The Winemakers

Wines from Old Mission and Leelanau Peninsulas are no longer secrets. They're winning international awards and selling by the tens of thousands of cases. TCBN Publisher Luke Haase sat down with four leading winery owners days before the 2007 harvest.

Included in the roundtable were:

Bob Begin, Chateau Chantal

Don Coe, Black Star Farms

Ed O'Keefe, Chateau Grand Traverse

Larry Mawby, L. Mawby

TCBN: Given our crazy weather this year, what will the 2007 vintage look like?

O'Keefe: I just walked out the door and asked my brother [winemaker Sean]…the late rain is adding volume and it looks similar to 2006…an excellent year.

Coe: Of course a winemaker always says it's the best year ever! (laughter)

BEGIN: Right. It will be a very early harvest, the earliest we've ever had.

Coe: A number of crops were affected by the spring freeze but we escaped that up here, and then the summer dryness, but we escaped that, too, with irrigation and deep roots.

TCBN: Has there been a power and sales shift from southwestern Michigan wineries to northwestern Michigan wineries?

Mawby: Oh yeah, absolutely.

Coe: That's a five-year trend. We have the price point, the location, and the distribution. And, we are either starting to make better wine or people would rather come here to visit.

O'Keefe: The consumer is more educated and they're stepping up in price point. You're seeing more award-winning wines coming out of northwestern Michigan. It's interesting. We notice in our tasting room. We used to get mostly repeat customers, but now we're getting many more new customers.

Mawby: That's dramatically true now. Six years ago, 80 percent of our customers were repeats. Now that number's not over five percent.

Coe: They're also younger. Young people who view a winery visit as a fun day out has really exploded, and they'll happily admit they've never visited before.

Mawby: We have great momentum. If they visit a half dozen of Michigan wineries they will find a couple wines they really like, so it's really feeding on itself.

Begin: You're right about the younger generation. At our B&B, I've noticed the 50-plus crowd that's always enjoyed the experience and the wine. But now they're also giving gift certificates to their children.

Coe: We also see employers buying for their employees, or even children buying for parents…the perfect gift for someone who has everything.

TCBN: Could someone taste a difference in the actual wines from Old Mission versus Leelanau?

Mawby: Oh sure! (laughter). Seriously? Not really. They're each unique. But the fact is, each one of us here knows in our heart of hearts that ours is the best.

O'Keefe: Absolutely. Or we wouldn't be in this business.

TCBN: Can northern Michigan produce a great red?

Mawby: If a great red wine is the predictable high alcohol and tannins and deep red, no, but that's not necessarily a great red.

O'Keefe: Right. People are just not yet familiar yet with European-style reds with lower alcohol content. But that will come.

Coe: I call them 'high alcohol fruit bombs' from California, and these wines just dominate the occasion and the food you are tasting. I just don't think that's why people consume wine. Wine is meant to be something that complements what you are doing at that moment.

TCBN: Do Detroit and Chicago retail outlets take our wines seriously?

Begin: We've always had trouble translating the experience visitors from Chicago have here back to Chicago. My own daughter works at a wine distributor in Chicago and she hasn't been able to get us in anywhere!

O'Keefe: I've tried since 1985 to break into Chicago and finally gave up. I've sold wine in Japan and that was easier than Chicago. Detroit's been fantastic, but we see our growth in markets outside of Michigan.

Coe: Well, if you're not a 'pull' brand, one with millions in advertising behind it, it's hardly worth the cost of trying to get into those major markets. You're much better going after second cities. We could all sell all the wine we could all make if we just got our wines into Grand Rapids and Ann Arbor. You know, northern Michigan wine represents just seven percent of total wine sales in the state.

TCBN: Your business models are all different. What are your options for growth?

Mawby: Every winery wants to grow, but how do you measure that growth? I'm the smallest here by a long shot. Now I've grown dramatically for four years, and I don't want to do that anymore. For me, now the growth will be in quality and price…and by the way, our sparkling production is the most capital intensive in terms of production and equipment.

Begin: We're expanding our distribution but our bed and breakfast operation has really helped our growth as well.

Coe: We are only seven percent of sales in this state. And that seven percent represents all Michigan wines, so if one out of every 500 or 600 bottles sold is Black Star, we're doing okay. Lots of people to reach. That's why we continue to look at adding new tasting rooms.

O'Keefe: We've had significant growth, particularly over the last few years, and now we're expanding the winery through major reinvestment. It's funny. I was talking to someone in the industry and we asked 'what would be the ideal situation?' I think it's a winery with a limited number of employees making just 5,000 cases, with self-distribution and selling out of a tasting room. But of course, when you're small you want to be bigger, and when you're big you look back at the simplicity of a small operation.

TCBN: How profitable is a winery here? Is it a good business to get into?

O'Keefe: I tell people 'don't get into it idly by any means.' But the nice thing is you could be a grape grower, a winery, both, have a B&B, do cheese or a distillery…lots of alternatives.

Coe: Is it a good investment? Well, you're always asset rich and cash poor, in the early years particularly. There's not a single investment we've made that hasn't seen growth in terms of asset value, but if you were standing with $2 million and were deciding between the stock market or a Burger King franchise or a winery, the only reason you'd choose a winery would be the lifestyle.

O'Keefe: And many people think it's about growing great grapes and wine, and that's important, but you have to sell it…and then the next vintage comes in. It's like the Lucille Ball show with her falling behind on the assembly line…they just keep coming.

Coe: Now, if you have a paid-off cherry farm and you're thinking about clearing some old trees, it might be wise to plant some grapes, but if you're a new guy who has to finance land and $15 per acre for a vineyard, you just can't do it.

Mawby: No way. Listen, if any bank loaned money for that business model, I don't want my money in that bank. It's just too long to wait-three to four years until the revenue flows. There's a reason why when you look at the U.S. wine industry, the vast majority are owned by families. There are very few public corporations.

O'Keefe: The ones that were have imploded!

MAWBY: Yep. They get out, because the returns aren't nearly good enough, especially if they're used to the margins you get with liquor.

TCBN: There are 20 or so wineries in Leelanau and Grand Traverse. How many will there be in 20 years?

Coe: I'd say 50. It will continue to grow.

Mawby: Fifty easy. But the interesting thing is that all the past growth has been from folks who are already here. When we begin to see people come into town from outside of the region who want to make and sell wine here, watch out.

O'Keefe: I'll guess 40, but I really have no basis for that guess.

Begin: I think there might be some fallout or consolidation around here over time. I'll say 30. BN

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