Author: Cyndi

Basic Mechanics & Benefits of the Alternating Proprietorship Arrangement

Cyndi
2 men looking at wine bottles on a table with a country map

By:  Louis J. Terminello, Esq. and Bradley Berkman, Esq.

Brand owners and wineries have options available when negotiating a wine packaging arrangement. This article will focus on the mechanics of an alternative to the standard contract packaging relationship. As a jumping-off point, contract packaging arrangements are one in which a winery will contract with a brand owner to produce and bottle wine for the brand owner. In the world of wine production, this is commonly referred to as a custom crush arrangement.

   It is a relationship of independent contractors, memorialized in an agreement where the brand owner pays a fee for the bottling services of the winery, and the winery, in most instances, delivers the final bottled product to the brand owner. The beverage alcohol licenses required are both federal and state production/winery licenses held by the winery, and almost always a federal wholesales license issued by the Alcohol Tax and Trade Bureau (TTB) – which is held by the brand owner – and other state licenses are required.

  All production reporting prepared and submitted by the winery and excise taxes, though almost always charged to the account of the brand owner, are reported, and paid by the winery. For all intents and purposes, the brand owner acts as both brand owner and distributor within the three-tier system and reports and pays excise tax at the state level, if required. Both parties benefit from this type of bottling arrangement. For the winery, this arrangement is an additional revenue stream. For the brand owner, a product can be brought to market without the high costs of investing in a production facility.

  Separate from the above arrangement, TTB has a unique licensing scheme available that may be more advantageous to wineries and brand owners for numerous reasons and is referred to as an alternating proprietorship arrangement.

Alternating Proprietorship Defined

  In the alternating proprietor relationship, an existing winery agrees to lease its winery premises to another party for the production of the “lessees” wine. The parlance typically used is “host” and “tenant.” The established winery acts as the host of the premises (think landlord) while the tenant “leases” the winemaking premises to produce its wine. There is an actual and permissible operational shift. Responsibility for, and the activities of, production may be taken over by the tenant operator. The relationship should be memorialized in an agreement between the parties, but the relationship requires application and approval by TTB before commencing production. 27 USC 24.136 (the Federal Code of Regulations) establishes the terms and requirements of the arrangement and is reprinted here for the reader’s review.

27 USC 24.136

§ 24.136 Procedure for alternating proprietors.

(a) General. Wine premises, or parts thereof, may be operated alternately by proprietors who have each filed and received approval of the necessary applications and bonds and have qualified under the provisions of this part. Where operations by alternating proprietors are limited to parts of the wine premises, the application will describe areas, buildings, floors, or rooms which will be alternated and will be accompanied by a diagram delineating the parts of the wine premises to be alternated. A separate diagram will be submitted to depict each arrangement under which the wine premises will be operated. Once the qualifying documents have been approved, and operations initiated, the wine premises, or parts thereof, may be alternated. Any transfer of wine, spirits, or other accountable materials from one proprietor to the other proprietor will be indicated in the records and reports of each proprietor. Operation of a bonded winery engaged in the production of wine by an alternate proprietor will be at least one calendar day in length.

(b) Alternation. All operations in any area, building, floor, or room to be alternated will be completely finished and all wine, spirits, and other accountable materials will be removed from the alternated wine premises or transferred to the incoming proprietor. However, wine, spirits, and other accountable materials may be retained in locked tanks at wine premises to be alternated and remain in the custody of the outgoing proprietor.

(c) Bonds. The outgoing proprietor who has filed bond as required under § 24.146 and intends to resume operation of the alternated areas, buildings, floors, or rooms following suspension of operations by an alternating proprietor shall execute a consent of surety to continue in effect all bonds. Where wine, spirits, or other accountable materials subject to tax under 26 U.S.C. chapter 51 are to be retained in tanks on the wine premises to be alternated, an outgoing proprietor who has filed bond as required under § 24.146 shall also execute a consent of surety to continue the liability of all bonds for the tax on the materials, notwithstanding the change in proprietorship.

(d) Records. Each proprietor shall maintain separate records and submit a separate TTB F 5120.17, Report of Bonded Wine Premises Operations. All transfers of wine, spirits, and other accountable materials will be reflected in the records of each proprietor. Each proprietor shall maintain a record showing the name and registry number of the incoming or outgoing proprietor, the effective date and hour of alternation, and the quantity in gallons and the percent alcohol by volume or proof of any wine, spirits, or other accountable materials transferred or received.

Summation of Basic Requirements:

  An examination of the code helps us parse out the basic requirements and responsibilities of the proprietor under the alternating relationship. Foremost, bear in mind that under this production paradigm, both entities, while conducting their respective operation, are treated as  proprietors under the law. Focusing on the requirements of the tenant proprietor, TTB requires that:

•    The alternating tenant proprietor must qualify as a bonded winery and obtain a Federal basic permit as a wine producer to conduct operations at the host’s location. 

•    The tenant proprietor must comply with record and reporting requirements of its operations by preparing and submitting its own operational reports to TTB just as any other fully functioning wine operation must do.

•    The tenant proprietor must obtain TTB approval of an application for a Certificate of Label Approval (COLA) before bottling the wine at the host’s location.

•    The tenant alternating proprietor must pay the excise tax for wine bottled and removed from the host’s location.

•    By extension, the tenant proprietor must hold an adequate bond to conduct its operations.

  There are a variety of benefits to the tenant producer under this production relationship. Perhaps the most significant, depending on the production levels of the host, is the availability of the reduced excise tax rates under the Craft Beverage Modernization Act (CBMA). The tenant’s own production levels are considered exclusive of the host’s production levels. The reduced tax rate, which may not be available under a standard custom crush arrangement, may now be available to the tenant winery contingent upon its own production levels which is an attractive benefit to the tenant proprietor.

  Note that TTB will scrutinize applications of alternating proprietorship to be sure the arrangement is not jeopardizing tax revenue, among other issues. Some of those additional areas of concern include an applicant’s attempt to qualify as a producer to take advantage of state tasting room regulations or to engage in direct-to-consumer (DTC) sales.

   Although these options may be available to a tenant proprietor, the spirit of the intent of this bottling relationship should be the guiding principle. All other benefits may be available and are certainly worth exploring. Experienced counsel should be consulted if any uncertainty is present as to the permissibility, processes, and procedures of structuring an alternating proprietorship arrangement.

What is the Most Important Decision in Choosing Grape Crop Insurance?

Cyndi

man on phone in vineyard looking at crop damage

By: Trevor Troyer, 
Vice-President of Operations 
for Agricultural Risk Management

What is the most important decision in choosing grape crop insurance?  Is it which coverage level to choose?  Is it which insurance provider to use?  Is it whether to insure all your grapes or only those that are the most susceptible to adverse weather conditions?  Is it checking to make sure the company you are going with has a good adjuster? Is it making sure the insurance company is local?

  Those are all important questions to ask.   But how can you answer all those questions?   You would need years of experience and knowledge of all the insurance providers.  You would need to personally know the adjusters in your area.  More than likely you don’t know the answer to those questions.  That is why the most important decision in grape, or another crop insurance decision is having a good and knowledgeable agent.

  Why is this important?  A good crop insurance agent is trained in all the aspects of your specific crop.  He or she knows which coverage levels do the best for making sure that your grapes are protected.  They are not going to just sign you up on the cheapest plan to get a commission.  They will go over why they think you should have a certain level.  Coverage in Grape crop insurance goes from CAT (Catastrophic 50% coverage with 55% of the price per ton value) all the way to 85%.   Depending on how many acres and locations you have choosing the correct coverage level is vital.

  A good agent will also go over which endorsements would be suitable for your vineyard.  What is Yield Adjustment? Why is this important.  Do you have more than one location?  They should speak to you about Optional Units.  (Optional Units allow different locations to be adjusted separately at the time of a claim.  This way production from one location is not co-mingled and therefore causing a claim not to be paid or reducing the claim amount.)

