Label Debuts During Tough Times

Wine sales in the United States have slowed considerably in the last year, creating financial hardship for many wineries. Even those with top-quality wine are having a bit of a tussle.

For Vintech, a Santa Rosa-based agricultural investment company, hard times couldn’t have come at a worse moment. It owns four wineries in California and hopes to own six or eight.

The flagship of Vintech’s operation, a handsome Forestville winery called Laurier, has just released its first wine under a new regime. The release is a stunning tribute to brilliant wine making and one of the best new Chardonnays I have tried in a long while.

Laurier’s history dates to 1978, when Jacob and Barbara Shilo founded Domaine Laurier in the rolling hills of this western Sonoma County town.

Jacob, an Israeli engineer, wanted to make some of the state’s best wines, and wine maker Steve Test did just that with western Russian River fruit. Recognition, however, was limited to connoisseurs, who saw that the high acid and lean style of Test’s wines were meant for aging; the wines were not very showy when released.

In 1988, Jacob Shilo died unexpectedly of a heart attack. Barbara, an artist, realized she didn’t want to run the winery on her own.

In 1989, the property--including a small winery and more than a dozen acres of grapes--was sold to one of Vintech’s limited partnerships. The word Domaine was dropped, and Vintech immediately began a major building project to upgrade the facility.

Vintech, which earlier had bought the Lyeth winery in Geyserville, soon made deals to buy Mazzocco in Healdsburg and Jekel in Monterey County.

The partnerships partially relied on additional bank financing. But the slowdown in the wine business caught Vintech president Donald Bade by surprise. Sales of Vintech’s wineries’ wines were good, but the weakness in the wine business hurt Bade’s fund-raising.

“Bank financing just stopped, and not just for us but for the entire industry,” Bade said. “Perhaps I was a bit naive, thinking it would be there.”

Bank loan portfolios often include a few poor performers, and banks are usually prepared for some wineries’ not living up to expectations. But the number of struggling wineries (and nonperforming loans) grew rapidly in 1990 because of the decline in wine consumption. And banks grew stingy.

Wineries are not cash cows. Most cannot run on a quarter-to-quarter basis the way other businesses operate because it takes more time to realize their profits. From production to sales it usually takes between one and three years, but the raw materials--grapes, barrels, bottles, corks--must be paid for up front.

Vintech knew all this but never saw its cash crunch as a near-fatal problem. It spent $3.4 million building a new 30,000-square-foot winery at Laurier, one of the most beautiful projects in the industry. And it moved its corporate headquarters to plush 17,000-square-foot offices.

Late last year, Vintech hit a fiscal stone wall. The firm missed payments to growers and other creditors totaling in the millions of dollars. When it missed a major payment on its Jekel Vineyards, Vintech was forced to file for reorganization under the bankruptcy court on that property.

Within the last few weeks, Vintech also has filed for Chapter 11 bankruptcy protection for its other three wineries. And former Jekel owner Bill Jekel filed suit to remove Vintech as general partner, charging, among other things, fraud in the acquisition of the winery.

In court documents, Bade has said Vintech’s four wineries should be permitted to reorganize as a group under its corporate banner. He says that all Vintech properties are jeopardized by Jekel’s lawsuit.

None of this, however, changes the quality of the 1989 Laurier Chardonnay.

The wine maker at Laurier, Merry Edwards, is one of the industry’s giants. She had previously left her imprint in the industry at Mount Eden and Matanzas Creek. Her ’89 Laurier Sonoma County Chardonnay (about $17) has a wonderfully complex apple and citrus aroma, creaminess and high acidity with a long, complex finish.

Edwards used Chardonnay grapes from four regions of the county to achieve this complexity, and though she crushed the equivalent of 32,000 cases of the wine, she bottled only 20,000 cases. The remainder was sold in bulk to raise cash to pay Vintech debts.

The wine is in a bottle with an embossed L in the glass and sports a dramatic new label. In the first few months, the price for the wine may well be below $15 a bottle.

Edwards, who also makes stylish and complex Chardonnays under the Merry Vintners label, is one of four excellent wine makers in the Vintech stable. Rob Hunter, formerly of Keenan, now makes the wines at Lyeth (Bill Arbios left recently to pursue other projects); Steve Pessagno is making marvelous wines at Jekel, and Nancy Steel, wine maker at Mazzocco, has produced lovely Chardonnays, Cabernets and Zinfandels.

The Laurier and Lyeth properties are Bade’s Burgundy and Bordeaux projects, respectively. Lyeth makes white and red wines from the Bordeaux varieties. Laurier also will make about 5,000 cases of Pinot Noir, following Burgundy tradition.

Edwards also intends to release a reserve Chardonnay in some months, a wine with a smaller appellation than Sonoma County.

Were it not for Vintech’s financial headaches, the unveiling of the new Laurier wine would make for far happier times around Vintech’s offices.

Wine of the Week

1989 Santa Barbara Winery Dry Chenin Blanc ($7.50)-- Put this wine in a blind tasting of Chardonnays and watch it befuddle the experts. Wine maker Bruce McGuire handled the wine the way you would a Chardonnay, fermenting it totally dry and then aging it in French oak barrels. Also, 60% of the wine underwent malolactic fermentation. With Chardonnays selling for twice this price--and a lot more, you get all the Chardonnay character without the sticker shock. A wonderful idea, executed flawlessly.