Chateau GT looks West; profitable wineries for sale

REGION – Chateau Grand Traverse is turning the U.S. wine paradigm on its head – shipping its wines to California.

President Ed O'Keefe III said the Old Mission winery sent 720 cases to a California wholesaler in late July. It will be sold in 130 Ralph's stores around Los Angeles.

Chateau Grand Traverse shipped to California back in the 1980s, but it didn't work out well, O'Keefe said.

"With shipping and the size of the orders, it just made our wine atrociously priced," he said.

He has higher hopes this time around.

"It's a serious enough order to warrant supporting the product," O'Keefe said. "It's a big step."

To firm up his toehold in the California market, O'Keefe hopes to be in 10 independent wine shops and 10 restaurants, also in the LA area, by the end of the year. He hopes to be a pioneer for other Michigan wines, too.

"It will open the eyes and maybe they'll consider some other ones, too," he said.

The answer to the question of what a Michigan winery is worth may be in the offing.

No Michigan winery has ever changed hands on the open real estate market. Now three Leelanau County operations – Bel Lago, Chateau de Leelanau and Willow Vineyard – are for sale simultaneously. Dan Matthies of Peninsula Properties, a real estate brokerage specializing in vineyards and wineries and the listing agent for Bel Lago and Chateau de Leelanau, says he is "close" on a couple situations and has taken deposit money from one prospective buyer. A confidentiality agreement prohibits him from saying for which winery.

This first sale is crucial to the industry because it will establish a benchmark value for a winery.

"Right now, there is no comp to go by," said Matthies, who also owns Chateau Fontaine. "Since all three of these came on the market, everyone is waiting for this."

A summary of the sales, per Matthies:

– Bel Lago – Listed at $3.95 million, the operation north of Cedar includes 90 acres of which more than 30 are planted. Bel Lago is an established brand and proprietor/winemaker Charles Edson produces about 5,000 cases annually.

– Chateau de Leelanau – Listed at $4.2 million, it includes 203 acres, of which 27 are planted and producing and a small winery with annual production of about 4,800 cases. The tasting room is off-premises in a rented facility on M-22 between Suttons Bay and Traverse City. A satellite rented tasting room is based in Frankenmuth.

– Willow – Matthies has not listed the property, but has shown it to prospective buyers. Neighbor to Chateau de Leelanau, it's the smallest of the three. The $2.35 million price includes 12 acres, 7.5 of which are planted in grapes, a small house, tasting room and winery. Annual production is about 1,200 cases.

Since all are established brands, Matthies expects that a new owner would continue producing wine under the existing names.

"It's given somebody an opportunity to walk into this business and buy a turnkey operation," he said, estimating that a new winery would need five to 10 years to get to the point where these three are.

"It is unbelievable, the expense," Matthies said of building a winery from the vines up. "No one can duplicate for a million dollars more what these wineries are selling for at this point."

As a vineyard real estate specialist, Matthies has done a lot of interviews on the sales. He says some media have taken a negative slant to the simultaneous sales, speculating that the industry might be encountering hard times. Not so, he said. All three are profitable and were prompted to sell for varying personal reasons.

Matthies also noted that three new wineries plan to open in Leelanau yet this year-45 North, Victoria Creek and French Valley.

The media interest does mean that first buyer will get one extra goodie into the bargain, Matthies said.

"The first one of these wineries that sells is going to have one of the biggest advantages in the Michigan wine industry as far as press and free advertising," he said.

Cari Noga has covered Michigan's grape and wine industry since 1999. Read her blog at www.michgrapevine.com.

Send news and story ideas to her at cari@michgrapevine.com

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