The Second Coming of B.C. Wineries

Tony Holler, Poplar Grove Winery | BCBusiness
tony Holler of poplar grove Winery brought shrewd business acumen and the drive to build his vineyard.

B.C.’s new generation of vintners are discovering that the wine business is not for the faint of heart. To be successful demands business smarts, a full-time commitment and a lot of cash—all before the first crush

Tony Holler, the majority owner of Poplar Grove Winery, has a perception problem with friends who know he became wealthy in the pharmaceutical business. “A lot of my friends say that this is a pretty expensive hobby,” Holler says. “It isn’t a hobby. Let’s not kid ourselves; we’re building a serious business.”

The B.C. wine industry is still dominated by a first generation of serious vintners who brought international credibility to Okanagan wines— wineries like Mission Hill, Jackson-Triggs, the Andrew Peller wineries, Quails’ Gate, Burrowing Owl, Tinhorn Creek and Gray Monk Estate Winery. But Holler is among a second generation that is building on the foundation laid by pioneers like Mission Hill’s Anthony Von Mandl, and who are expanding the province’s reputation worldwide.

Just a quarter-century ago, there were only 13 wineries in B.C., none with recognition outside the province. Today, there are close to 240 wineries, a number of which are winning international awards and exporting wines. “Our wines are in Tokyo and Beijing,” says John Skinner, proprietor of Painted Rock Estate Winery and a contemporary of Holler’s. “It means something there if you are from the Okanagan.”

Skinner is quick to acknowledge that all the upstart wineries wouldn’t be enjoying the success they are without the groundbreaking work of the pioneering generation that preceded them. “Painted Rock and the other little wineries that are out there banging the drum, we’re being accepted internationally on the backs of Quails’ Gate and Burrowing Owl and all those guys,” he notes. “They started to hit the quality marks early, giving the Okanagan some international profile.”

Today the B.C. wine industry’s annual sales, including wines made from B.C. grapes as well as the cellared-in-Canada wines from imported bulk wine, total about $400 million. Wine has become a major driver of jobs and investment, including the money being spent on new wineries.

Holler could offer himself as the poster child for the well-heeled newcomers who are shaking up the wine industry. They are passionate about wine and they can spend what it takes to produce world-class wines. But they also bring a hardened business sense to the enterprise, according to Geoff McIntyre, a Kelowna-based CA and business consultant with consulting firm MNP who specializes in the B.C. wine industry: “They like the idea of the lifestyle, but they don’t want to lose money.”

“You are getting a new group of people coming into the wine business,” says Holler, who acquired control of Poplar Grove in 2007. “They are people who have been successful in other businesses. They typically are wine collectors and love drinking wine.” (Holler has 5,000 bottles in three personal wine cellars.) “We need people who say we are going to be a serious winery making serious wines. Probably the best trend that you are seeing is that the people who are coming into the wine business have the capital to be in that business.”

In addition to Holler, the group making second careers in wine after being successful in business includes Laughing Stock’s David Enns, a former financial consultant; Noble Ridge’s Jim D’Andrea, still a high-powered Calgary lawyer; Tantalus Vineyards’ Eric Savics, still a senior stock broker in Vancouver; John Arthur Kenneth Meyer of Meyer Family Vineyards, a former broker (who goes by Jak); Painted Rock’s John Skinner, also a former stock broker; and Mick Luckhurst, a former building supply dealer and developer who owns Road 13 Vineyards.

John Skinner,owner of Painted Rock, at
his West Vancouver home.

A New Generation

It is perhaps no coincidence that the new generation of wine entrepreneurs is well represented by current and former members of Vancouver’s investment community who have built successful careers on recognizing market opportunities. “I was a wine collector and an enthusiast,” says Skinner. “But I am also a market-timing guy. I recognized an opportunity to invest in an industry in its infancy that was just starting to prove itself. I thought it was a golden opportunity if I could buy the best property to produce the best wines.” In 2002, Skinner—then 44—decided to retire from the investment business by 50 and start a winery. When he disclosed his plan to fellow broker Eric Savics, who had not yet acquired Tantalus Vineyards, Savics thought that “John was barking mad.” Now, both men have sunk millions into one of the world’s most seductive businesses.
Tantalus Vineyards in Kelowna was formerly the under-financed Pinot Reach Cellars, which opened in 1997. It came on the market in 2004 with its underlying vineyard.

“I am an accidental wine tourist,” Savics concedes. “I had a friend call and say, ‘You should look at this property in the Okanagan.’ It turned out the wine was good, and that drew me in.”

