considering the price of land in BC, it would require a minimum of $300,000 just for dirt for a land-based winery license.  That's before equipment, agricultural costs and infrastructure.  One could entertain a 'commercial' winery license, but that's just basically an extension of the BC Liquor Distribution Board's retail system.  You'd miss out on the great system of kick backs given to land-based wineries that produce VQA products.
Next add in the licensing requirement for a 500 case annual production.  This artificial constraint means you'll be looking at a minimum of 8 tons of grapes (about 60 cases per ton) at a cost of somewhere between $1200 to $3,000 per short ton. Let's split the difference at $2100 per ton or about  17 grand right out of the gate.

The point is: if you're a good winemaker who would just like to buy some grapes, make some wine and sell it on the open market: you're out of luck.  

Why should there be some arbitrary number for production? What has that got to do with great wine?

I queried friends in other jurisdictions.  My contact in California knew of no constraint in the size of the operation while in Ontario another friend suggested things may be even worse.

There's no system to allow shoestring operators to simply take part in the market. I propose licensing follow the precedents set be the food industry.  The priorities should be about good sanitation, proper disposal of waste and other environmental concerns in concert with local requirements.  Not some made up number for case production and the requirement for tracts of land that may be the most expensive agricultural land in Canada if not all of North America.
It's time this lazy, bourgeois style of licensing was changed to allow innovative and dynamic new producers.

Is A New Winery In Your New Year?

Starting a new winery is a daunting task.  People come at the problem from varied backgrounds and levels of talent.  Everybody has a different idea about what makes a winery a success. But few would argue that a winery needs to be a successful business.

Often the decision to start a winery happens in the blink of an eye.  Sure, you may have mulled, pondered and ruminated about it for a decade.  But for most people, it comes down to a single moment of conviction when your passion, drive and hope come together and you say: Let's do it.

Forget about the awards ceremonies, the glowing reviews and the adoration of thousands of wine lovers: that will all come in good time.  The first thing you have to do is make sure you have a good business plan.  Without the plan, you're like a ship without a rudder.

The wine business is capital intensive at start-up.  Returns on investment are delayed, reflecting both the nature of a business linked to an agricultural cycle and a slow inventory turnover.  Investors looking to make a quick buck should look elsewhere as a five year lag before returns in not uncommon.  In fact, without proper funding, your winery could be in serious trouble by the time your second or third harvest comes around.  You may find yourself strapped for funds and without the kind of cash flow you may have expected

The wine business is heavily-weighted to a brand-driven model.  You'll soon have questions about how to best promote and market your brand. Before some of the details become insurmountable, consider engaging the services of a consultant.

In the wine industry that could be someone purely on the business side who has a familiarity with the workings of banks, government and the law.  Or it can be someone from development and production, like myself (the friendly guy in the photo), who will be able to tell you what you'll need to achieve the kind of excellence we all strive for in wine. 

Whether you're starting a new venture or working with an established company, there's never a bad time to re-visit the business plan with a fresh set of eyes.  Consider the talents of a consultant when you need to clearly identify your wine business priorities and and create viable, profitable solution.

Black Cloud Pinot Noir is Ready!

It's been a great journey! And it's only just begun.

My wife and I took a situation that was really a kick in the backside and changed into an opportunity.

Back in August, when we lost a big consulting gig, we started thinking about how it sometimes seems like things are going great and then a black cloud moves in and rains on our parade. We talked long into the night about our dreams, where we came from, how far we've come over the years. We talked about our vision of owning our own winery and how that seemed to be just out of reach.

Then one of us remembered how every cloud has a silver lining. We decided then and there to make the situation work for us and not against us.

The wine I had been consulting on was excellent. I knew if I could get some we could use it to shoestring finance our dream. Long story short, my employer, Township 7 , agreed to help us establish the Black Cloud brand until we can spin it off into our own licensed winery operation.

We decided to adopt the Black Cloud name to constantly remind us that adversity makes us stronger and, even if things look bad sometimes, there's always a way to make things better.