  A good crop insurance agent also knows which Approved Insurance Providers, AIPs, are doing the best with your crop.  Some insurance companies focus on row crops.  Others focus on certain areas of the US.  While some of these might be available in your area, they may not be the best option for your grape crop insurance.  Currently there are 13 insurance companies that are approved by the USDA to service crop insurance policies.  All thirteen may not be available in your state.  For example, in New York state only 8 of these 13 companies are active. It is important to have a good insurance company.  But you are probably not going to be able to determine that unless your agent is guiding you with that.

  Having a good adjuster is important as well.  A good agent knows which approved insurance providers have been doing well with Grape claims and which have not.  Claims should all be done the same but sometimes you might get adjuster that is new to grapes.  This can cause problems.  Agents have to stay out of the claims process per rules by the USDA, but they can help you make the right decision on which company to go with based on past experiences. Your agent can help answer questions about your policy and how it relates to a certain loss.  They can also send you material on how claims are paid out and losses are calculated.  An agent cannot ride with you and an adjuster to look at your grapes.  An agent cannot send you claim documents etc.  But they can make sure you understand your policy and the claims process.  And most importantly they can put you with an insurance company that has good adjusters.

  There are a lot of moving pieces to a crop insurance policy.  Perennial crops are fundamentally more complicated than a row crop like corn, soybeans or wheat.   You need an agent that understand the complexity and can help you navigate coverages and options.  Crop insurance policies and options can change every year.  Your agent has to be up-to-date and aware of all changes.  Just because an agent has an insurance license and they can sell crop insurance does not mean they are knowledgeable.  It also doesn’t mean they understand grape crop insurance.

  While crop insurance coverage is the same from one insurance company to the next.  Premiums are also the same for the same coverage from any of the approved insurance providers.  This doesn’t mean that each policy is structured the same.  What endorsements have you added? Do you have QL, Quality Loss so you can use pre-quality loss production in your database? Do you have Basic or Optional Units? What about Contract Pricing? All these things can be the difference in getting a claim paid.

  You should ask your agent how long they have been selling crop insurance.  Do they work with a lot of perennials.  Do they have other grape policies.  Just because they are local does not mean they know grapes.  Sometimes the best option is a national agency that works with grapes across the US and in multiple states.  How long have they been working with vineyards in your state?

  The person that is most important in your grape crop insurance is your independent insurance agent.  The more knowledgeable they are the better.  This is the person you have to place your trust in.  He or she can guide you through the complexity and help you tailor a policy that best suits your needs and locations.

Women and Winemaking-A Constellation of Stars Creating Stellar Wine

Cyndi
Attorney Theodora Lee-Owner of Theopolis Vineyards
Attorney Theodora Lee-Owner of Theopolis Vineyards

By: Cheryl Gray

Women have been an integral part of winemaking since the days of ancient Egypt, Greece and the Roman Empire. Today, they own vineyards and wineries and have a hand in virtually all aspects of creating wines that earn accolades and appease palates around the world. 

  Among them is Attorney Theodora Lee, a senior partner in a San Francisco law firm who never imagined herself becoming a vineyard owner and winemaker. Lee’s groundbreaking step toward establishing Theopolis Vineyards came in 2003 when she bought several acres of land in the Yorkville Highlands region of Anderson Valley, a Northern California wine-growing region about two hours outside San Francisco. Anderson Valley is a designated AVA (American Viticultural Area) known largely for producing pinot noir and sparkling wines.

  Lee was no stranger to farming since she grew up around farms in her native Texas. As a seasoned litigator and trial lawyer, she also knew that she had to equip herself with knowledge about viticulture, which she did at UC Davis. However, Lee hadn’t planned on going solo when the time came for her first grape harvest, one that would result in her first award-winning wine.

  “From 2003 until 2012, I was quite content being a grape farmer, plowing the land, pruning the vines, fertilizing the vineyard, mowing, chopping, weed eating, erosion control, tying the shoots up to T-posts, fruit thinning and picking the grapes during harvest. As any winemaker will tell you, great wine starts in the vineyard.

  Then, in 2012, an ill-timed rain fell during harvest, and I rushed to pick my grapes at 22 brix. The buyer at that time had contracted for grapes at 25 brix, so they rejected the entire lot – 10 tons of fruit. Faced with no one willing to purchase fruit at a lower brix level at the last minute, I decided to have my fruit custom-crushed.”

  Lee’s pivot to a custom crush led to Theopolis Vineyards’ award-winning 2012 Estate Grown Petite Sirah, which earned a gold medal at an international wine competition. Her moniker in the wine industry is “Theo-Patra, Queen in the Vineyards,” part of which is a throwback to her pledge name as a Delta Sigma Theta Sorority member.

  “Now that I have a wine brand, the greatest motivator for me is to produce premium wine which is second to none. I love to bring folks pleasure in the bottle, and it is very important that I produce the best product to bring to the marketplace.”

  Theopolis Vineyards consistently rakes in awards, with 90 percent of its products sold directly to consumers. Lee says that as a small craft winery, a three-tier distribution system doesn’t make economic sense for her company. Instead, Theopolis Vineyards focuses on direct shipping to a customer base stretching across the United States and, more recently, Belize. Lee adds that the company has a few distributors focusing on its handcrafted products, and those relationships have worked well. The wine club approach, however, has been spot on. 

  Lee’s advice to other women who want to enter the world of winemaking is straightforward.

  “For anyone thinking about entering the viticulture industry, I suggest that you find your passion.   There are all aspects, from vineyard management to enology, business management, marketing, sales and wine education. So, my slice of advice: ‘Pursue your passion, educate yourself, work extremely hard, be persistent and be very patient, but never give up and keep climbing, then success is yours for the taking.”

  Cathy Corison, founding partner of Corison Winery in California’s Napa Valley, knows a thing or two about that advice. Corison took a career pivot of sorts and beat the odds. Corison’s journey to winemaking began in college when, as a biology major, she found herself drawn to the science of winemaking. A master’s degree in enology, followed by multiple opportunities to get hands-on experience, led to Corison finally making her breakthrough, establishing Corison Winery in 1987. She did it by purchasing grapes grown in the region between Rutherford and St. Helena, an area known for prime benchland vineyards. Purchasing barrels followed, and then, to produce the wine, Corison had to depend on vacant space in other wineries to create her first products. All the while, she was still moonlighting on other winery and vineyard jobs. 

  Corison Winery finally got its own estate vineyard in 1995 when the company bought the former Kronos Vineyard, which had operated as a farm for over a century. Corison would use part of the land purchase to build a winery in 1999, a Victorian-style winery barn structure designed by William Martin, an architect. In 2015, Corison Winery purchased the nearby Sunbasket Vineyard after sourcing grapes from it for more than 25 years. 

  Together with her husband and business partner, William Martin, Corison has established a reputation for the winery by producing cabernet sauvignons that are marketed as globally recognized wines noted for their distinctive taste, longevity and consistency. The majority of sales come through the winery’s wine club, visitors to the winery and online purchases, resulting in exports to 18 countries and a presence in several U.S. markets.

  Corison says her motivation is driven by a personal devotion to creating good products.

  “Wine is alive and grounds us. The best part is sharing it with friends, family and guests to the winery. I love the great wines of the world, and it is so gratifying to be a part of that.”

  Corison shares her advice to women who want to enter the viticulture industry. 

  “First, you need to be passionate about wine because this is a very difficult business. Then be prepared and start walking. Persistence and a long view will be required.”

  Persistence and the long view paid off for St. Clair Brown Winery and Brewery, a self-described boutique urban winery and nano-brewery headquartered in the city of Napa, California. What used to be a deserted lot and former machine shop is now production central for hand-bottled craft wines and beers.

  Longtime friends Elaine St. Claire and Laina Brown worked together at other wineries for the better part of 18 years before they took the leap to open the winery portion of their business in 2010, followed by the companion nano-brewery in 2018. St. Clair is the winemaker and brewmaster. Brown serves as the company’s president. 

