Monday, June 30, 2008

Pa. wineries' cost-saving efforts bear fruit

With the cost of everything from glass bottles to gasoline increasing, some Bucks County wineries are looking for creative ways to save money so they can avoid scaling back production or raising prices.

They're cutting out the middleman, joining forces to buy materials in bulk and, in the case of the Fratelli Desiato Vineyards in Bedminster, installing solar panels, wind turbines and cisterns that capture rainwater to irrigate fields and wash equipment.
"We did it because of the economy," owner Lou Desiato said of his vineyard's new "green" amenities. "We were trying to cut some of our overhead."

The changes have helped lower the winery's electric and water bills, he said.
"We're watching every penny," he said. "We're closed on Mondays and Tuesdays because there's not enough business to support it."
Costs have risen and business has slipped at the vineyard's restaurant and tavern, but Desiato said the winery will still produce "a few thousand bottles" of wine this year about the same as last year.

"People are more price conscious," he said. "But our private events are still good, which is helping us weather the storm."
Wine is a $661 million industry in Pennsylvania. The state is the nation's fifth-largest producer of wine grapes in the U.S., according to the Pennsylvania Winery Association.

Though local wineries are susceptible to higher prices for ingredients and supplies and subject to slowing demand during tough economic times, some area vineyard owners say they're going to be just fine.
"People are staying local and buying local and we have a ton of local customers," said Tom Carroll Sr., co-owner of Upper Makefield's Crossing Vineyards and Winery, which added solar panels last year.
is even ripe for expansion, said Carroll.

The business plans to open a retail location in the Marketplace at East Falls on Ridge Avenue in Philadelphia, he said. Plus, Carroll said he expects the winery to increase production and build an addition to give it more storage space.
"We're still doing well," agreed Jerry Forrest, patriarch of Buckingham Valley Vineyards. "We get a lot of business from the Philly metro area in a 20- or 30-mile radius."

He added that wine lovers are likely to continue making purchases despite economic concerns. "To some degree, I think we're cushioned because we deal with a unique clientele," he said increasing.
"Our costs are up, but we're trying to do things smarter," Carroll said. "(Our) expansion actually helps because we're buying (supplies) in bigger quantities."
Petroleum-based fuels are needed to produce the glass used in wine bottles and some types of labels, so those costs have gone up significantly, vineyard owners said. Crossing Vineyards recently switched glass suppliers to get a better deal and the business uses labels that aren't petroleum-based.

Desiato added that his vineyard has joined forces with Peace Valley Winery in New Britain Township to make some supply purchases together to get a better price.
Tinicum's Sand Castle Winery grows all its own grapes, which cuts down delivery costs. But winery vice president Joseph Maxian said it's still costing more to keep the tractors running and get other materials they need to operate.

"If they get an excuse to raise prices, they will," Maxian said of suppliers. "We haven't changed our prices since last year. We're hanging on."
Sand Castle, which celebrates its 20th anniversary this year, has faced an additional challenge: portions of nearby River Road have been closed for repairs due to several floods during the last few years.

Like Crossing Vineyards, Sand Castle plans to increase production when a new vineyard it has cultivated in recent years begins to bear fruit. The winery currently produces between 24,000 and 36,000 gallons of wine per year. It charges $13to $30 per bottle.
"We're going through the challenge of an energy crisis and unknown economics, but the farmer is always optimistic and always looking to next season," said Maxian.


Winery taps into the Chinese wine market

Filippi brand to be sold on far-off shelves

The Chinese straying from tea as their beverage of choice shouldn't be hard to believe.
It didn't take long after the red curtain was raised in the late 1970s for China to embrace Coca-Cola.

And when the Germans settled into the eastern port town of Tsingtao, beer quickly reached the lips of those used to rice wine.

But a goblet of cabernet to go with the kung pao?

It seems like an odd pairing, but a burgeoning middle and upper class in China has spawned a new appreciation for wine, and wineries like the Joseph Filippi Winery in Rancho Cucamonga want to tap into that market.

This past week, the winery sent 200 cases of bottled wines and 2,700 gallons of wine not yet bottled to Tianjin, China, where it will be sold to different stores and restaurants. Winery owner Joe Filippi said his client in China is planning on opening a tasting room where most of the wines will be from the Cucamonga Valley.

According to Filippi, California wineries may be shipping large quantities to China, but countries like Australia and Chile are also getting their foot in the door.

"As their middle class grows, they want the American lifestyle and part of that is wine," Filippi said. "We have to take advantage of that because if we don't, other countries are going to catch up to us."

Wine isn't new to China, but for decades, the wine has been of low quality. A surge in imports has changed that, leading to connoisseurs with deep pockets and discerning tongues.

Wine imports surged 52 percent in the first nine months of 2007 from a year earlier to 27 million gallons, according to an Associated Press article.

The climate is especially ripe for American wineries to export owing to the weak dollar abroad.

But wineries aren't the only ones eyeing this lucrative market.

Marc Curtis started the Redlands-based China Wine Tours, which will have its first group tour in October bringing American wine enthusiasts to visit the wineries in China. Curtis said the wine scene has changed dramatically, and small boutique wineries are popping up in the provinces of Shandong, Shanxi and Xinjiang.

