11.28.2018  
 

Washington Wine Draws Foreign Investment

Bodegas Valdemar spending $18 million developing winery and vineyard in Walla Walla

 
by Peter Mitham
 
hertz
 
Bodegas Valdemar’s new winery, to be called Valdemar Estates, will have a capacity of 10,000 cases and should be complete in 2019.

Walla Walla, Wash.—Washington may be the second biggest wine producing state in the U.S., but its growth has been driven largely by homegrown entrepreneurs with little help from foreign investors. California wineries have made investments here, and Ste. Michelle Wine Estates’ ventures with Ernst Loosen and the Antinori family have won acclaim, but Oregon has been the destination of choice for direct foreign investment.

The construction of a 22,000-square-foot winery and tasting room south of Walla Walla by Bodegas Valdemar S.A. of Rioja is changing that. Valdemar expects to spend up to $18 million on winery and vineyard development over the next five years, the first time a vintner from Europe has set up a new winery in the state independent of local partners.

“We came here with my father and my sister and we really fell in love with Washington, to be honest,” says Jesús Martínez Bujanda, CEO of Valdemar Estates, the Washington venture of his family’s Rioja winery in Oyón. “In the first trip, we realized that we were going to do something here.”

Bodegas Valdemar produces approximately 150,000 cases a year and wanted to expand within Spain, but after scouting local opportunities it turned its attention abroad. The market at home was crowded, and the family looked for a less mature market with dynamism and opportunity.

Washington fit the bill. Martínez Bujanda spent a semester as an exchange student at the University of Washington in 2009 during his business administration studies so he was aware of what was possible, and the state ranked high on the list. The cost of entry was cheaper than California, and the range of high-quality grapes being grown was more diverse than many other U.S. regions.

“Washington has a lot of opportunities for, basically, all the varietals,” he said. “The prices here are still reasonable in terms of the grapes, and the prices of the wines are quite high.”

The collaborative attitude among wineries in Walla Walla was also a draw.

“I don’t think there’s any other wine region that has this, and that’s important because that’s going to guarantee the success of the region,” he said. “For me, the question is really, why not? We are really convinced that this is going to be one of the top wine regions in the world in the future.”

A key partner in establishing the new venture is Norm McKibben, who sold Valdemar a site adjacent to Amavi Winery for a new, 20,000-square-foot production facility and tasting room.

“Norm McKibben has been one of the big supporters that we have had since we landed here,” Martínez Bujanda said. “Probably from the financial standpoint it was more reasonable to produce wine for a few years and then think about building a winery, but we didn’t want to do that. We wanted to go all-in from the first year and build a beautiful winery.”

Valdemar Estates will have a capacity of 10,000 cases but production will start small and increase in step with demand. A stunning 2,000-square-foot tasting room with an outdoor seating area of similar size promises to make the winery a destination and build a following for wines expected to retail in the $80 range.

“We want to build on exclusivity and our location, instead of pushing the market,” Martínez Bujanda said. “We aim to position our wines in a very premium price segment, so I think we need to do it slowly.”

The winery crushed 12 tons last year from vineyards across the state, which will underpin an initial release of approximately 600 cases when the winery opens in 2019. It received 36 tons of fruit this year sourced from some of the region’s best vineyards, including two sites in the Rocks District of Milton-Freewater on the Oregon side of the Walla Walla Valley AVA as well as properties in the Yakima Valley and on Red Mountain.

Valdemar has purchased 26 acres in the Rocks, which it expects to begin planting in 2020 and is also in discussions for another 50 acres in a “very interesting place” but negotiations are ongoing. The plan is to continue sourcing fruit from vineyards across the state for the foreseeable future, learning about local capabilities.

“Our main philosophy is the vineyard,” Martínez Bujanda explained. “In order to keep the sense of place, you need to control the ripeness and have higher acidity in the wines. And that’s the style we’re going to look for here.”

The focus of winemaker Marie-Eve Gilla will be Cabernet Sauvignon and Syrah, as well as Grenache. Chardonnay, given Gilla’s experience in France, is a top candidate for a white varietal. The project excites Ashley Mahan, chief operating officer of the Walla Walla Valley Wine Alliance, who toured the emerging facility a month ago.

“I’m still blown away,” she said. “The family is extremely nice and come with a great deal of knowledge, passion, and camaraderie. We’re very happy to welcome them into Walla Walla!”

Some of the excitement comes from the fact that foreign investment is rare for Washington, which has seen plenty of domestic interest to date but little from overseas. This contrasts sharply with Oregon, which has long attracted investment from France.

While the Eritage development in Walla Walla secured investment from Chinese investors through the EB-5 program, the single largest source of foreign investment to date has been from Canada. Vincor International purchased Hogue Cellars in 2001 for $36.4 million, and, more recently, in 2013, Vancouver’s Aquilini family acquired 670 acres for $8.8 million on Red Mountain. It subsequently acquired an additional 700 acres in the Horse Heaven Hills AVA.

Aquilini Red Mountain Vineyards LP recently filed plans with Benton County for a 21.5-acre parcel that was formerly a gravel pit, for a 170,000-square-foot winery as well as a tasting room. The plans project completion by 2021, but Aquilini executive Barry Olivier said the timeline is not set in stone.

“Our design team filed plans in the local county office so we can get a jump on permitting,” he told Wines & Vines." However it may take several more years before a final investment decision is made.”

Aquilini’s initial 2014 vintage sold out rapidly through the company’s Top Table restaurant chain, and Olivier said the second, 2015 vintage will be released in the coming weeks.

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