  According to Brown, the duo’s years of experience at larger wineries gave them real motivation to put wines on the market that would distinguish their products from the rest. The two used that motivation to sit down and make a list of everything they wanted their own venture to encompass.

  “After working in the industry for over 10 years, 20 years for Elaine, we came to a point in      our careers where we just wanted to create wines that were crafted with respect, applying the attention to detail and a level of quality that we were truly proud of and then to share them with our community. Our vision was to make our products for the people around us and for the rest   of the wine industry out of honor for what could be created – not just create another brand wrestling for market share.”

  St. Clair got her wish by being part of creating the best of both worlds. As a UC Davis graduate and an award-winning winemaker and brewmaster, St. Clair had always wanted an opportunity to make both wine and beer, putting to use 30 years of experience in making wines in Napa Valley and a decade more as a head brewer.

  For Brown, experience as a wine industry executive came into play when deciding how to create what she describes as a place where craft wine and beer could be showcased in an inviting space. Brown describes the many different facets of how women can enter the winemaking space.

  “The wine industry is very diverse and creative. My advice is to think of what area speaks         to you and how you want to live. The viticultural side of the industry is the establishing and farming of vineyards. If you are more outgoing, you may prefer a career in sales and marketing or hospitality. There are also many fields that support the industry, which are as wide ranging as technology, accounting and culinary. This industry attracts a lot of talented people with different personality types who work hard and enjoy a great lifestyle. More and more women are working in the wine industry, and there is a place for everyone.”

Galena Cellars & Vineyard-Family Legacy Through Generational Contribution

Cyndi
photo of front of Galena Cellars winery building

By: Gerald Dlubala

When a third-generation winemaker like Eric White, president and winemaker of Galena Cellars Vineyard and Winery in Galena, Illinois, calmly and confidently says that he’s still learning, it shows the dedication and continuous education that occurs in the winemaking industry. According to White, every harvest, every tweak in the process and every batch produced is a learning opportunity, and it’s part of the excitement of being a winemaker.

  White says that the family’s winemaking journey started with his grandparents. “My grandpa Lawlor is the root of Galena Cellars,” said White. “He was this eccentric guy who just liked to do things out of the ordinary. One day, he decided to take a home winemaking class at a community college in Cedar Rapids. At the time, the popularity of wine was taking off on the West Coast, but there were little to no actual wineries throughout the Midwest. Grandpa Lawlor thought this had a chance to be something special, something unique and something they could all enjoy as a family. The idea kind of spiraled from there, and now, three generations later, here we are.”

  The current Galena Cellars and Vineyard location is actually the third winery opened by the family. In 1976, after graduating with her degree in enology from Fresno State University, Christina Lawlor, the family’s second-generation winemaker, opened Christina Wine Cellars in McGregor, Iowa. She produced 200 cases of cherry wine. Four years later, in 1980, a second location opened in LaCrosse, Wisconsin, in an old Milwaukee freight depot.

Finding the Perfect Spot

  It was in 1983 that the Lawlor family came across the location in Galena, Illinois, while on a trip to purchase grapes. Christina recruited her brother Scott and his wife Karan for help with this new family project. Galena Cellars opened in 1985, taking up residence in a restored 1840s granary building on Main Street. Following the opening, Galena Cellars celebrated its first annual Beaujolais Nouveau Wine Celebration and, in the process, gained further recognition when they were featured on The Today Show.

  Galena Cellars wine production grew, resulting in the family purchasing a farm on North Ford Road, just outside of Galena. This made it possible to move their wine production here to the farm and vineyard. It allowed them to start growing experimental grape varietals. It also came with expanded responsibilities, so the family decided to close the McGregor and LaCrosse locations to focus all their energy and resources on the farm and vineyard location.

  “We currently grow La Crosse, Marechal Foch and Petite Pearl, Verona on 4.5 acres,” said Christina Lawlor-White, second-generation winemaker. “Additionally, we have an experimental one-acre vineyard that we work on in conjunction with the NIWG (Northern Illinois Wine Growers). We have 12 vines responsible for 23 varieties. It sounds like a lot, but for me, it’s not a job, it’s a lifestyle. It’s hard work, but it’s also invigorating work. It’s still exciting, and it never gets old.”

  Galena Cellars and Vineyard offers tastings, tours and music at the vineyard. Additionally, guests are always invited to simply hang out and take in the beautiful vistas and all that the farm and vineyard have to offer. If interested, guests can take a more intimate stroll through the vineyards or soak up the area’s picturesque sunsets while enjoying the award-winning wines made right there on site.

  In 2004, five years after releasing its flagship wine, “Eric the Red,” named after Christine’s son Eric, Galena Cellars added a suburban tasting room and gift shop in downtown Geneva, Illinois.

  While offering the same great wines as the farm and vineyard location, the downtown space also featured music, tastings, wine-infused cocktails and small bites available from a full kitchen that perfectly paired with their wines.

A New Generation Continues the Family Legacy

  Galena Cellars’ history reveals a true family business success story. Several family members were included along the way, some even moving to the area to join the business. During this time, Christine Lawlor-White would go on to be named “Winemaker of the Year” three separate years by the Illinois Grape Growers and Vintners Association, owning the title in 2002, 2008 and again in 2017.

  As additional family members completed their education in winemaking and joined the business, some of the others retired. It was in 2018 that Eric and Britt White were called on to continue the family legacy as third-generation winemakers. Eric is the current president and winemaker, and his sister Britt is Galena Cellars’ brand ambassador and wine club manager.

  Following family winemaker tradition, the Illinois Grape Growers and Vintners Association named Eric “Winemaker of the Year” in 2019. Enhancing the ceremony, his mother, Christine, was the one to hand him the coveted award. Eric and Britt are now moving the winery forward, infusing their ideas and techniques into what the family has done before them, and the future looks as bright as the morning dew glistening off of their grapevines.

Family’s Work Ethic Continues Through Generations

  “We grew up in a rural lifestyle that was very different and very unique,” said Eric. “I never really understood the magnitude of what everyone was doing and all of the accomplishments that happened along the way. Looking back, it was a lifestyle of invigorating, hard work.”

  That hardworking family tradition keeps Eric and Britt determined to push the envelope and never shy away from new ideas, as long as they do so in a way that honors the traditions and legacy of the family members who started and grew Galena Cellars to where it is today.

  While many winemakers I speak to dread the harvest season for the endless hours and continuous deadlines that present themselves to get the grapes gathered and processed, this family seems to relish the harvest season. “The harvest is the most exciting time of the year for me,” said Eric. “It’s a second chance on winemaking. It’s when I can assess what I did right and what I did wrong and constantly improve from there. It’s when we can bring in new varieties from the vineyards we worked with in the past and create new styles or variations to offer our guests.”

  “We have a strong passion for perfecting what we do,” said Britt. “We want to stay small and remain unique, and we want to grow our wine club offerings and membership. We offer everything from dry reds to a fruit and dessert selection and everything in between. There is truly something for everyone in our lineup. Additionally, our wine club gives us the unique opportunity to try out new ideas in our cellar and produce unique, small-batch wine exclusively for the members.”

  Galena Cellars Vineyard and Winery offers up to 70 varieties of wine. “We have five acres encompassing three varieties,” said Eric. “We use these three varieties to produce small batches of wine in various styles.”

  “We are working to find the perfect grape to grow in our climate,” said Christine Lawlor-White. “We have an experimental vineyard on the property that allows us to continue our quest to research these new varietals. Our terroir and environment matter as much as the finished product, so finding the perfect grape to grow in our climate can take years of research just on its own. Typically, our best sellers are our flagship, Eric the Red (marechal foch), our Oktoberfest (riesling and muscat blend), our General’s Reserve Red (a red blend of hybrid and vinifera varietals) and our locally sourced Edelweiss.”

  Lawlor-White also tells The Grapevine Magazine that the palates of their consumers continue to change, so their wines are evolving as well.

