Idaho Incubator Evolves with State's Wine Industry

Growing 1,200-case producer offers custom crush services to smaller state operations

by Peter Mitham
idaho wine incubator
The University of Idaho Agricultural Incubator provides space for some of the state’s fledgling wine producers.
Caldwell, Idaho—A business incubation center the University of Idaho acquired for start-up wineries has evolved into a custom-crush facility as the state’s small, family-run wineries have defined their needs.

Formerly known as the Center for Entrepreneurial and Economic Development, the University of Idaho Agribusiness Incubator has evolved from providing production space for new vintners to providing services for existing wineries.

When it began focusing on wineries in 2009, the 22,000-square-foot facility made space for two wineries and had hopes of accommodating up to five. The agriculture sector had done well, and the wine industry was its rising star (see “Idaho University Incubates Wineries”). 

Yet new production facilities cost more than most startup wineries could handle, so the university applied for stimulus funds from the U.S. Department of Agriculture and the local economic development agency to install infrastructure that would support tenants that came to include Fujishin Family Cellars, which operated a tasting room on a cooperative basis with Bitner Vineyards and Vale Wine Co., Davis Creek Cellars, Periple and Hat Ranch Winery.

Today, the incubator has 9,000 square feet set aside for production and warehouse space for wineries. A classroom building attached to the incubator provides meeting space for startups as well as groups such as the Idaho Wine Commission.

As the state’s industry has grown to 48 wineries, the focus of the center has shifted to helping wineries manage growth rather than incubating nascent producers.

“We’re focused more now on business expansion and retention than we are with the business startups,” Jim Toomey, director of the incubator, told Wines & Vines. He added that one winery, Hat Ranch, is functioning much like a custom-crush operator.

Tim Harless, who operates the winery Hat Ranch with his wife Helen, said the incubator has been ideal for his venture, which complements his day job as an airline pilot. It has given him access to affordable space to grow the operation, which is producing nearly 1,200 cases per year under two labels, Hat Ranch and Vale Wine Co., which he acquired in 2014.

“The space is very competitive, probably cheap as you can get for processing space, so that is very helpful to the bottom line,” said Harless, noting that he has yet to receive a paycheck from Hat Ranch. “We’ve looked at other commercial spaces, and we just don’t see that there’s any reason to move any time soon.”

The presence of chillers, plumbing and other infrastructure integral to winemaking is also helpful, and Harless has been happy to open his space to other wineries.

“We’re still at the point where a rising tide lifts all of our boats,” he said. “We had people calling us and they wanted to bring over a tank for cold stabilization, or they wanted to have some stuff destemmed, or filtering.…We realized we could put together a lot of different services for whomever needed it.”

The arrangement has Toomey’s blessing as the incubator finds new ways to support an industry that continues to define itself.

Precept’s purchase of Ste. Chappelle in 2012 and the establishment of two new viticultural areas in the past two years has focused attention on the state’s potential, but the industry remains small.

Prior to Hat Ranch offering its services, many wineries have worked with Greg Koenig of Koenig Vineyards, just west of Caldwell. Some leased space at the incubator before moving into their own premises.

The collaborative approach makes the kind of support the incubator is increasingly providing a responsive and responsible, approach.

“That’s how they’re getting by,” Toomey said.

While storage space may not seem like a big thing, it’s providing the backup support wineries such as Huston Vineyards need as they grow and evolve and deal with planning commissions.

“We’re getting increasing requests for some of the expanding wineries in the county for case goods storage,” Toomey said. “They’re looking for some space in the interim.”

The local market remains small, and local pricing doesn’t necessarily deliver the payback wineries need. Hat Ranch has managed to grow sales 50% each year, but now (in its fifth year) it’s just starting to see cash flow that makes sense. Many wineries cultivate wine clubs to boost and stabilize sales.

Prospective tenants that have money but lack a viable business plan aren’t strong contenders for the space. Toomey has leased space to artisan granola producers for two units in the incubator, but he recently turned down an artisan cidery.

“We just didn’t feel it was going to be viable. It was going to be a repeat of what happened with some of the wine startups,” he said. “They have all of the money in the equipment, and they just can’t get their money back on the deal.”

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