You’re going Commercial
By: Kirstin Jackson-Ellis
With 15 wineries alone listed as members of the East Bay Vintner’s Alliance and many more making wine away from the spotlight, the East Bay has proven a popular place
to open a winery. Our winemakers are worldclass, our juice can be found on restaurant lists across the nation, and the region’s bottlings receive as many accolades in grape journals as they do on our tables.
It’s hard not to get swept up by the excitement. But running a successful urban winery takes a lot more than grapes and passion. It requires as much persistence, cash flow, and business know-how as that day job you should keep. Here’s what Steve Edmunds of Edmunds St. John, Sasha Verhage of Eno Wines, and Adam Nelson, one of eight owners of Two Mile, say you should know before moving from garage to warehouse.
Learning the Ropes
“I went in without my eyes wide open or anything telling me ‘you need to think about this and this and this.’ If I had been a really level, down-to-earth person, I might have never
When Berkeley winemaker Edmunds launched Edmunds St. John in 1985, there were more people preparing to launch wineries in Napa than there were actual wineries, and the number of people crushing commercially in the East Bay couldn’t be counted on one hand. Without a large support system and very little winemaking experience to his name, Edmunds now considers his current success to be part luck. Although he wouldn’t recommend his route to many, looking back he thinks maybe it was best for him to be fresh and inexperienced, because “it permitted the energy to flow without [me] overthinking everything.”
Then again, everyone learns how to make wine and run a winery differently, says Eno’s owner and winemaker Verhage. He recommends that aspiring winemakers “start small and figure out the best way that they learn,” whether it’s through hands-on methods, reading, watching videos, or taking classes. For Verhage, apprenticing
with a winemaker during the crush and harvest and riding with grape growers taught him invaluable information about the varying soils, clones, and properties of different appellations and making wine, information that he would not have learned from books.
Two Mile’s Nelson first made wine with fellow partners in a garage, when it was “a social experience centered around winemaking.” As the partners were going big, Nelson learned immediately that some people are better by the barrel, and some people shine in the office. Although all Two Mile owners are involved with grape procurement,
harvest and crush, and the final product, Nelson realized at the beginning that his background would better benefit Two Mile in the business realm, where he concerns himself largely with finances, compliance issues, and marketing. Passion and craftsmanship, many are surprised to discover, only takes a winery so far. Then comes the leg- and paperwork
Red Tape, Space, and Logistics
Before a commercial winemaker may officially crush, he’ll need grapes, sure, but equally as important, explains Nelson, is complying with government regulations. To start, anyone making and selling their own wine needs a Federal Wholesaler’s Basic Permit and a State Wholesaler Retail Permit. These allow individuals to buy grapes, sell their wine wholesale and to individuals through mailing lists, and to advertise their wares.
After these permits are acquired, the quickest path toward making wine that can be sold, at least in the city of Berkeley, is to rent space in a custom crush. Custom crushes are facilities where winemakers can work under the establishment’s licenses and use their highly specialized, specific winemaking equipment. All interviewed winery owners
recommended that new winemakers start here before investing in new $10,000 fermentation tanks or $2,000 de-stemmers for themselves. However, if a winemaker felt that he or she needed more than what custom crush could offer, there are other options, all of them requiring additional governmental compliance initiatives. One option would be to join forces with an established winemaker and apply for an Alternating Proprietorship license in order to become part owner. Another option would be to find one’s own warehouse, then bond it with the Alcohol and Tobacco Tax and Trade Bureau, properly zone it for use with the city of Berkeley, and finally, acquire a Winegrower’s license and pay taxes to state and federal government for the property and goods produced (all of which a custom crush already has and does).
Of course one can’t use just any bonded warehouse. Make sure, says Steve Edmunds, that the space also has three-phase, 220-volt electric supply, a house current of 110 volts, floor drains, and preferably high ceilings to keep the temperature low. And if one is buying his or her own equipment for a warehouse, Edmunds recommends using St. Helena’s Wine Country Classifieds to find a listing for a mobile bottling line truck, and most importantly, find great deals on used equipment, which is so important to small-production winemakers in a
Did they mention it would be expensive?
Speaking of capital, most East Bay winemakers and winery owners, including all interviewed (except Edmunds), still have a day job. In a business where Verhage says it takes around $100,000 to make 1,000 bottles of high-quality wine, “you’re going to blow through a whole lotta money before you see a penny…there’s a Herculean push in the beginning that gets rid of romanticism very quickly.”
The cost of winemaking ranges from expensive to downright exorbitant. For example, good Russian River Pinot Noir grapes can demand more than $4,000 a ton. A wooden barrel costs from $800 to $1,200, and in its useful lifetime (generally, three to five harvests) can only produce something between 900 and 1,500 bottles of wine. Add on to that the cost of renting or owning a crush and storage space, and the price of production including labor, bottling, bottles, caps or corks, cases, and labels. Then, of course, figure in taxes, permits, and inevitable waste.