  “We work in depth with vinifera grapes and implement the education and technology learned from West Coast viniculture and apply that knowledge to our American French hybrid grapes,” said Lawlor-White. “Additionally, we focus on sourcing fruit from our local growers, as well as some of the best-growing regions available.”

  That strategy has served them well. Their awards are too numerous to list here. Yet, from Illinois State Fair Competitions to American Fine Wine Rosé Wine Competition and into Experience Rosé International Wine Competitions, there are enough silvers, golds and double-golds to impress even the most experienced wine consumer.

  “Winemaking is one of those businesses that typically is a family business,” said Lawlor-White. “It’s as if winemaking is in your blood! Each generation makes important contributions, and the wine just gets better and better.”

  “We are fortunate to work together and spend time as a family together doing things we all love to do,” added Britt.

Plan a Visit and Maybe Even a Stay

  Galena Cellars Vineyard and Winery offers an updated tasting room and a wraparound deck to enjoy the unmatched views of the surrounding farmland and picturesque vineyard vistas. Guests are encouraged to stroll through the vineyard

and end their day with a glass of locally made wine while experiencing a memorable sunset in a farm and vineyard setting. For those who want an extended stay, Galena Cellars offers a cozy guest suite and quaint guest house that would be perfect for an extended stay. Treat yourself to a romantic getaway, a family get-together or a simple night away from the rigors and stresses of daily life.

  For more information, including award lists, or to book a stay, contact Galena Cellars Vineyard and Winery at:

Galena Cellars Vineyard

4746 N Ford Road

Scales Mound, Illinois, 61075

815-777-3235

Galena Cellars Downtown

111 N Main Street

Galena, Illinois, 61036

815-777-3330

www.galenacellars.com

Drinks Development, Initial Legal Concerns and Protections

Cyndi

By:  Louis J. Terminello, Esq. and Bradley Berkman, Esq.

It’s invigorating to be in the presence of a creative. A glance at the dictionary reminds us that the definition of creative is one who is capable of creating original things. The drinks business has no dearth of creatives. The industry is replete with driven and creative people who generally take the form of winemakers, brewers, distillers, and brand developers/owners. Their palette is in fact their palate and their medium is a must, mash and/or unique package design. Praise the beverage entrepreneur – they take our tastebuds to new and exciting places. But, as the poet Robert Burns instructed in 1785, the best laid schemes o’ Mice an’ Men Gang aft agley (Scottish for often go wrong). In more contemporary words, without proper planning, and a bit of luck, all original ideas risk plummeting from the lofty perch where creatives reside.

  Enter stage left; The drinks lawyers who can assist with legal issues surrounding brand creation and launch.  Careful business planning coupled with a punch list of the legal issues likely to be encountered during the process of drink creation is a harbinger of success. What follows are the first few legal concerns that should be considered and sorted through prior to a project launch.

The Novel Idea and the Need to Protect It

  For the entrepreneurial brand developer, creative inspiration can come from anywhere and at any time. Ideas for beverage flavor profiles may come while preparing a unique meal or from stumbling on an accidental blend of flavors while creating a cocktail at home. Brand names may be inspired by a song, or book, or emerge from the ether like an apparition. But the apparition must take physical form if it is to ever end up on the shelves or back bars of saloons everywhere. For the brand developer, without their own means of production, a manufacturer is required. Choosing the right producer is a complicated process with many sub-parts. 

  The first step of course, which may seem obvious, is discussing formulation and taste profile with potential brewers, distillers, or wineries, but how do we protect the novel idea from being misappropriated by a dishonest party. Clearly, the process requires the brand developer to share his secret idea with others to determine if, in fact, the producer can make the stuff.  The dangers of disclosure are obvious – the producer has the ability to take your idea and bring it to market on his own leaving the brand developer out in the cold. In fact, this could happen with anyone the brand developer discusses their new concoction with.

Nondisclosure Agreements-Protecting the Secret

  Prior to engaging in any discussions with any potential producer, it is incumbent on the brand developer/owner to have a well-drafted nondisclosure and confidentiality agreement (“NDA”). The core function of the NDA is to prevent a producer, or any other party, from disclosing the developer’s idea to another or independently producing the product without remuneration to the brand developer. The NDA should call for injunctive relief in order to stop the activity complained of as well as other damages, including money, should that be an available remedy. Commencing good faith negotiations with an honest opposite party is what we all expect and want. However, the developer’s next million, maybe even billion-dollar idea should be protected from the outset with a well-crafted NDA and should be entered into with any party prior to discussing the novel idea.

Intellectual Property Including Trademark

  More importantly, there is a greater area of concern related to protecting one’s brand ownership. The next area of concern and of paramount importance is that the brand name and associated designs and logos be protected. The reader is likely aware that the next item on our brand launch checklist is protecting one’s intellectual property through a trademark (TM). For the uninitiated, trademark applications are submitted to the United States Patent and Trademark Office (USPTO), which once granted, identifies the brand owner of the product, and protects ownership of the name, design, logo, or symbol. A trademark allows the holder of the TM to pursue legal action against a party who may try to use the mark as its own and without the consent of the true trademark holder.

  The first step in the TM process, once the brand developer has come up with a name and/or logo, is to search the USPTO database to be sure the mark is not held by another person or entity, and that the name is available for use. There are only a few more disheartening things than investing resources in brand name development only to find out that it has been trademarked by another party. It should be noted here that all is not lost if the mark is already held by another party.

  These issues are best explored in another article but suffice it to say, there may be ways to gain control and ownership of the TM. Also, as brand sales grow and the brand increases in value significant equity will reside in the brand name. Protecting that equity is paramount particularly if an interested and significant buyer knocks on the door and desires to purchase the brand for enough money which allows the brand developer to retire to their own Caribbean island for the remainder of their days.  It’s important to note that there are various legal mechanisms available to trademark holders that protect their ownership rights to the mark while allowing other parties to use the mark to fulfill contracted obligations.

  Generally, trademarks can be licensed to another party for any use whatsoever but generally, in the world of beverage alcohol, nonexclusive licensing agreements are often used in production and distribution agreements granting limited rights to the non-mark holder. Note that licensing agreements can be complex and are discussed here only to point out their existence and present the option. Any licensing agreement must be carefully drafted to protect the rights of the parties and all trademark matters should be handled by a competent Intellectual Property attorney.

Formula Protection & Production Agreements

  After sourcing a reliable producer for the drink idea, the next crucial step is negotiating and entering a formulation and packaging agreement. It is highly probable that the producer selected will assist in developing the formulation. It is also not uncommon to secure the services of a third-party formula service provider to create the liquid beverage. Whichever avenue is pursued, the brand owner must be sure that they will have ownership rights to the finished product, particularly if the formulation is unique, and that no other party shall have the right to the formula absent the brand owner’s consent. An agreement memorializing all terms of formula ownership must be drafted and executed by the interested parties.

  Well-crafted supply and bottling agreements are the next integral part of the brand development process. In a nutshell, once a partner producer is identified, the brand owner and producer will commence negotiating the essential terms of the business relationship. Essential terms will include items such as production and purchase quantities, pricing and payment terms and delivery terms. Issues such as how to deal with adulterated products and recalls should be memorialized also. In sum, this agreement will memorialize the rights and duties of the parties and ideally will allow for the smoother production of the finished goods allowing the brand owner to focus on securing distribution, selling and marketing to consumers and other brand-building activities.

  In conclusion, the areas above are the first few items that should be addressed when launching a new brand. Protecting the developer/brand owners’ rights in all aspects of product introduction is essential and working with seasoned beverage law professionals should be seriously considered. Experience tells us that brand launch problems can be avoided upfront with proper and competent Beverage Law and business law guidance.

Brunello di Montalcino 2019-Great Material & Spirited Character Animate a Lustrous Vintage

Cyndi
vineyard under blue sky

By: Raffaele Vecchione (Founder and Editor of WinesCritic.com)

An in-depth analysis of a rich, sunny vintage with over 150 Brunello di Montalcino 2019 tasted.

