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NorCal Wine Blog
A Good Winery is Closing, Another Gets Back to Basics
- General Interest
- Written by Fred Swan
- Wednesday, 07 December 2011 01:08
There are roughly 3,400 bonded wineries in California. The vast majority of those are small businesses and family-run. Operating a winery is rarely a tremendously profitable venture. It is even harder to succeed now, given this economy. Consumers are spending less. Banks are lending less.
The winery business is very capital intensive, yet also low-margin. There’s usually at least a two-year gap from the outlay of cash for grapes and barrels to the release and sale of a red wine. That means you’re always two years from getting paid for one vintage and one year out on another while trying to sell bottled inventory from yet a different vintage. Those sales don't happen overnight. In the meantime, all the bills need to be paid.
For most small wineries, direct sales are the best shot at profitability because fewer middlemen means higher margins. But how do you get people in the door or to an online store? Advertising is expensive. Reviews are helpful, but not something to be relied upon. Social media has helped many wineries. But, once everyone is using social media, it’s no longer an advantage but just one more thing you must do to avoid losing ground.
Recently, Ortman Family Wines announced that their wine business, including the downtown Paso Robles tasting room are ceasing operations as of December 23. I profiled Ortman Wines here a few months ago. In their announcement regarding the closure, Matt and Lisa Ortman were frank, “We are unable to meet the demands of our lender during these tough economic times, and the lender has chosen to call in the loan and liquidate the assets.” The Ortmans worked very hard and made some really good wines. They just couldn’t generate enough revenue to cover the expenses that had mounted up. And, not only have they lost their investment, they are also out of work. If you’d like to buy some of their final vintage, it’s still available at the tasting room and the online store.
Much better news, though still highlighting the issues facing small, family businesses, Emtu Estate Wines is going to re-focus on their original business model. I covered John and Chris Mason’s small Forestville winery in one of NorCalWine’s first articles. At the time, their wines were sold almost exclusively in person during tastings at their backyard picnic table. The wines, in particular the Pinot Noir, are quite good. So, Emtu also sold to handful of fine restaurants and shops.
As the winery built momentum, they were encouraged to do more outbound promotion, become active in social media, etc. That’s really hard for a two-person operation to maintain, along with an estate vineyard, winemaking and business operations. Especially when those two people also put a huge focus on charitable work which takes them out of the country for months at a time to places such as Haiti and Kyrgyzstan. And Russian hackers shut down your website with malware. And you need to take time off for surgery to donate a kidney to your sister. Seriously.
So, the Mason's are going back to their old way of selling. John puts it simply "one of [my] goals is to meet everyone who drinks our wine. Well that is what we want to do, to share wine with a small group of people who we can call friends." I asked their permission to share that opportunity with you. It's something I have enjoyed.
The pricing is easy to remember. Before the holidays, buy a case or more and your price is just $20 per bottle plus shipping (but no tax). Make that about 79 cases of 2008. I just sent an email.
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This article is original to NorCalWine.com. Copyright 2011 NorCal Wine. Photo of John Mason in the Emtu Estate vineyard courtesy of the winery. All rights reserved.