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Washington Wine Retrenches

Some big companies who invested in boom times are cutting back

Harris Meyer
Posted: June 16, 2010

In a sign of the slumping economy, several wine producers in Washington state, both large and small, are pulling back or dropping out. Notable names include Crimson Wine Group, Diageo and Precept Brands. Some big companies who entered Washington during the boom times but never achieved much success are now calling it quits.

Napa Valley-based Crimson, owner of Pine Ridge and Archery Summit and part of Leucadia National Corp., has decided to indefinitely shelve the launch of its Washington brand Double Canyon, according to CEO Erle Martin. Crimson's plan was to release Cabernet Sauvignon from purchased grapes under the new label in 2009, and produce the first Double Canyon estate wines from its 600-acre property in Washington's Horse Heaven Hills this year. It envisioned eventual production of 20,000 cases.

Crimson laid off winemaker Ned Morris last year and sold the production equipment but is holding on to the vineyard and selling the grapes. "[This economy's] quite a headwind to be launching a premium brand into," Martin said. "We're keeping our powder dry, and we hope at some point to launch the Double Canyon brand."

Precept Wine Brands of Seattle, which owns Alder Ridge, Waterbrook and Apex Cellars, has decided to mothball its Alder Ridge production facility in the Horse Heaven Hills and lay off winemaker Rob Chowanietz, according to marketing vice president Alex Evans. It will continue production at its facilities in Walla Walla and Prosser. Precept currently has the 2008 and 2009 vintages of Alder Ridge in barrels.

"We aren't sure what we'll be doing with the Alder Ridge winery," Evans said. "We're still trying to figure out final harvest plans. We might crush small quantities to maintain the Alder Ridge brand, which we're committed to in the short and long term."

Later this month, beverage giant Diageo will close its Canoe Ridge Vineyards tasting room in Walla Walla and its Sagelands Vineyards tasting room east of Yakima, said spokeswoman Kim Tomlinson. That's part of the company's cost-cutting campaign and effort to focus on its core wine brands, including Beaulieu, Sterling and Chalone. "Tourism is down and we had to make the tough decision to close the visitor centers," she said.

While Diageo announced in May that it would consider selling non-core assets, Tomlinson said the company is committed to Canoe Ridge and Sagelands. Their production will remain the same and the two Washington properties are not for sale. Nevertheless, some observers still predict they will be sold.

Smaller Washington wineries have also felt the economy's bite. Yellow Hawk Cellar in Walla Walla is closing in July after 12 years of production. Ash Hollow Estate Vineyard in Walla Walla has cut production by more than half, to about 2,000 cases. Isenhower Cellars in Walla Walla is cutting production by two thirds and shifting to direct sales only. All three were small brands that mostly sold locally.

"Hopefully it will be more profitable and I'll work less," said owner and winemaker Brett Isenhower. "It's a shit sandwich and everyone will get a bite. I wish there was a silver bullet but I don't think there is."

There are opportunities, however. Nicolas Quille, general manager and winemaker at Pacific Rim in West Richland, which produces Riesling from eastern Washington grapes, said his company grew 35 percent last year. "We're at a price point that's in the sweet spot, around $10," he said. "People got a little crazy, wineries were popping up everywhere, and they were coming up with $60 Cabs."

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