  2019 is assuredly a vintage that will be remembered over the years thanks to the perfect amalgam of technological and phenolic maturity and the sheer quantity of grapes the producers took to the winery.

  This extraordinary year,  at a historically difficult time, which raised many doubts about climate change and the seasonal trends it brings, arrived like Manna from heaven for National and International producers and wine merchants.

The waiting was over, Brunello di Montalcino finally signed its name on the register and it did it in grand style.

  The 2019 followed two difficult vintages; the 2017 was decisive, vibrant and distinguished itself with a solid acidic impression and some slightly herbaceous matrices. (https://www.winescritic.com/brunello-di-montalcino-2017-la-maestria-dei-produttori-viene-fuori-nel-difficile-millesimo/)

  The rainy 2018 which was difficult to manage cultivation wise was pleasant with great harmony albeit unstable and rather fragile in some expressions.

  2019 was everything producers look for in a vintage. A sunny year, sometimes hot, dynamic and rich, solid and layered, complex and territorial. The right amount of well distributed rain contributed to the maturity of the grape without ever being cause for alarm. The harvest, which went smoothly during a window of time when the weather was mild and dry, framed an almost perfect picture for the winemakers.

  In 2019 the most memorable event was the exceptional absence of storms (hail, frosts, drought or excess rain) which we have unfortunately become more accustomed to over the last few years.

  A few rain showers, perfect for lowering the temperature and reinvigorating the grapes, arrived in the middle of July and August without doubt contributed to making this a great year.

  In the glass the vintage is distinguished by notable material in the sip, thanks to a perfectly centred grape harvest; lively tannins, rigid at times but noble and fine nonetheless thanks to the quality of the fruit and the producer’s interpretation of the right amount of refinement in barrels of different dimensions.

  The finale is always fresh, harmonic and balanced, highly appreciated from the start.

  Over the last few years we are witnessing wines being bottled earlier than the classic time during which the major part of producers usually bottle. They are trying to bottle before the classic month of September, bringing it forward to July or even March or April in order to benefit from the longer period in the bottle before the new vintage is released onto the market,at the same time this keeps the freshness and character of Sangiovese more fragrant and tasty.

  New containers are arriving in the wineries, there’s a crazy search for wooden barrels which are taller rather than wider (refinement vats), these are useful because they increase the contact surface of the wine to the most noble part of the wood.

  The production is also helped by the  great enthusiasm and willingness to work on expressions which are born from the territory, in particular from single vineyards.

  The ever more expert merchants are looking for territorial wines which are easily to recognise and trace back to the vineyard. This concept of the vineyard allows us to take some prerogatives in order to understand the evolution of a single parcel over time which is rigorously vinified whilst carefully maintaining maximum attention towards truly bringing out its unique particularities.

  The primary analysis during the tastings of 150 Brunello di Montalcino allowed us to place it alongside the great vintages of 2010, 2015 and 2016. Maybe the right mix between the different vintages would bring us something new and unexpected in the structure of the 2010, the power and astringent character of the 2015 and the class and elegance of the 2016.

  It has an agile and sinuous movement and is immediately striking to the taster by showing the right amount of material and freshness.

  About ten wines would have been on the podium to contend for the title of best wine of the vintage.

  In the end the one to win the highest recognition and take home a perfect score was Giodo, a union of balance, class, elegance and quality of material.

  Demonstrating the right concentration and the right determination in the alternation between fruit and citrus which always distinguishes the great Sangiovese. It will continue to grow over time and will give the best of itself from 2025 onwards.

  The painstaking work done by Bianca Ferrini and Riccardo Ferrari, respectively owner and agronomist/oenologist of the winery was perfectly directed by Carlo Ferrini, the World famous consultant oenologist.

  Behind him the fantastic competitive challenge between three Titans. Renieri and Fuligni are incredible wines which tell the story of the greatness of the vintage in different manners. Renieri is spicy and decisive, creating remarkable salivation which makes the expression absolutely gastronomic and pleasing with the edgy traces which distinguish a thoroughbred Sangiovese.

  Fuligni has an auster character, composed and rigid at times, a wine that we need to understand and read in an introspective manner to truly appreciate the quality which distinguishes it. There’s no need to shout and in the 2019 vintage the symphony is regal and dashing.

  Pietroso is exciting in the deep traces which alternate between the fruity character of cherries and sour cherries mixed with candid notes reminiscent of the freshness and elegance of magnolias, gardenias and hawthorn.

  In the Olympus of expressions which are more unique than rare is Madonna delle Grazie, produced by Il Marroneto it steals the scene with captivating nuances and the mastery of a select few. It’s the tannins profile which is exciting, dense and compact, absolutely integrated from the start.

  On the same footing we find Vignavecchia di San Polo, it’s the best expression ever made in the winery, the method and the Venetian rigour have born great fruit and given satisfaction with a wine which is precise and essential with character to sell.

  Still tying on points (98) are different profiles and different visions from producers who have their fingers on the pulse of great wine production.

  Piero, Vigna del Suolo, Giovanni Neri and Vecchie Vigne respectively, then Talenti, Argiano, Casanova di Neri and Siro Pacenti are all incredible wines which border on perfection of execution and underline the depth of the vintage.

  A heartfelt thanks to all the producers who participated in our tasting and who welcomed us during the harvest period.

History in a Glass 

Cyndi
3 wine glasses different colors of wine 3rd glass being filled by pouring wine from bottle

By: Tod Stewart

As with everything, wine is not immune to the whims and vagaries of tastes and trends. In fact, some of the most historically popular (and important) wines have practically fallen off the modern wine aficionado’s radar. Yes, sherry, m’dear, I’m talking to you. The good news is that your moment in the spotlight may be returning.

  Sherry sports the distinction of being an incredibly significant yet incredibly misunderstood player in the wine game at the same time. This is likely due to a double whammy of being unfairly associated with “grandma’s wine” and erroneously associated with something sweet. The sweet stuff your (probably British) grandmother once drank (or maybe still does) isn’t what most Spaniards would regard as sherry. In fact, sweet, or “cream,” sherry is a decidedly English concoction developed to satisfy a certain palate. Most “true” sherries are really quite dry (fino sherry is perhaps the driest wine commercially made). But let’s back up a bit. What exactly is sherry?

  Sherry is the product of a demarcated area of southern Spain’s Andalusia, close to the Atlantic Ocean. It’s important to stress that authentic sherry is Spanish. Period. Full stop. Sure, “sherry style” wines are produced around the world, but the real deal comes from Spain. Yet considering the influence of the British on the development of the sherry trade and with sherry firms sporting names like Duff Gordon, Osborne, Williams & Humbert and John Harvey & Sons, you might be tempted to think it’s made in England. Andalusia is a hot region with little rain. The chalky albariza soil plays host to the white Palomino Fino grape variety (along with some Pedro Ximénez and Moscatel planted in the less favorable barros and arenas soils).

  While unique soils and grape varieties are the cornerstones of sherry’s character, the production methods and maturation process really give the wine its character.

  Sherry begins life as a dry white wine, which is then lightly fortified (usually to about 15 percent alcohol via the addition of a grape spirit and wine mixture) and is left in barrels filled only two-thirds full. A typical table wine would oxidize under these conditions. But the damp sherry cellars filled with oxygen-rich Atlantic air create ideal conditions for the development of flor – a yeast blanket that covers the surface of the wine and both protects it from deterioration and eliminates harmful, vinegar-producing bacteria.

  The wines designated as fino, the lightest and driest style of sherry, go on to mature for a year or so. The flor allows finos and sherries based on the fino style, like amontillado and palo cortado, to mature, for the most part, biologically since the flor does the aging. Barrels with little or no flor are given additional fortification and designated as oloroso. These wines are given an extra dose of alcohol and allowed to age oxidatively, as oxygen does the aging.

  After the cellar master determines which barrels are going to result in what, the wines are introduced to soleras for final blending and maturation.

