Idaho University Incubates Wineries

Start-ups receive support, facilities and low rent before going out on their own

by Peter Mitham
Vintrust Somm Selections
Davis Creek Cellars spent its first two years at a neighboring winery, but moved into its own space at CEED this summer.

Caldwell, Idaho. -- A business incubation center formerly used for manufacturing and high-tech start-ups is now focusing on wineries and other agricultural businesses, attracting interest from operators as far away as Texas.

University of Idaho's Center for Entrepreneurial and Market Economic Development offers 22,000 square feet for local companies trying to establish themselves, and is focusing on agriculture as a stable sector that has shown resilience in tough economic times. "Other sectors have ground to a halt," CEED director Jim Toomey told Wines & Vines. "Agriculture has really been one of our most successful and consistent sectors."

Wineries are key companies for the center, which is using stimulus funds from the U.S. Department of Agriculture and the local economic development agency to convert space for two wineries. It hopes to house three more producers by the end of March 2010. The facility also hosts a viticulture program for Treasure Valley Community College.

Davis Creek Cellars of Marsing, Idaho, moved into the center this summer, keen to have its own premises after two years of making wine at Koenig Vineyards ' facility in Caldwell. Davis Creek winemaker Gina Davis appreciated the chance to start out at Koenig, but with four other labels being produced at the facility, crush time could become hectic. But having her own facility was a costly proposition.

Gina Davis at Davis Creek Cellars
Winemaker Gina Davis is grateful to have her own winemaking facility at CEED, where she produces small lots from 14 grape varieties.

A 1,700-square-foot bay in CEED is an alternative that makes sense to Davis as she seeks to grow her production, which currently sits at about 1,200 cases per year of small lot wines using 14 different grape varieties. Though she owns her own equipment, the University of Idaho's business incubation facility gives her access to the kind of space she needs, at a third of standard industrial rents.

"They were able to convert a standard industrial space at the university's incubator and add the cooling systems and floor drains that we needed, and with some minor electrical work we were able to start using all of our equipment," Davis told Wines & Vines. "We can add cooling and insulation, but to have floor drains plumbed into a space is a little more extensive, and also costs a lot more."

Martin Fijishin of Fujishin Family Cellars
Martin Fujishin's Fujishin Family Cellars was the first fledgling winery to move into CEED's incubator; his rent is locked in while he gets on his feet.

Martin Fujishin, principal of Fujishin Family Cellars , was the first winery to set up shop at CEED. The rent is currently subsidized, he explained, but will gradually increase to $650 a month. The arrangement gives start-up wineries a break, while encouraging them to grow production to a point where a facility of their own is possible.

"It gives us the impetus to incubate out and make space for new wineries, but it also provides us with a real good opportunity to start out with a viable level of rent," Fujishin said. Fujishin is producing 500 cases in its first vintage this year, and hopes eventually to produce 3,000 to 5,000 cases annually.

While various models exist for wineries to collaborate and defray startup costs, Fujishin said an incubation center provides a measure of independence that lets wineries control their production and expand as needed. By contrast, Fujishin's tasting room operates on a co-operative basis in partnership with Bitner Vineyards and Vale Wine Co. (which also plans on moving into CEED, next door to Fujishin).

"We're able to have that collaboration still, but have our own separate bonded space," Fujishin said of the CEED arrangement, adding that he plans to stay in Caldwell when it's time to leave CEED because of the relationships he enjoys with other local wineries. For him, starting up also means getting rooted.

The key difference in incubating wineries is the long-term, capital-intensive nature of the business, said Toomey, who has worked with both agricultural start-ups and high tech firms. "You have to really understand what's the natural evolution time within the industry," he said, suggesting that a three- to five-year development timeline wouldn't be unusual for wineries.

Based on what he's seen among the wineries seeking to set up shop at CEED, Toomey believes winemakers are approaching the business with the right attitude. There's a general realization winemaking isn't about to yield a fast buck. "They realize the work that has to go into something; they don't have dollar signs in their eyes," he said.

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