In the vineyard, grape vines that have things too easy become insipid and unremarkable. The best fruit undergoes stress and trial.

We hope that our 2006 Pinot Noir exhibits all the character and complexity you'd expect from a hand-crafted, small lot wine. Made from vines that flourished while being tested by the elements.

The labels are on and we are ready to fill orders.

Simply contact us at:

blackcloudwine@shaw.ca

$25 /bottle

An Economy In Crisis: This is the Best TIme to Start A Winery.

The other day a friend of mine questioned my sanity in light of the current global economic woes and my decision to establish a winery.



He called me 'crazy'.



I can understand this reaction. But it's a reaction built on emotion. An emotional response to stimuli that produces more questions than answers and creates fear of the unknown. It's a diet of information that suggests volatility and instability in institutions previously considered to be rock solid.



Emotion alters our judgement. Rational discourse and strategic planning are difficult when running around the room pulling out your hair.



What is happening right now sets the stage for years of growth. Predicting the period of growth may be difficult. Just when it will happen is tough to say. But when it comes around, a business and its' drivers must be prepared for growth. If you're still in damage control at that point (or even just afloat) your going to miss the ride.



So starting a business at the bottom of the economic cycle isn't such a bad thing. It's important to be prudent, maybe even frugal, and make sure you're scalable.



We're starting shoe-string and with such a small inventory that I'll be able to hand-sell it myself. In fact, that's part of the plan. And without a plan, how do you know if you've screwed up or not?



Bad time to start a winery? I don't think so. Bad time to have a winery with a bloated inventory, no viable marketing plan and enormous debt? I think so. In our own backyard here in the Okanagan Valley, I think we're going to see some consolidation. Some of the bad actors will either merge or be bought outright. There will be deals to be had. Prices haven't dropped too much yet but they will as too much value is being attached to non-existent good-will.



So, my friend, my state of mind is not one of questionable mental health. Sure, I'm crazy.

Crazy like a fox.

First step: a limited company.

As we head down this winery project road, we feel our first step is to incorporate.

A limited company allows us some protection of personal assets and helps legitimize our status.
The company will also allow us to develop a wine brand exclusive of the company name. We feel the company name will allow us to further diversify our efforts, when the time comes, as we spinoff other ventures. Not everything we do in the wine world is directly linked to our wine brand. So we see the company as a kind of fiscal umbrella.

At this time we are examining different company structures and trying to establish what the best format will be for our project. As an example, we may be considering outside investment at some point and we want to be able to act on that option without creating an entirely new entity.

Up until now, we've been operating as a partnership.

There's lots to learn for newbies. We're always open to comments about what we're doing. If you've had a similar experience be sure to comment on how it went.

New Winery Grand Opening - Hijas Bonitas

One of the newest wineries in the Okanagan Valley is having their grand opening all weekend.

Hijas Bonitas in Summerland is rolling open the doors and inviting the public to drop by.

There's barrel tastings and helicopter rides and, of course, the fanastic scenery.

Lawrence Hopper and family will be on hand to welcome you. It's in north Summerland. Watch for the signs and balloons. The event is on all weekend with live music and food.

I had the opportunity on Thursday to pull a few barrel samples for the VIP reception.

It was a great afternoon.

Wine Payola Is Alive and Well.

While talking to people about the wines I make and the wines coming out of the Okanagan Valley and BC the conversation inevitably turns to availability. People want to know where they can get our wine so they can enjoy it at home with their friends and family.

Township 7 has pretty good distribution around the Lower Mainland and we're working at spreading the love to Vancouver Island and other areas in the province. Some of the other wineries I'm familiar with are in most areas of B.C.

But it's getting tougher for new wineries and new labels to get onto the store shelves. Why is that?

I was out and about last week in Vancouver and realized that an old practice was becoming more and more prevalent. Individuals and businesses are being paid to stock certain brands. On the flipside, some restaurants and shops are demanding a certain fee to carry a line.

I'm not naive; this isn't news. It's always been the case. There has always been somebody who was willing to add a few bottles to an order or make some other little gesture to secure a spot on the shelf or a choice restaurant listing.