  A solera is basically a series of barrels. Each contains the same style of wine but of differing stages of aging. Fully mature wine is tapped off the bottom barrel. This barrel is topped up with slightly younger wine from the barrel above, which is topped up with even younger wine from the barrel above it. New wine is introduced to the first barrel in the chain. (Then it tells two friends, and they tell two friends and so on. Sorry, but that paragraph just set itself up.)

  This constant blending, referred to as “dynamic maturation” (as opposed to “distressing maturation,” which is what I’m personally experiencing), results in a supply of fully mature wine that is always consistent. Stylistically speaking, finos and their ilk tend to be lighter and more delicate, while olorosos are darker and nuttier. Cream sherries (e.g., Harvey’s Bristol Cream) are typically blends of sweet wine with drier wine before being sold to old people in the UK. Serve finos cool, the others less cool. Also, don’t forget they are wines, so treat them like wine and not like, well, not like whatever stuff you keep sitting open in a dusty decanter on the mantle for eternity.

  Even if you understand sherry’s complex creation cycle, you still aren’t out of the woods when it comes to fully comprehending the stuff. And honestly, the industry itself is partially to blame for a lot of the confusion.

  I mean, just as you are getting the concept of “dynamic” aging and how it results in uniformity of the finished (and non-vintage, I should add) wine, you run smack into sherries proclaiming to be a 20-year-old or a 30-year-old. Having made peace with the claim that fino sherries are light, fresh and delicate and should be consumed within six months, you are hit with something called a “very old fino.” This happens right after you’ve been told that an amontillado is, more or less, an aged fino. Huh? Oh, yeah, and don’t forget manzanilla, which is a fino aged near the sea (And how “near” counts for near?). What’s a palo cortado (and why are there three levels of the stuff)? The verdict seems to be constantly out. And what is PX? Sounds like a virus. Is “amoroso” a sherry or an aphrodisiac? Is cream sherry a dairy product? And what are we to make of a “Palo Cortado ‘Almacenista’ Solara Matured by Vides 1/50”? Did Torquemada use this stuff to extract confessions? “Cardinal Fang, make the heretic learn about sherry!”

  Luckily, developing a taste for sherry is a fair bit easier and more pleasurable than actually understanding it on a technical level. But, for some, it might not be the smoothest ride.

  Sherry is a bit of an acquired taste. In my university years, I had read about the wonders of dry fino sherry long before I ever had the opportunity to taste it. And when I did, I couldn’t believe people actually drank it, let alone waxed rhapsodic about it. It can indeed have floral overtones, but in general, fino sherry is an oxidized, high-alcohol number that smells not of a particular vinifera but, depending on the style, of sea spray, bitter almond and green olive. Darker styles like oloroso and amontillado lean toward notes of walnut, sultana raisin, fruitcake and yes, varnish. In other words, not pinot grigio. Thank God. Sherry remains staunchly traditional and demands that you conform to it rather than vice versa. Like other complex forms of art, you often don’t fully appreciate it until you’ve looked at it, listened to it or tasted it a number of times. You mature; so does your palate.

  So, what’s the future looking like for a wine as complex and traditional as sherry? For some answers, I spoke to Victoria González-Gordon López de Carrizosa, from the historic González Byass, a legendary sherry bodega (and creator of the now legendary Tio Pepe brand) with roots stretching back into the 1800s. 

  “Since the sherry ‘glory days’ of the 1970s and 80s, producers have adapted significantly to the changing demands of international markets,” she emphasized, noting that while volume sales are still important in traditional markets like the UK and Holland, González Byass has focused efforts on moving away from volume production, aiming instead at high quality, premium sherries. “Much emphasis has been put on education,” she notes, as sherry is a wine that needs to be understood: its particular production methods, styles and versatility.”

  She reveals that “change has been constant since the turn of the century, as sherry producers have looked to establish sherry as quality, world-class fortified wine. As a result, the Consejo Regular Jerez, the governing body for sherry, is initiating changes across the board in order to prepare the region for the future. This includes expanding the production areas for sherry, which will allow more wineries to promote their wines as sherry. In addition, new grape varietals are being approved for production, responding to the demand for native varietals and those that can adapt to the changing climate – and to allow for more innovation in the future. Another important factor is a change in regulations so that different wines and styles are more easily understood by the end consumer.”

  Creative bartenders, it would seem, may be the engine driving sherry’s future popularity.

  “It is clear that mixology is helping us reach new, younger consumers,” González-Gordon López de Carrizosa confirms. “We believe this is an important way to communicate the versatility of sherry. In markets like the USA and Canada, it is great to have our sherry ‘name called’ or specifically mentioned as an essential ingredient in a well-made cocktail. We are proud to have González Byass sherries featured in cocktails on top mixology lists and in the very best bars in major, trend-setting cities around the world. Often, this experience can be the first and very important step to introducing our wines to consumers and giving them a chance to learn about this fascinating drink.”

  As they say, what goes around comes around, and it seems the time is now for a bit of a sherry renaissance.

Guarding the Flavor and Clarity of Wines Through the Right Filtration Systems

Cyndi
wine filtration machine

By: Cheryl Gray

Wine is a vulnerable product. From grape harvest to filtering the best from your fruit, the tools of the trade include filtration systems designed to tackle problems associated with mineral additions, oxygenation and other culprits that can threaten a wine’s flavor profile.

  Experts in the winery filtration industry include Aftek Filtration Systems. The company, based in Rochester, New York, has been in business for nearly 40 years. Aftek works with multiple sectors in the food and beverage industry, including wine, beer, hard cider, distilled spirits and kombucha.

  Jim Russell represents Aftek. He describes two common problems wineries must control and how Aftek can help. 

  “After selecting the correct media and proper processes to reduce or eliminate mineral addition or absorption, our next most common culprit seems to be oxygenation. It has been noted that with colors and flavors susceptible to oxygenation, this is something to minimize and eliminate.”

  Russell also lists the problems that affect filtering wine.

  “If we consider wine as a solution, certain additions may cause items in a solution to precipitate out as a solid. Adjusting brix levels and even the type of sugar (liquid vs. granulated) has seen drastic effects on filterability. Blending two different types of products may also cause a precipitate. Gum-arabic and certain ‘mouthfeel’ additives can be inherently difficult for membranes. Color-intensifier, especially crossflow-derived retentates, will not pass a membrane. Beta-glucans can also be problematic for membrane filtration and is hard to test for.”

  Russell adds that looking at other areas, such as pad filtration and cartridges, while purging tanks and lines with gases, such as nitrogen, is a good idea.

  “Cartridges are very good and neutral on absorption or minerality uptake, the limiting factor seems to be the volume to process for bulk solids. By selecting a pad (Eaton Becopad) that is water jet edges versus knife cut, we minimize leaking and not only have less loss but lower DO uptake. Going to the Becopad can achieve low to no drip loss and the lack of DE/perlite means no minerality uptake. These are also available in lenticular/modules. If you are looking for even higher processing in flow and volumes, consider the crossflow by Della Toffola. This equipment is going to give the highest quality with minimal effort.” 

  Russell cautions against cutting costs that may seem viable but could eventually cost more in the long run. 

  “Using fewer pads seems like you are saving money until you understand the mechanism being done in filtration. By reducing area, we increase flow per square meter, as the pads are designed to be about 0.5 bar or less on clean start-up.

  This increase in flow causes soft materials to impact the matrix of the pads at high velocities, prematurely reducing the filtration area. It has been noted that in some cases, we have seen three flow times with double the area.

  By targeting when you have multiple pad changes out per batch on certain varietals, it might be good to try to increase your area where possible. If this isn’t the case, it could be worth looking at using a slightly more open pad to reduce the loading.”

  As for cartridges, Russell says it is important to protect the full life of your membrane filtration system.

  “Premature clogging on membranes seems to be the biggest cause of not achieving full life on your membrane. Common factors include but aren’t limited to not pre-filtering tight enough, letting too much time pass from the last pre-filtering, improper enzymes for pectins or beta-glucans, improper cleaning, improper storage and unfilterable additions are a few of the most common.”