When asked whether they would suggest anyone start a winery in this economy, all answered differently. Edmunds says that he wouldn’t recommend it, but it would depend on “what level of winemaking you want to start on, and what sort of capital you already have,” not to mention, “how stubborn someone is and how prepared they are to fail and
lose money.” Verhage, who generally wouldn’t feel comfortable advising anyone to start a winery now, says, “there’s a glamour and dream, and it’s great to be seduced, but know what that means before jumping in.” Nelson, on the other hand, says to go for it. “It’ll be at least two years before anything gets to bottle anyhow,” he states, “and besides, there’s a great local support system, and the more agricultural products we produce locally, the better.”
Still in the game?
First, you want to target your potential customers, and you want the public to know you exist. Edmunds advises joining associations like the Rhone Rangers or Family Winemakers, who aid in introducing new wines to the community and journalists through tastings. It also helps to join the Wine Institute, says Edmunds, because members are privy to a media contact list that many use to send out sample bottles to those interested. But know going in, suggests Nelson, that even with community or general support, garnering press as an urban winery can still be “a difficult challenge,” because, “people can have models in their head of what a winery should look like,” such as family-owned, estate-grown, or located in Napa or Sonoma. Our wines may be making news, but some wine drinkers are deadset on visiting that chateau off Highway 29
In addition, not everyone will like your wine. It may be because they’re not ready for your unique thrill or it may be because your product needs finesse, but either way, it’s essential that new winemakers get used to hearing “no” and take that time to improve their product. Says Edmunds, “so much about this business is timing and luck, but it’s also really important to be able to reach out to people and develop the thick skin to take rejection and hear, ‘sorry, we’re not interested,’ because sometimes they say it nicely and sometimes they don’t.”
While a positive response certainly isn’t guaranteed, winery owners say it’s a little easier to get great wine into shops and restaurants than it is to get press coverage for them. Best of all, explains Nelson, is that if a shop’s salesperson or wine buyer loves your wines, they’ll hand-sell them. Of course it can take multiple trips to retail shops to get that appointment, he adds: “there can be many two-, three-hour-long waits to get your wines tasted at a restaurant.” In fact, because so many winery owners know that those relationships between restaurants, shops, and wineries must be built and nurtured, many hire established wine brokers who have already built such relationships to represent their wares. And, if the wine doesn’t compel, it’s easier to hear “no” from a broker than directly from a potential buyer. Simply put, a broker with connections and reputations for representing good wines overall has a much better chance at getting wines tasted than do new winemakers, unless they know the wine buyer or are lucky. Besides, “coordinating five tastings a day” and “driving from place to place” uses vacation hours that may be better devoted to harvest, crush, or “daddy time,” explains Verhage.
Getting Grapes in the East Bay
Some good news: Now it’s easier than ever to find grapes if you’re a small-production winery, says Edmunds, who assumed when he started over 20 years ago that he’d find grapes quickly. “In those days, it turned out to be much more difficult to get raw material. These days they’re all over the place.” For most winery owners, finding the right grapes is a matter of drinking enough wine to know which grapes and areas are preferred, and telling the growers of their adoration. If the grapes are from a highly celebrated vineyard, winemakers stay on that waiting list until the grower has extra grapes. Sometimes winemakers are asked to provide growers with sample bottles so they can determine if they like the winemaker’s touch.
Edmunds suggests that new winemakers have someone they trust teach them about grape ripeness and harvest, instead of picking only when a grower says it’s time. But these days, he adds, relationships between growers and winemakers have gotten better and are probably the best he’s seen. This is because most grape growers are happier selling their grapes to small winemakers who are involved in the growing process, rather than to bigger wineries who can order their grapes, pay, and
then leave after harvest. Explains Nelson “they feel better not to be selling to huge wineries that they have no relationship with.” And if you’re willing to invest in their business, they’ll return the favor like they did with Two Mile, who ventured into a shared-risk program with a grower in order to get the organic, and in the future, hopefully, the biodynamic
grapes they want. As Verhage puts it, “I want to be able to talk to them, I make a lot of visits, we strategize, and it’s a collaborative relationship.”
Relationships and networking, it seems, play at least as large a role, if not larger, in East Bay’s winemaking as they do in Napa’s.
The reality of winemaking as a business, and not just a passion, speaks to the differences between the commercial sphere and home winemaking. Although it takes a lot of hard work and time, if success is reached, there seem to be as many rewards as there are tribulations. Until then, advises Edmunds, “keep your area, tanks, and barrels clean, keep air from your wine once fermented,” and “be prepared to respond to and anticipate market changes.” Lastly, “make what you like to drink,” says Verhage, “because if no one buys it, you can still have a good party and drink what you’re passionate about.”
Edmunds St. John
1331 Walnut St
805 Camelia St
Two Mile Wines
2816 San Pablo Ave
When not writing for her lighthearted food and wine pairing blog,
vindelatable.blogspot.com, Kirstin Jackson-Ellis works as a freelance writer,
a food and wine consultant, a wine bar manager, and a cook. She also eats
vast amounts of cheese.