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Adding Wine Capacity in Washington

Milbrandts envision large winery for themselves and clients

by Peter Mitham
Jerry Milbrandt
George, Wash.—Rising harvest volumes are prompting the expansion of grape crush capacity in Washington state.

With a record tonnage of 210,000 tons last year and more new acreage coming into production annually, some have questioned whether state wineries have the capacity to handle the fruit being delivered by what Washington State Wine Commission dubs “the perfect climate for wine” (see “Record Harvest for Washington State”).

Most custom-crush facilities are maxed out, even with new ventures coming online, while the expansion of acreage means that new vineyards are frequently dozens of miles from the wineries they’re supplying. “We’re currently hauling to six different wineries, some of them as much as 130 miles away, and we’re kind of at their mercy,” said Jerry Milbrandt, who with his wife Janie has direct ownership of 1,375 acres of vineyard and indirectly own more than 1,000 acres through the Milbrandt family and its partners. “The logistics are just crazy.”

Milbrandt expects this year’s state harvest to top 225,000 tons, putting further pressure on growers, wineries and crush facilities to juggle fruit, tank space, scheduling and labor.

The challenges are a large reason why the Milbrandts are preparing to purchase 13.5 acres from the Port of Quincy, just off I-90 in the town of George, for the newly formed Ancient Lakes Wine Co. The site is part of 63 acres the port district owns within the city, which has pegged the property for large-scale manufacturing and distribution uses. Ancient Lakes will be the first project on the land, which still requires servicing. Construction will occur during three phases starting this year and continuing through 2015.

3 million-gallon capacity
An interim lease has been inked and is set to be approved this week. It will give the Milbrandts access to the property for site preparation in advance of constructing a facility capable of producing upwards of 3 million gallons of wine for both the Milbrandts as well as clients including Charles Smith Wines, Ste. Michelle Wine Estates and Powers Winery.

The site was chosen because of its proximity to Evergreen Vineyard, the property Jerry and Janie Milbrandt own, as well as because land values were cheaper in George than they were further north in Quincy, where demand by tech giants like Microsoft seeking land for server farms has driven up prices. “We can just deliver to ourselves and crush at our own speed, 24 hours a day if we want to,” Milbrandt said. “It will enhance quality, and it will solve most of our logistics issues.”

Ancient Lakes will be developed in three phases and ultimately rival the capacity of the Wahluke Wine Co., which the Milbrandt family owns in Mattawa, Wash. It handles 3.4 million gallons and will ultimately focus on red wine production. “Right now, we’re virtually at full capacity (in Mattawa),” Milbrandt told Wines & Vines. “We could spend maybe $1.5 million and add more red fermentors or convert some, but it would be so much nicer if we could add this new facility (and) allow some of the grapes to flow there.”

Brandon Rice, formerly of Goose Ridge Estate Vineyards and Winery in Richland, Wash., has been appointed winemaker for Ancient Lakes.

The move was encouraged by Charles Smith, who himself has been juggling production arrangements (see “Charles Smith Positioned for Growth”). “He likes the Evergreen fruit, and he’s been after me to build this crush facility,” Milbrandt said.

Taking on new risk
But the move isn’t without risk, because bringing crush in house will shift what’s delivered to wineries from raw fruit to juice and wine. “We’re going to change from delivery contracts to a juice or a wine contract,” he said. “There’s quite a bit of monetary risk to us.”

A significant proportion of the 2015 crop has been allocated, promising a relatively smooth transition. Yet the question remains: Will one winery’s expansion be enough?

The revamping of operations will allow the Milbrandt facility in Mattawa to focus on producing red wines as well as allow clients such as Charles Smith to focus on developing new wine programs (in Smith's case rosé), but more wineries need to follow suit.

With existing crush capacity serving Ste. Michelle or their own needs, there remains room for facilities to handle the 225,000-250,000 tons state vineyards could produce this year.

Milbrandt isn’t optimistic all that fruit will find a home.

“There’s every likelihood there’ll be grapes left in the field this year because of not enough tankage, not enough crush facilities and unwillingness or no desire of crush facilities to expand or take on those grapes,” he said.

Ancient Lakes Wine Co. is open to filling the need—its site allows it to expand to handle upwards of 7 million gallons a year—but it is focussing on the initial phase of its development first.

It’s a path other wineries may want to consider if grapes hit the ground rather than the crush pad this fall.

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