  Aftek can also help with the selection of crossflow equipment. Russell says that because labor and materials costs have risen, crossflow for processing wines is an increasingly valuable weapon in a winery’s arsenal.

  “Ceramic membranes are less impacted by pectin’s and can take more solid loading per area than their polymeric counterparts. The cleaning cycles done at higher pressure and the innate material strength lend to better regeneration. They also can take clay/bentonite fouling where the polymeric versions would be ruined. The selection of full-automatic systems also lends to less operator variability and better cleaning cycles.”

  Filter Process & Supply is another company offering filtration products for wineries. Based in New Jersey, Filter Process & Supply works with its customers to help guide their processes of choosing the right filtration products. The company works with customers to deliver a timely shipment of filtration products and offers suggestions on ways to improve the filtration process. That includes working with clients to identify cost savings, increase throughput and provide technical support.

  Peter Wojnarowicz, the company’s manager of applications, describes some other challenges in filtering wine.

  “One of the biggest issues we see when reviewing existing applications is undersized filter equipment, causing you to have too much flow for too little surface area. This creates a flow velocity that can ultimately affect filter life. If you start with a high differential pressure, it could cause filter life to be cut short. There are exceptions, especially with viscosity-related products. The pore size of either synthetic or cellulose media can be affected by higher flows. If the pore size is below 1-micron, flow reduction is important for filter life. Impaction of the media at higher flows typically shortens the filter life.”

  Wojnarowicz describes some of the solutions his company recommends and why those recommendations are important for wineries to consider.

  “With wine, the maximum flow we tend to recommend is a 1/2 gallon per minute per square foot, but ideally, we would like to see a more conservative flow rate of a 1/4 to 1/3 gallon per square foot. So, for example, if we have a surface area on a 40cm X 40cm pad that is roughly 1.5 square feet, and we are using a 20-plate filter with same media throughout, the flow rate is seven to 10 gpm based on 30 square feet. With a divider plate using two-stage filtration, the flow would need to be lower.”

  Next, Wojnarowicz describes multiple methods of filtering and clarifying wines. 

  “For smaller wineries, cartridge filtration and a small plate filter, typically a 20cm X 20cm, work well from 25 to 100 gallons, depending on how many plates are used. For larger volumes in the range of 200 to 1000 gallons, a 40cm X 40cm plate filter will work well, also based on the number of plates. Then, there are various-sized lenticular filters/stacked disc (same) filter systems. We have small, medium and large systems depending on the volume of beverage that will be filtered. We have been working with lenticular filtration and clarification in different industries for about 25 years. 

  For volumes from 500 to 1,000 gallons, a crossflow system is something that may be a good investment. Currently, we recommend cartridges, plate filters and lenticulars, and we will review the pros and cons of each in more detail with a customer.”

  Choosing between stacked discs, plate fillers or lenticulars, Wojnarowicz explains, depends on the production needs.

  “While both use the same media, plate filters have some drip loss, whereas stack disc systems are completely sealed. Higher pressures are attainable in stacked disc systems, which is good if the filtration run is nearing its end and a change-out can be avoided. 

  Typically, lenticular systems have a lower cost for the equipment but higher operating costs when compared to internally ported plate filters. To charge a lenticular, it could be up to four times the cost compared to charging a plate filter with the same square footage.”

  Since lenticulars are closed systems, the wine, Wojnarowicz says, is subjected to higher pressures because it goes through finer pore sizes, which may lead to other problems.

  “Potentially, higher pressures can strip out. We typically do not like to go above 20 psi when filtering. Pressures higher than that may be okay if the beverage run is near completion, but, if the process run is at a halfway point, it is probably better to change out and start with new media.”

  Wojnarowicz adds that with proper training, minimizing drip loss in plate-filtered wine can be reduced to half a gallon or less.

  The Vinter Vault, with two locations in California and a third in Texas, offers customers custom filtration setups, with the crossflow system being the largest. Company president Ryan Horn adds that The Vinter Vault also offers DE filtration, cartridge, plate and frame, as well as lenticular systems.

  No matter what filtration system a winery installs, the goal is to produce wine with clarity and flavor that will maintain its integrity until it is uncorked and poured. Equally important is to perform filtration in a cost-effective manner by minimizing product loss through proper training and technique.

The Evolution of California’s Winery Industry (2013-2023)

Cyndi

A Decade of Challenge, Change and Resilience

Napa Valley Sign outside of Vineyard says Welcome to this world famous wine growing region

By: Mike McNulty, Managing Principal at EPIC Insurance Brokers & Consultants

Over the past decade, California’s wineries have witnessed changes in the property insurance marketplace that would have seemed impossible ten years ago. As an insurance broker focused on the winery industry, I have seen firsthand how movements in the insurance marketplace have reshaped how our wineries do business. As we look for a way forward, it helps to look back at the road that brought us to where we are today.

  Think back to harvest time in 2013; vintners prepared to reap the rewards of a long and sunny year, enjoying a high-yield, high-quality crop of fruit. We were all a little nervous about another dry year (California’s rainfall was less than 34% of what forecasters had hoped to receive). And while the state was in the grip of what we eventually realized was its worst drought in recorded history, there was no question that the California wine industry was ascending.

  There was so much confidence in the future of California’s wineries that insurers were fighting for the right to provide property and liability coverage. In 2013, the average winery owner/operator could expect four to five insurers to compete for their business, each offering broad coverage, low deductibles, and attractive pricing.

  As the wine industry grew and expanded, it sprawled, literally. New wineries were established further and further from urban centers, nestling closer to and even within California’s forests. Proprietors created tasting “experiences” as their properties became tourist destinations. They used the backdrop of California’s incredible geography to blend their wineries into the picturesque terrain with breathtaking results.

The Rise of Climate Change

  We would soon discover the unmanaged fuel in those woodland areas were ticking time bombs.

  The drought of 2013 would last for another 4 years in most of California – killing plant life, felling trees by the millions and creating acres of tinder ready for a spark. California is no stranger to wildfires, but most of the state’s coordinated efforts went into suppression, not prevention.

  According to the California Department of Forestry and Fire Protection, 601,635 acres of California burned in 2013 wildfires – worryingly ahead of 2013’s rolling five-year average of 449,178 acres of yearly wildfires.

  Our current five-year average for California wildfires has grown to 1,158,028 acres. To give a sense of scale, that is on par with the entire Grand Canyon National Park set ablaze every year. There is every indication that this is the “new normal.”

2023: The Dynamic Shifts

  The insurance industry was not ready for the increasing magnitude and severity of wildfires in California. Blazes like the Glass Fire of 2020, which spread from Napa into Sonoma Valley, threatened the stability of carriers who had once competed for the privilege of serving California wineries.

  Their retreat was not subtle. Coverage policies became more restrictive, narrowing the safety net wineries had come to rely on. For many, the cost of insuring their wineries became prohibitively expensive. And it was not just about the cost – the very availability of comprehensive insurance became a luxury item.

  Proprietors bolt sprinklers onto rooftops, create fuel breaks, remove trees, bushes, and anything else a blaze could use to sustain itself. In many cases, these owners are frustrated to learn their efforts are not enough to get insurers’ attention and support.

Embracing Technology and Collaboration

  We have discovered there is no turnkey answer to the threat of climate change. But wineries have two advantages that might have been unthinkable 10 years ago: emerging technologies and a willingness to collaborate with competitors for mutual survival.

  Early detection can make all the difference in responding to a wildfire event. Communities can install camera monitoring systems throughout the community in hopes of catching fires before they get out of control. Once a novelty, flying drones are now table stakes for many wineries. They conduct routine flyovers and capture aerial imagery that can persuade insurers of the comprehensive scale of their mitigation practices.

  These images and high-fidelity satellite imagery can now be used in tandem with data analytics to optimize fire mitigation planning and prevention. Companies like FortressFire use aerial assessments augmented with site inspections and other indices to identify and correct fire vulnerabilities that might otherwise have been overlooked.