The flagship wine already was a widely acclaimed Old Vine Riesling (from vines planted in 1978). Savics hired professionals to reduce the vineyard’s eclectic assortment of varieties to plantings, mostly new, of Riesling, Pinot Noir and Chardonnay. The makeshift Pinot Reach building was replaced with a winery so modern and well equipped that there is even a charging station for electric cars.

“The wine was good and got better,” Savics says. “That justified the additional capital.” Tantalus wines were soon listed by many top Vancouver restaurants. He does not disclose what he has invested, but it is a big number. “I don’t know that number because it has been done in stages. Of course, we have had some revenue to offset that, but it still needs to become a business that can take care of itself.” Tantalus currently produces 4,000 cases a year, with expansion planned as the estate’s grape production rises. “We have enough land and we have the facility that can handle 10,000 cases,” says Savics, who still maintains his investment business in Vancouver.

Eric savics’s contemporary tasting room at
Tantalus Vineyards.

“If we got to the level where Tantalus was recognized outside of B.C., it would be marvellous,” he says. “I would like to be in New York at Daniel restaurant. I would like to be in Napa and have The French Laundry take it. I would like to be at The Fat Duck Restaurant in London. It would be a wonderful thing to get wines into restaurants like that.”

Road 13 Vineyards, south of Oliver, is another turnaround story. It opened in 1998 as Golden Mile Cellars, and was a struggling 1,000-case producer in a quaint replica castle when Mick and Pam Luckhurst bought it in 2003. Earlier that year, the Luckhursts had moved into an Osoyoos lakefront home after three years of developing real estate in Edmonton, where the winters got them down. “The vineyards are like waterfront,” Mick said after that summer. “They are serene. They are peaceful. They are just art for the eye. Then the romance of it takes you over.”

Behind the winery purchase, however, was the same market timing that motivated John Skinner. “My business instincts came to the forefront,” Mick says. “I thought there was a lot of growth in the industry and, thus, growth in your equity.” Since then, the Luckhursts have poured substantial sums into the business, adding a modern winery to the castle, buying additional vineyards and hiring a top winemaker to get production to 25,000 cases a year. “We are moving awfully fast, faster than we ever had originally in mind,” Mick says. “A lot of it is just my temperament; you push ahead.”

At Hester Creek, proprietor Curt Garland, 76, has invested $25 million, including the $5,250,000 he paid in 2004 to buy the bankrupt winery. He is a remarkable example of how wine seduces people into the business. The owner of a major transportation services company in northern B.C., he was looking for a small Okanagan vineyard where he could make a little wine for the cellar in his new Prince George house. He chanced on the bankruptcy trustee’s advertisement in a Penticton newspaper for Hester Creek, which had a 28-hectare vineyard and a dilapidated winery. After outbidding another winery to buy Hester Creek, Garland turned it around by hiring experienced professionals and building a well-equipped 23,000-square-foot winery before the 2010 crush. In the same year, Hester Creek joined the ranks of the Okanagan’s premium producers by releasing The Judge, a $45 red blend. “We are operating in the black now, which I am very comfortable with,” Garland said in an interview early in 2012. “It probably exceeds my expectations by a year.”

Tony Holler’s Poplar Grove originally opened as a garagiste boutique in 1997. When founders Ian and Gitta Sutherland divorced a decade later, Holler, who had collected Poplar Grove wines and who owned a small neighbouring vineyard since 2004, bought control of the winery and retained Ian as winemaker. The son of a Summerland apple grower, Holler is a former emergency room doctor and a co-founder and CEO of vaccine maker ID Biomedical Corp., which GlaxoSmithKline Inc. bought for $1.7 billion in 2005. Holler now has funnelled his energy and his resources into growing Poplar Grove and its associated Monster Vineyards label, into a producer of 20,000 to 25,000 cases of premium wines each year.

“I wasn’t that interested in having a tiny boutique winery,” Holler says. “I wanted to really develop a winery that was a sustainable business and could become a family business that might go through generations of our family. In order to do that, you have to have a certain size.” He decided that would be about 25,000 cases a year, made with grapes from winery-owned vineyards so that the fruit quality could be assured. He spent about $7.5 million on about 40 hectares of land and another $2.5 million planting it. The vineyards, for tax purposes, are run as a separate business by his wife, Barbara. In the last two years, at least $8 million more has been spent on two new wineries—one a functional but modern processing facility and the other a glittering glass-and-steel showpiece on a hillside with a dramatic view over the Okanagan Valley.