It was always there in the shadows. But now it's not so backroom. It's unofficial policy for some.
The result is that big producers are dominating stock lists like never before. A few multi-label houses are calling the shots; allowing smaller independents to take a few slots here and there.

Established small wineries should be able to maintain their foothold. But I wouldn't want to be a new brand going into this market. There are some big sharks on the prowl and blood in the water.

But that's business. Nobody said it would be easy to establish a brand. So who loses out besides the small, new winery? Probably only the consumer. If a big house decides that saucy import Green Appendage must be on every wine list then that is what the consumer will see. And they've got the muscle to make it happen. So everyone drinks Green Appendage and misses out on one of the small guys.

The upshot is: look for lists that are less diverse that carry fewer small, independent producers. These are the houses dominated by the big players. Solution: know who owns the brands and avoid "owned" establishments. Support restaurants and shops that demonstrate balance and fairness.
Or don't because you just don't care.

Vancouver Playhouse International Wine Festival

The biggest wine festival in North America is now well under way at this point and will continue through the weekend. I'm popping in on Friday afternoon for trade day to see some old faces and taste some new wines.
Each year the festival pooh-bahs select a region and a wine as the thematic influences. This year the country is Italy and the wine is bubble.
Next year is what I'm interested in:
Our own little old British Columbia will be featured as the region and Pinot Noir will be the wine.
As a result, my main squeeze Township 7 will be in attendance and I'll be there to press the flesh and dispense the stuff. So mark your electronic calendar devices now! March 23 -29, 2009.

Staff Training - Terms Explained

There's always new staff to train in a growing organization. It helps to have a manual or training book with wine and vineyard terms explained from your company's viewpoint.

A little humour always helps.

Here's an excerpt:

Fermentation
Naturally-occurring or commercially prepared yeast (a genus in the kingdom of fungi) strains (usually Saccharomyces cerevisiae or Saccharomyces bayanus) prefer sugar (complex carbohydrates) to complete their life cycle. The by-products of their activity include alcohol and carbon dioxide. Saccharomyces cerevisiae is also used in the production of ale and stout. Another yeast, Saccharomyces pastorianus, is used for lager. Molson Canadian is a lager. If you notice, pastorianus has the word “anus” embedded in it which explains why Molson Canadian tastes like ass.

Malolactic Fermentation
Primarily used for red wine and Chardonnay, the ML fermentation is a bacterial infection that takes malic acid and converts it to a form of lactic acid. Human taste receptors perceive malic acid as sharp and tangy (think Granny Smith apples) while lactic acid, prominent in dairy products, is softer and ‘creamy’. In conjunction with other factors present, a wine that has gone through ML and barrel aging will be considered to be smoother and more complex. Aroma is also altered. Descriptors can include: corn, cream corn, banana, popcorn, caramel, butter, cheese. ML in white wine (Chardonnay) has been on the decrease in recent years.



Tannins
They get their name from the tanning of animal hides. This was done by using an acidic solution sourced traditionally from oak bark that stopped the decomposition of the hides. Tannins in wine are complex astringent polyphenols that help stop the decomposition of the wine. Tannins are sourced from the grape skins, grape seeds and the wood of the barrel. Care must be taken to not extract too much tannin during production, especially from the seeds which can supply particularly harsh tannins. Tannins combine with substances in wine such as proteins and other macromolecules to form strong and heavy complexes that often precipitate and are seen as sediments in aged wines. The best way to describe the effect of tannin in wine is to have the subject drink from a cup of cold, strong tea. Tea contains a lot of tannin and there are few other flavours to confuse the palate. The effect will be a ‘furry’ tongue sensation. The tea should be sipped with the cup handle grasped between the thumb and the forefinger and the pinkie finger raised.

How many wineries can you fit in a phone booth?

Just thought you'd like to know...
Heard the other day that there are 50 applictations for winery licenses currently under review by the provincial authorities.
Any idea I had that the grape supply would catch up with demand is now dismissed.