"Right now, China is the sixth-largest wine producing country in the world and experts say by 2058, they'll be No. 1," Curtis said. "I think it's going to be sooner than that."

If that's the case, Chateau China doesn't seem so odd after all and as the country develops a generation of wine snobs, Cucamonga wines could play a role.

This week's shipment by the Filippi winery included zinfandel, syrah, cabernet franc and a ginseng-laced red table wine. Some production took place at Galleano Winery, which has also shipped its wines to China in past years.

"These days if you go to a store, it's difficult to find things that aren't made in China," said winery owner Don Galleano. "It's been very much one way as far as trade goes so it's good to see other areas get products made in the United States."

Wendy Leung

Italian cork maker to double size of Sonoma facility

Italy’s largest producer of natural cork wine bottle stoppers is planning to double the size of its North American distribution hub to have more room for quality control and increase efficiency.

Ganau America, a subsidiary of family-owned Sugherificio Ganau S.p.A. of Sardinia, purchased 2.8 acres of land in late May and plans to build a 40,000-square-foot facility about a half-mile away from its current location at 21750 Eighth St. E. The new location is in Carneros Business Park, a 53-acre newly approved development located just north of the intersection of Eighth Street East and Highway 121.

The goal is to open the estimated $5 million facility in early 2010. Del Starret Architect of Santa Rosa is designing the project.

If the county of Sonoma approves the project proposal, the new location would have four times more laboratory space than the current facility. Winemakers often use such labs to test for problem bales of corks, according to Mariella Ganau, president of Ganau America.

“In Napa and Sonoma counties, many winemakers want to do their own evaluations in our facility,” said Ms. Ganau, 30. “So it made sense to accommodate winemakers who want to do their own tasting.”

Such testing, including the soaking of stoppers in wine, hot water or vodka for 24 hours, has become more rigorous in the past decade as some winemakers have looked askance at natural cork closures amid publicity that fingered such stoppers as the culprit for “tainting” wine, especially delicate white varietals.

Such attention to the issue has led to the rise of alternative closures and a shift among natural cork stopper makers toward vertical integration from tree to delivered bale as well as development of cutting-edge sanitation for the cork bark as early in the production process as possible.

In the mid-1990s, Ganau adopted a high-temperature steam system to battle TCA, which is a mold-related chemical compound often blamed for wine taint. A decade later, the company acquired autoclaves large enough to clean whole slabs of cork bark, allowing for use of high-temperature water to remove contaminants without boiling the wood.

Ganau set up its distributorship in Sonoma in 2003 with the acquisition of Italcork, a cork importer in which Ganau had part ownership. Italcork started in 1991 and expanded to the location currently occupied by Ganau America in early 2003.

The new facility would allow throughput of corks to increase 20 percent right away and offer additional expansion opportunities, according to Ms. Ganau. Each year about 80 million corks leave Ganau America’s facility south of Napa, representing 17 percent of Ganau’s global sales. The facility firebrands, lubricates, sorts and samples the stoppers before shipping them to customers.

The stoppers are produced at the main plant in Italy. In 2001, the parent Ganau company opened a facility in France to make stoppers for sparkling wine. Earlier this year, Ganau opened a plant in Portugal to produce cork pieces and discs, which are sent to the Sardinian plant for forming technical corks, which have agglomerate cork between one or two discs of solid cork on each end.

Jeff Quackenbush

Wine retailers fear bitter year ahead as sales tumble

The rampant growth of the UK wine market has ground to a sharp halt with sales falling at their steepest rate in living memory as consumers suffer the effects of rising taxes and the economic downturn.

Wines sales in Britain have soared this decade and the market grew 6 per cent to £5.6bn in the year to the end of February, according to Nielsen, the market research company.

However, that growth has now come to a sharp halt with off-trade sales in the four weeks to May 17 down 5 per cent, or about 4.5m bottles, against the same period last year.

The scale of the decline will be a blow to UK wine retailers who have seen demand grow strongly in recent years as consumers turned away from beer.

Analysis: Retailers sitting pretty
Jeremy Beadles, chief executive of the Wine and Spirit Trade Association, blamed the government's taxation of the drinks sector for playing a big part in the decline. The government in March pledged to raise duty on wine by 14p a bottle and a further 2 per cent above inflation annually until 2012.

"Consumers are facing skyrocketing costs for everything from bread and milk to petrol. Now we're seeing those increases effecting sales of alcohol," he said. "Politicians are making it worse with their tax increases and should remove the burden of higher taxes and end their pledge to raise taxes even higher."

The WSTA said that if the decline continued the UK wine market would be unlikely to see any growth this year.

Nielsen does not track changes on a monthly basis but industry insiders said they cannot remember a time when the sales declines has been so sharp.

Majestic last week reported a 3.4pc increase in pre-tax profits in the year to the end of March, but chief executive Tim How said that had come through price increases rather than higher sales volumes.

Wine sales have seen strong demand in recent years in pubs and bars but the on-trade is seeing declining drink sales as people begin to spend less.

The sector has also been hit hard by the smoking ban.

Any further decrease in wine consumption as drinkers seek cheaper alternatives or simply go out less will be a further blow.

Jonathan Sibun