02.20.2018  
 

Washington Wine is a Triple Threat

Custom-crush providers seek to expand bulk wine business to match demand

 
by Andrew Adams
 
wine vineyard four feathers washington winery
 
Four Feathers Winery is producing more vineyard-to-bottle private-label brands for companies outside of Washington state.

Prosser, Wash.—David Forsyth has been making wine in the state of Washington for more than 30 years, including two decades at Hogue Cellars and five years at Mercer Wine Estates.

Because of the state’s severe and sudden frosts that can bring a quick end to the harvest, he’s grown used to making excess wine as a hedge against not being able to harvest all of his grapes. Over the years, Forsyth has become a veteran of the bulk wine market, selling off that extra wine if it wasn’t needed as branded product. Recently, the parties that have been in the market for that wine have changed.

“In the recent five to seven years, California wineries are finding Washington wines to be a great alternative,” he said. “There’s definitely an interest in California in Washington, and we see that as having lots of potential for both state industries.”

Growing production
Forsyth is now the winemaker and general manager of Four Feather Wine Estates, a custom-crush, bulk wine and private-label winery producing around 1 million cases per year out of a winery in Prosser, Wash. The facility is owned by the Zirkle family that has grown fruit in eastern Washington for three decades and now owns 3,000 acres of vineyards.

Most of the wine grapes grown by the Zirkles are under contract to Ste. Michelle Wine Estates (SMWE), the eighth-largest U.S. wine company, but Forsyth said about 10 years ago the family decided to invest in a winery to crush and ferment their grapes as an insurance policy against SMWE deciding to buy grapes elsewhere or not needing the same quantity. If the winery was the insurance policy, the “premiums” would be partially paid by Ste. Michelle using the facility to process and even ferment some of its grapes.

The winery also would be used to process grapes from the Zirkles’ vineyards, including the 650-acre McNary Vineyard in the Horse Heaven Hills appellation. In 2012, Forsyth joined Four Feather Wine Estates to manage the winery and oversee the bulk-wine program that has grown rapidly since then.

According to the Wines Vines Analytics winery database, there are 13 wineries producing more than 50,000 cases per year and offering custom-crush services in Washington, nearly double the number in Oregon.

Investing in bulk and custom business
One of those large custom-crush operations is Ancient Lake Wine Co., in Quincy, Wash., which is now operating the state’s largest custom bottling line: a brand new GAI monoblock that can process 250 to 300 bottles per minute. The company is part of Milbrandt Management, which owns more than 3,000 acres of vineyards and produces nearly 2 million cases per year, according to the winery database. Much of that is for custom crush and a growing private-label business that director of winemaking Brannon Rice said is fueled by demand from out-of-state wine companies, many of which are based in California.

Rice told Wines & Vines there is “absolutely” rising demand from California. “I’m down in your area at least four times a year,” he said.

In the past decade, Washington growers have tripled the amount of Cabernet Sauvignon acreage in the state to more than 18,000 acres, harvested more than 71,000 tons of the variety in 2016 and are expected to have surpassed that in 2017.

During the recent Unified Wine & Grape Symposium in Sacramento, Calif., in January, Mike Veseth, a professor emeritus at the University of Puget Sound who studies the economics of the global wine business, identified Washington as California’s most able competitor in terms of quality-to-price ratio, access to market and capital investment.

Santa Rosa, Calif-based Vintage Wine Estates just acquired Tamarack Cellars in Walla Walla, Wash. Just this week, Josh Phelps’ Grounded Wine Company in St. Helena, Calif., released a new wine called Collusion, which is produced with Columbia Valley AVA grapes because the state is what Phelps calls "the next frontier for American-made Bordeaux varietal blends."

In the same state of the industry session at Unified, Steve Fredricks, the president of Turrentine Brokerage, mentioned the significant growth of acreage in Washington during his remarks about the Cabernet Sauvignon market.

Fredricks told Wines & Vines that the increased amount of bulk wine is drawing interest but not significantly more dollars. “I would not say that many more transactions are happening yet though,” he said.

Planting to match demand
Rice, with Milbrandt Management, said the company’s current long-term plan is to plant around 300 acres per year, and that new supply is going in largely to support growth from out-of-state clients. He said now that Washington growers better understand the state’s terroir, planting decisions are more effective and better in tune with the market. In addition to Ancient Lake, Rice also manages production at the Wahluke Wine Co. winery in Mattawa, Wash.

While many of acres of Riesling have been removed in favor for Cabernet, that has actually helped balanced the market for the aromatic white wine varietal, and Rice said he’s selling a significant amount of Riesling for private labels at $6 to $8 per gallon. Cabernet costs between $10 and $18 per gallon, with Chardonnay at $7-$9 and Merlot $10-$16. “We’re going to continue to grow as the market allows us,” he said. “We’re going to continue to push the envelope on that.”

Rice joined the company in 2014, when the Ancient Lake Wine Co. winery was an empty hay field. By October 2014, he was able to process 1,200 tons at the facility. “We were putting up tanks as we were filling them,” Rice said.

Since then, production has grown to 16,000 tons managed by just 12 production workers. Rice said Washington wine not only has to compete on quality but remain a good value, so the winery was built to be as efficient as possible. He said that was accomplished with “over sizing” equipment so a 40-ton truck can be unloaded and processed within 15 to 20 minutes. About 80% of what he processes are white grapes, so the winery employs a gentle belt-driven crush pad with the goal of reducing maceration. The winery also has a centrifuge and high-solids cross-flow, ceramic-plate filter by Padovan to extract as much usable wine out of lees as possible. “It was a significant investment, but what you get out of it is pretty phenomenal,” he said of the filter.

The reds and whites are picked by machines, New Holland mainly, but Rice said he’s considering investing in one of the latest Pellenc harvesters. He added that the winery is possibly the only in Washington to use fully insulated tanks that are all outside. Such a set up makes temperature-control much easier.

At Four Feathers, Forsyth has Wahluke Slope Cab for $11 per gallon by the tanker or McNary Merlot at $12 per gallon. The 50,000-square-foot winery has total capacity of 3 million gallons, and the crush pad has three 50-ton Siprem presses with the space to add two more, as needed. Nearly all of the red grapes are harvested using Pellenc machines with onboard sorters and are fermented in 15,000 gallon tanks.

By volume, Four Feathers’ client base is split about 50-50 between in-state and out-of-state clients, but just by the number of customers the significant majority are outside of Washington. “We have a pretty broad, wide consumer base out of the state,” he said.

Forsyth said the company sells quantities from small lots to tanker trucks to wineries throughout the United States, supporting existing wine programs or as needed, depending on harvest conditions. The company also is moving, offering grape-to-bottle programs for wineries, shiner sales and private labels for large retailers and wholesalers. During the off-season, he said they’ve found a niche in fermenting apple juice for a national cider brand.

Despite the growth of Washington’s production capacity, it’s still small compared directly to California. The state’s total harvest of Cabernet is still about half of what is grown in the Lodi AVA/Delta region of California, and there are several individual wineries in California that could process all of that tonnage in just one harvest.

Veseth, the wine economist who identified Washington as California’s looming competition, later said the state “isn’t really a threat at all” because as wine production grows in nearly every U.S. state, so too can wine consumption in a rising tide for every boat in the industry.

 

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