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76 WINES&VINES December 2015 BUSINESS PRACTICAL WINERY & VINEYARD about 15 additional V. vinifera and hybrids (such as Dornfelder, Lemberger, Regent and others). The wine is produced only in the best vintages and aged in American and French oak barrels for up to 30 months. "We grow several clones of all of our main production varieties (32 Pinot Noir clones, 10 Chardonnay clones, six Riesling clones, four Pinot Grigio and three Auxerrois) to increase the complexity of our wines. "We produce about 5,000 cases of Bel Lago brand wines each year (about 95% estate- bottled) and another 11,000 cases for custom- crush clients." However, of the many wines Bel Lago pro- duces, "We have far too large a portfolio (15 to 18 bottlings) for our winery size," Edson notes. This is a common circumstance in this tourism- driven wine region. Edson is enthusiastic about his Pinot Grigio, something he characterizes as "reflecting our Italian name, which is why we refer to it as 'grigio' and not 'gris.' I am also really enthused about our Auxerrois, Chardonnay and Pinot Noir." Black Star Farms Winery "The best decision we made is the cooperative concept of having six growers as a part of winery operations benefiting from downstream profit- ability with a definite interest in the quality of the wines from a dollar and cents standpoint," explains winemaker Lee Lutes. "On Leelanau Peninsula, it is not uncommon for growers to be paid $1,500 per ton for whites and $2,000 per ton for reds. We typically pay $2,000 to $2,500 per ton for whites and $2,500 to $4,500 per ton for reds—about 18% of the posted retail bottle price. If a wine is listed at $20 per bottle, they will be paid 18% of the bottle price, whereas it is less profitable for the win- ery if it is sold through normal distribution channels. "It changes the grower-producer relation- ship by making all feel they are working on the same side; any adversarial position goes away. If it is good for the winery, it will be good for the grower. It is the one thing we have done that has aligned our very key growers with a mindset akin to what it is we have as the pro- ducer. Unless you are on the same side of the equation, it is very difficult to agree with the other, but once you have all parties aligned, then all benefit. "The worst business decision we made early on was one that is likely fairly common in this industry, but one that becomes so important— that being that you never have enough storage space and volume for what you will actually need. This could also be extended to our tast- ing room space. "We started out with a 10,000-case produc- tion model but had the good fortune of being on a high-volume roadway in a tourist area with tremendous seasonal traffic. We started with a modest 1,000-square-foot tasting room in our bed & breakfast building and outgrew that space in the first year. "At the same time, the area's wine industry was receiving great press, and our wines were selling considerably better than expected: Our 10,000-case goal was achieved in the third year, and we were busting at the seams with inventory and production. "I would never suggest that you build more than you need, but a winery requires so much excess storage for empty glass, closures, labels, bottled inventory, barrels, etc., that a 25% surplus of space in the early years will quickly be rendered essential." Black Star Farms' wine production is 70% white and 30% red, totaling 25,000 cases per year. The largest volume wine is Riesling, with a late-harvest bottling topping out in most vintages at about 7,500 cases. Total Riesling production is close to 10,000 cases, with a dry (0.8% residual sugar [RS]) and classic (2.25% RS) bottlings as part of the mix. Pinot Noir production ($25 per bottle) is typically close to 2,500 cases annually. L. Mawby Vineyards "I made my best decision in the late 1990s: to eliminate table wine production and focus entirely on sparkling wines," says Larry Mawby, owner and winemaker at L. Mawby Vineyards. "At that time, we were a very small producer of about 2,000 cases annually, a mix of table and sparkling wines from estate grapes and grapes purchased from other grow- ers on the Leelanau Peninsula and elsewhere in Michigan. "I had been making traditional-method sparkling wines on a small scale since 1984, but they represented only about 15% of pro- duction. It was no small thing to eliminate 85% of our sales, but it seemed like the right thing to do for many reasons. "My intent has always been to make the best wine possible from grapes grown in Michi- gan. As a small producer from a region that cannot produce large quantities of low-cost grapes, the only commercially viable approach is to go for quality. That has meant experiment- ing with varieties in the vineyard, viticultural practices and winemaking styles, etc. Over the years, I have come to feel that sparkling wines were the most consistently superior—that every year, our vineyards produced grapes of exceptional balance for sparkling wine. "By the late 1990s I had produced sparkling wine for more than 10 years and thought I knew enough about the technical side that I could improve quality by focusing attention there. I felt that if we conducted ourselves in the vineyard always thinking about sparkling wine, then harvested and handled the grapes and juice in the winery with the clear intent to produce sparkling wines, that we could improve the quality of our sparkling wines. "That focus would also enable us to justify the cost of special equipment for sparkling wine. In 2000 we were not making any table wines; produc- tion and sales of sparkling wines were increasing, and our customers were understanding and supportive of our direction. "In 2003 we had a serious winter here, with a near crop failure (85% crop loss in the area), just as we were increasing production. We purchased pressure tanks and a counter-pressure filler and entered the tank-fermented (charmat) sparkling wine business using wines and grapes brought in from southwest Michigan and California. This we did under another label, reserving our original brand for Leelanau Peninsula appella- tion, traditional-method wines. "Today we produce about 16,000 cases of sparkling wines for ourselves and several thousand more on a custom basis for other wineries. "My worst decision was not so much a deci- sion as it was a lack of attention. Climate change is having an increasing impact on our vineyards. I knew more than 20 years ago that this would occur, but I failed to act fast enough. The 2003 crop loss should have been enough of an alarm bell, but we were still caught un- prepared for the 2014 winter crop loss (about 85% loss). "We need to address the effect of climate change by changing how we grow the grape- vines we have planted, and look toward new cultivars that we can plant today in prepara- tion for changes we will see in the next 20 to Larry Mawby transitioned his winery to 100% sparkling wine produc- tion in 2000, saying bubbly was his most consistently superior wine.