  Wildfires do not respect property lines or municipal jurisdictions, so homeowners and businesses in wine country have banned together to coordinate their mitigation strategies collaboratively.

The New Normal

  Over the past few years, California wineries have undergone a profound transformation, confronting challenges that have reshaped their operational landscapes. As the threats of climate change and shifting insurance dynamics loomed, the industry’s response was pragmatic: leveraging technology, refining practices, and fostering collaboration.

  The road ahead for California’s wineries remains uncertain, with climate unpredictability and financial challenges. However, the past decade has shown the wine industry’s proactive strategy, built on innovation, collaboration, and strategic adaptation, has equipped their communities to overcome the challenges it faced. It’s a strategy of resilience we should all hope to emulate, including the insurance industry.

Mike McNulty headshot

Mike McNulty is managing principal at EPIC Insurance Brokers & Consultants. Mike holds over 30 years of experience in the insurance industry, specializing in cost and risk management. He oversees the delivery of extensive insurance and risk management solutions to clients in the consumer beverage business.

Custom Crush Host & Guest

Cyndi
Photo of winery building with grape crushing equipment and people using bins to put grapes on crushing equipment

By: Thomas J. Payette, Winemaking Consultant

Having been on both sides of custom crush not only as a winemaker as a host winery but also as a winemaking client in another’s winery I feel especially adapted to help people with custom crush endeavors.  Making sure your grapes and wine get the excellent treatment they deserve is always the top consideration.  You want to make excellent wine, without winemaking flaw, as a bottom line.

Choosing Your Custom Crush Partner

  Make sure to choose a custom crush winemaking facility that is adapted to your size and style.  If you care for the products that winery makes that is a key asset that you can hopefully build on but it is not a given your wines will be as clean and assertive as the winery making your wines.  Research the winery you plan to be involved with and make sure they are the correct fit.  Research their sanitation and explore if brettanomyces could be a long term issue, especially if making reds and moving the bulk wine back to your facility.

Discuss How Far to Go

  Discuss with the winery how much of the process you plan to have done at their facility.  Will they just crush and ship? Will they crush, ferment, press and ship?  Will they crush, ferment, press, age, bottle and ship?  What should the label say?  What should they expect from you?  If you are building a new winery building are there contingencies’ for a construction delay on your end?  There are many ways to configure what your needs are and the winery should have some idea of how long you plan to stay and what their role is in your vision.

Communication

  Now we can see communication is already a huge part of this relationship.  Beyond how long you will stay at the winery leads into division of responsibilities.  Who will decide the yeast, enzyme, nutrient, style, maceration, whole cluster press, crush and press, etc?  Will tanks be available?   Should you bring your own tanks and barrels to the winery to be helpful?  What can the winery supply to you in the way of fermentation capacity and how soon will the wine get into your barrels so the production path is clear for their grapes and wines?  Map out a process with the winemaker and/or GM to make sure a plan is in place.

Priority

  Every harvest comes with new challenges.  Often winemakers are already stressed with their own fruit and winemaking demands only to find owners and GM’s piling more on them with custom crush.  Make sure the winemaking team really wants you there and that they will treat your fruit with the same respect as their own.  Is the winemaker being compensated extra for your presence?  Should they be?  Are they happy you are “on board” or is this process a thorn in their side?  Are you just in their way? This is hugely important to your success as a client in their cellar and what are your buffers or remedies if you find your expectations are not being met?  This happens and you need expertise to know when things are not just right.

Expertise

  Make sure you have expertise on hand to help coax your winemaking process along.  Make sure a detailed plan has been placed, on paper, for the resident winemaker to follow.  Make sure the plan has the flexibility needed to shift to address the potential abnormalities every harvest has.  This ability to make decisions on the fly will be imperative to your overall wine quality success.  Not knowing the ins and outs can lead you subject to agreeing to things you may not have agreed to and having the wines suffer in the process.  Make sure you don’t become “second fiddle” for the cost of a “front row seat”.

Being a Priority

  Keeping yourself in the forefront will be a delicate balance.  Harvest has everyone under stress and that starts to show quickly in the game.  Make sure level heads approach reactionary winemakers with compromise and offering solutions.  It will help the stress level of the onsite winemaker remain low and you will gain respect.  This will typically pay off later when you do need a little something extra from the winemaking team.  They will respectfully step forward and help on the back end.  Show that you understand the shoes they are in and that you are not only present to help them navigate the waters, with them, but ready to look after your wines, too. 

How to get the Best

  Getting the best is by getting along.Communication is the key.  If your fruit is being delayed from the 10:00am delivery slot originally planned – place the quick call to the proper winemaking team person and let them know calmly. 

Chances are something else has shifted that day already and the team easily navigates this new slot.  It always works out well beyond any planning but if the team is veteran – they have seen it all and will refocus their energy to a more immediate task that may have been slated for later that day.  This same approach goes for all during the year.  Plan and communicate.

Flexibility

  The above has certainly addressed the issue of flexibility.  This is farming at crush.  Harvesters break down, picking crews get out of sequence, lug deliveries may have been delayed or any other host of things could happen.  Many situations are out of your control so plan for the worst and accept a good day.  They happen more frequently than this article might suggest.

Good….Great Relationships

  Keep a great relationship, even at your own expense, while having wine made in another’s facility.  That doesn’t mean you need to role over and accept poor treatment of your fruit and wines but rather go the extra mile to have the winemaking crew want to help you.  Help them when possible on a task they are working on if the winery environment allows it.  If you can help them clear a path to work with your fruit – they will respect that.

Doing Work Yourself

  Will you be able to do work yourself on their premise and in their facility?  This can be key from crushing fruit to racking tanks and barrels or filtering wine.  If things are being slow to get done ask if you can come in and do the work yourself provided you have the knowledge and skills.  Some wineries will allow this and in some cases it is the best solution for on site quality control.  Will the custom crush winery assign their top personnel on your lots or will they focus on theirs?  Human nature comes into play here and you need to protect your investment.  If late Friday work orders delivered to a non veteran winemaking staff should become the norm for what needs to be done to your wines – this should sound alarm bells to you.

Lab Testing

  Will the custom crush winery supply lab numbers to you?  Do you trust their lab numbers, expertise and how will you know if the numbers are trust worthy?  The difference in a pH reading of 3.88 and 3.76 could have a huge influence on how you may want to handle that wine.  Make sure to use outside labs to help validate the internal numbers being supplied to you.  It is great insurance for your wines and you soon know how reliable the internal winery numbers are and how often you need to seek outside numbers.

Record Keeping

  How much access will you have in the record keeping?  Will the custom crush winery hold those records close to their chest or is it an open book?  Do they keep as detailed records as you hope to see?  Address this before becoming a client of theirs.  Is it up to them to keep track of blends or yourself?  Perhaps it is best to run the records parallel so you can confirm your confidence in what you receive.  It will help in any case especially in the event of a computer crash or other catastrophic events.

Sanitation

  When courting a winery, as a potential custom crush facility, make sure you are happy with what you see in terms of sanitation.  Don’t expect that the overall sanitation regime will change once you “get married”.  Look at the process and procedures that each winery might have in place to understand how they clean certain segments of the winery.  If you plan to move the wines in bulk to your facility be careful not to contaminate your brand new winery with spoilage microbes that could affect your wine styles for years if not forever.

Summary

  Make sure to look out for number one when looking to do custom crush.  Many honorable facilities exist but be on your toes to make sure you know when things are not headed in the proper direction for your wines.  Make sure you are getting your monies worth and that the wines you intend to craft are indeed shaping up in the proper fashion.

•    Know what your goals are and express them.

•    Explore the winery that will best fit the goals.

•    Make business arrangements to achieve the goals.

•    Communicate throughout all the winemaking process.

•    Have a commanding presence while remaining flexible.

  A big thanks to Rombauer, Laird, Braman, Prince Michel and numerous other wineries for allowing me custom crush access and experience.