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Virtually in the Wine Biz
By Tina Caputo
Jul 8, 2008
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Last month, I went to Portland for the American Society for Viticulture and Enology conference and trade show as part of my job as editor of Vineyard & Winery Management magazine.  (Yes, I know what you're thinking:  Does the glitz and glamour of being a wine journalist never end?)  During the trade show, a security guard came up to our magazine's booth with a plea for information.  She and her husband were thinking about starting a winery, she explained, but they'd heard that only the super-rich need apply.  Does it really cost millions of dollars to get into the wine industry?

Five years ago, I would have squelched her pathetic little winemaking dreams with an answer of, 'Basically, yes.'  But that's no longer true.

An article posted earlier this week on Forbes.com offered a sobering reality check for high-tech moguls dreaming of trading in their semi-conductors for Semillon.  Author Eric Arnold wrote:  'It's the dream of many entrepreneurs:  Get rich, buy a vineyard, kick back on the porch and relax with a glass of your own wine.  Keep dreaming.  Wine is a tough, competitive and expensive business….'

Arnold goes on to explain that, in addition to a $1 million-plus investment, becoming a vintner requires back-breaking farm work, the ability to leap mountains of maddening regulatory paperwork in a single bound, and superior sales savvy.  A single piece of winemaking or vineyard equipment can cost more than $100,000, and oak barrels now run nearly $1,000 each.  Then there are the years of losses you have to incur before you earn a single dollar.  While all of that is certainly true for those looking to enter the wine biz the old fashioned way--buy or build a winery, plant vineyards, wait a few years for the vines to produce a decent crop--there's a simpler, cheaper way to go about it.  It's called a 'virtual winery.'

To start a virtual winery, you need not own a winemaking facility, a vineyard or winemaking equipment.  Instead, you pay to process purchased grapes or bulk wines at someone else's winery facility (usually a custom-crush facility or an established winery that offers custom-crush services).  You can make the wine yourself, if you have the know-how, or hire a consultant to do it for you.  Of course, you still have to pay for things like grapes, barrels, bottles, corks, labels, marketing, etc., but the cost will be far less than paying for a shiny new basket press, dozens of fermentation tanks, and an automatic sorting table. 
Due to these advantages, virtual wineries have become more prevalent in the last five years, and today there are more than 1,500 in the United States.  Some are tiny-production brands, while others make millions of cases per year.  Many well-respected vintners, such as California's Au Bon Climat, Qupe Winery and Charles Creek Vineyards, use custom-crush facilities to produce their wines. 

It's not unusual for virtual wineries to morph into brick-and-mortar operations once their owners gain the resources and experience to build their own bonded facilities.  For example, Oregon's Firesteed Cellars made the switch in 2003, when the company purchased the winery where it had been making its 'virtual' wines for a decade.  Washington's Hedges Cellars also began as a virtual winery.

'Great,' you say.  'Where do I sign up?'  But before you start designing your winery t-shirts, there are a few drawbacks to consider.  The first is less control over fruit sourcing.  As a virtual winery--and especially if you're new to the industry--you may not always have access to the grapes you want.  The top growers often have long-term contracts with other wineries, and don't have fruit to sell to newcomers.  Even if you're able to buy fruit from a certain coveted vineyard for a few vintages, there's no guarantee that the fruit will be available to you next year.  When buying grapes from someone else's vineyard, you don't have nearly as much control over the farming methods used there as you would on your own land.

The second reason that some vintners prefer the brick-and-mortar model is control over winemaking.  When you're making wine at someone else's facility--which will usually have many clients--you're at the mercy of scheduling during the busy crush season.  Sure, you may need to get your grapes into the press now, but there could already be four other vintners ahead of you.  Owning your own winemaking facility allows you to be first in line every time, and to pick and choose the equipment you're using to make the wine. 

That's not to say that the virtual model isn't a good way to go.  It allows you to get your feet wet in the industry without investing millions of dollars--and every waking moment of your time--in the process.  And most consumers care more about how a wine tastes than whether the vintner owns his own winemaking facility or vineyards.  Some virtual wineries, like Charles Creek Vineyards, even have tasting rooms, where they can present their wines to the public.

Still thirsting to become a vintner? Here's a sampling of custom-crush wineries to help get you started:

Bin to Bottle, Napa, Calif.:  bintobottle.com

Central Coast Wine Services, Santa Maria, Calif.:  centralcoastwineservices.com.

Crush Pad, San Francisco, Calif.:  crushpadwine.com

Judd's Hill Microcrush, St. Helena, Calif.:  napamicrocrush.com

Napa Wine Co., Oakville, Calif.:  napawineco.com

NW Wine Co., McMinnville, Ore.:  nwwinecompany.com

Oak Ridge Winery, Lodi, Calif.:  oakridgewinery.com

Owl Ridge Wine Services, Sebastopol, Calif.:  gregandgregwinery.com

Paso Robles Wine Services, Paso Robles, Calif.:  pasorobleswineservices.com

Premium Wine Group, Mattituck, N.Y.:  premiumwinegroup.com 

Sonoma Wine Co., Graton, Calif.:  sonomawineco.com