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Charles Smith Positioned for Growth

Purchase of former Whitman Cellars expands possibilities for Washington state winemaker

by Peter Mitham
charles smith wine
Charles Smith's purchase of the former Whitman Cellars gives him an extra 10,000 square feet of production space.
Walla Walla, Wash.—With some of the most dynamic years in the Washington state wine industry yet to come, winemaker Charles Smith (of the eponymous Charles Smith label as well as Charles & Charles, K Vintners and others) has taken steps to free up resources and move forward with new projects.

Smith purchased the former Whitman Cellars premises (including property, equipment and the Whitman Cellars trademark) for $1.1 million in August 2012, giving him an extra 10,000 square feet of production space.

More recently, Smith and partner Charles Bieler handed sales and marketing of their Charles & Charles label to Trinchero Family Estates, freeing up time to pursue new initiatives such as a single-vineyard Chardonnay line planned with winemaker Brennan Leighton, formerly of Woodinville’s Efeste Wines.

“We’ll sell more wine and not work as hard at doing it,” Charles Smith told Wines & Vines regarding the arrangement with Trinchero, noting that sales of Charles & Charles wines have been growing at 30% annually.

The deal with Trinchero means Smith’s own in-house sales team of five people won’t have to take on extra work or expand as the brand will be handled by Trinchero. He says the move will improve the brand’s exposure as well as allowing him to focus on Washington state wine.

“We get to do some bigger things without really having to be bigger ourselves,” he said.

That’s where the new space in the former Whitman Cellars premises comes in.

Moving in
Community Bank of Joseph, Ore., called loans totalling $2.66 million (principal and interest) at the end of January 2011, abruptly shuttering Whitman Cellars. While the winery was listed at $1.1 million the previous fall, it failed to find a buyer and entered foreclosure.

Driving by the Pine Street location last summer, Smith saw a sign advertising the premises’ availability just as he was wondering whether or not to lease a new facility to accommodate K Vintners’ production.

“If we hadn’t purchased Whitman Cellars, we would have been very, very, tight-squeezed,” Smith said. “We had the opportunity to purchase it lickety-split...(and) like a hermit crab, we moved in.”

While a thorough cleaning was done just in time for the first grapes to arrive the week of Sept. 17, there have been no structural changes or major renovations. The premises, which came with equipment, were ready to go.

“The idea was, be modest in our environment and spend the money where it most matters to the consumer. It’s not a place to visit; wine in the bottle is what they’re going to get,” Smith said.

While the premises are serving the primary purpose of accommodating K Vintners’ production, they’re also home to 27 single-vineyard Chardonnays now undergoing malolactic fermentation. Smith anticipates this first vintage from the project, undertaken with Leighton, will be released in late 2014.

When they do, they’ll likely flow smack-dab into the midst of a renewed Walla Walla and Washington state wine industry.

The economic landscape
While a handful of Walla Walla wineries shut down in the wake of the 2008 financial crisis and ensuing recession, Smith believes the trial by economic fire has left a stronger, more dynamic industry.

“I was member No. 17. Now there’s over 120 bonds—and that was in a 10-year period,” he says of the Walla Walla Valley Wine Alliance. “The growth has been incredible, and with any type of growth of that nature you’re going to expect that you’ll have things aren’t going to stick.”

But if the boom wasn’t all wine and roses, it doesn’t discount the wine and roses that exist.

“I think people are coming back—not that they’ve ever gone—with a real intensity, a real passion,” Smith said. “With Trinchero Estates and Gallo coming to the American wine business and the consumer is going to take Washington even more seriously.”

Gallo bought the Columbia and Covey Run wineries in June 2012 from Ascentia Wine Estates. (See “Gallo Purchase Could Boost Grape Prices.”)

Smith himself also has expansion plans in mind, having planted 40 acres of vines last spring on a property south of Walla Walla on Cottonwood Road.

With 18,500 square feet of production space across three locations, Smith looks forward to consolidating operations—now producing 300, 000 cases a year—in a single location at the Cottonwood Road property.

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