Good Fruit Grower

February 2013

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Viticulture Gallo could start a CALIFORNIA TREND Gallo Winery brings needed national recognition and distribution to Washington wines. by Melissa Hansen E & J. Gallo Winery's entry into Washington's wine industry could be the start of a trend bringing California wineries to Washington State. The purchase by the world's largest wine company of Washington's Columbia Winery and Covey Run Winery brands last summer from Ascentia Wine Estates is seen as a positive move by the Washington industry. "Gallo's entrance is positive," said Butch Milbrandt of Milbrandt Vineyards and Wahluke Wine Company. Gallo brings national recognition and they have huge national distribution that works well, he said, adding that because they only purchased the wineries in Woodinville and Sunnyside— no vineyards—they will need to buy a lot of grapes. "It's all good and will help put us on the map." The Washington Wine Commission's Steve Warner agrees with Milbrandt's assessment. —Butch Milbrandt "Everyone I've talked to says the real value of Gallo in the state is the company's recognition and distribution," Warner said. "It's a global wine entity that has a very sophisticated distribution and marketing network, and we see their entry as only helping Washington State brands." One of the biggest weaknesses of Washington's wine industry is national distribution. It was a common theme mentioned by many when Good Fruit Grower gathered information for this story. Growers and vintners believe Gallo's entry will help bring Washington wines to more national markets and build national recognition. "It's another piece in the puzzle," said Warner, referring to the growth of Washington's wine industry. Warner shared a conversation he had in August with Roger Nabedian, Gallo's senior vice president and general manager of the premium wine division. "Roger made it clear that Gallo purchased Columbia Winery and Covey Run because they wanted to add premium Washington wine to their portfolio," he said. "It's all good and will help put us on the map." Wide range of wines While Gallo certainly dominates the jug wine segment of the market, the company has seven wineries located within California's wine regions and produces wine in every category, at every price point. Thus far, there's no worry from the Washington wine industry that Gallo will try to produce the bottom-tier style of wine here. "They're smart people, they know how to grow grapes and are in it for the long haul," Warner said. "They know that wine of bulk quality can't be economically produced under Washington conditions." Gallo was unable to provide information when contacted by Good Fruit Grower. However, it was previously reported that current production at Columbia Winery and Covey Run is around 300,000 cases. Gallo assumed a number of grape contracts from the purchase and has stated it will be working to develop relationships with premier growers in the state. Long-term plans are to increase wine production levels. 20 FEBRUARY 1, 2013 GOOD FRUIT GROWER Gallo is not the first California-based wine company to venture to the Pacific Northwest. The publicly held Chalone Wine Group established Canoe Ridge Vineyard near Paterson in 1990 and acquired the Staton Hills Winery in 1999, renaming it Sagelands Vineyard. At press time, California's Trinchero Family Estates announced it is handling sales, marketing, and distribution for the Washington Charles and Charles wine brand, a collaboration of Charles Smith of Walla Walla's Washington K Vintners and Charles Smith Wines and Charles Bieler, winemaker and marketer of New York City. Trinchero's President Bob Torkelson said, "Washington wines are on fire," in a news release. The number of California wineries branching out into Washington State has been small, but there are rumors that a prominent Napa winery is interested. Growing wine grapes in California's Napa Valley is an expensive proposition. Not only are land costs outrageous, but also the regulatory environment requires a bevy of erosion, water quality, land use, and other permits, resulting in total planting costs that can easily reach $300,000 per acre. No head-scratcher In regard to other California wineries following Gallo's lead, Ste. Michelle Wine Estate's chief executive officer Ted Baseler asked, "Why wouldn't they?" Baseler said that he's always believed that at some point, others would discover Washington wines. "There's a lot of excitement in the wine trade over Washington wines," he said. "It's not a head-scratcher that others would want to enjoy the same excitement and growth." However, Baseler pointed out the winter hazards of growing grapes in the Northwest that Californians and most Europeans are unaccustomed to. "Our periodic winter freezes that can level vineyards to the ground are unknown in places like California. There aren't many who want to come up here and experience that. "Some think it's inexpensive to grow wine in Washington because we produce high-quality wines that are inexpensive," he explains. While land prices are much lower here than northern California, (around $10,000 an acre) the wine grape yields are about half or less than yields in some California locations, affecting the profitability of certain wine styles. •

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