“My view of this business is that it is a long-term investment,” Holler says. “A lot of the things we have invested in last a long time. Listen, the land isn’t going to get cheaper in the Okanagan. It’s a beautiful place. The land will appreciate in value and, as we build our business, the business will appreciate in value.”


David and Cynthia Enns of Laughing
Stock Vineyards.

John Skinner, Jim D’Andrea, Jak Meyer and David Enns all had the resources from previous careers to start wineries from scratch. In 2004, Skinner found a derelict apricot orchard on the east side of Skaha Lake where he contoured ideal growing slopes on about 20 hectares and planted 50,000 vines imported from French nurseries. Painted Rock’s first harvest in 2007 produced two wines that won Lieutenant Governor’s Awards for Excellence in B.C. Wines. The winery won two more from succeeding vintages, along with red wine of the year with a Syrah entered in a national competition. “Painted Rock was successful with quality wine right out of the gate and developed a following pretty quickly,” says Geoff McIntyre, a consultant at accounting firm MNP.

Skinner pursued what he calls “a very aggressive mandate for quality. The vision is one where we are aspiring to quality of an international standard. I don’t look at the domestic market as our immediate competition.” He employs a top-notch Bordeaux consultant, Alain Sutre, who also advises Burrowing Owl, Poplar Grove and Osoyoos Larose. Since 2004, Skinner has invested more than $10 million in Painted Rock. In spite of that, the production is deliberately capped at 5,000 cases a year. “We don’t want to get bigger; we want to get better,” he says. “It’s about attention to detail. As I looked at all the ultra-premium players around the world, that 5,000-case number resonated.”

Similarly, Noble Ridge Vineyard and Winery at Okanagan Falls is capping annual production at around 6,000 cases. “Our goal was to make premium-quality wine,” says Jim D’Andrea, the principal owner of the winery with his wife, Leslie. “We are not interested in making volume wine.” A lawyer with Bennett Jones LLP, a major national law firm, D’Andrea traces his winery decision to a family backpacking trip in Europe in 1998. “In France, we met a guy who owned Domaine de Villeneuve in Châteauneuf-du-Pape,” says D’Andrea. “He was an accountant who had sold his business and bought this little domaine. He just loved it. I got really quite excited.”

Cleaning the vats at Laughing Stock Vineyards.

Already a collector of French and California wines, he was “convinced that Canada also could make very good wines. When we were making our plan, the goal was to make the best wine in the country.” The winery is on a hilltop (hence, the Noble Ridge name) that Jim and Leslie bought in 2001 and planted with four hectares of vines. Five years later, they bought an adjoining three-hectare vineyard with a sturdy barn that housed a basic winery. With several millions already invested, they sold minority interests in the business to friends.

“We had a 10-year plan in 2003 when we started making our wine and we are right on course,” Jim says. By 2012 the business was generating a profit. “Does it go as fast as you want it to go?” he asks. “No, of course not.” He continues to practice law, although in the growing season his clients are likely to find him on a cell phone while working the vineyard. “Once we can make a living here, then I will start to get out of the law business,” Jim says.

Meyer Family Vineyards principals Jak Meyer and his wife Janice Stevens developed a taste for fine wines while Jak was working as an investment adviser, and that led to his career switch. In 2006, Meyer bought a 1.5-hectare vineyard in Naramata with 10-year-old Chardonnay vines. He retained winemaker Michael Bartier, who then worked at Road 13 Vineyards, to make the first several vintages there. “We looked at the small boutique winery model—just keep that vineyard and do 600 cases a year,” Meyer says. “And it would just be a hobby.” After releasing a $30 Chardonnay and a $65 Chardonnay early in 2008, Meyer quickly understood that the wine business is not a hobby. “We realized that we will never make money at 600 cases,” he says.

By that summer, Meyer had hired a full-time winemaker and commissioned the design for a showpiece Naramata winery. Then he was able to snap up a 6.5-hectare Okanagan Falls vineyard with a bankrupt rudimentary winery for about $2 million. (The winery had not opened because the owner’s Arizona real estate business collapsed.) This accelerated Meyer’s business plan by a year and gave him the vineyard base to support a viable annual production of 4,000 to 5,000 cases. He shelved the planned Naramata winery, investing instead in the Okanagan Falls property. He estimates he has now invested $5.5 million—enough that he would consider adding a strategic partner to what is still a family business.

Meyer stopped working as an investment consultant in 2007 and has no regrets, even if the winery still consumes capital. “Five to seven years is probably a reasonable time in which to expect a return,” he says. “Anyone who thinks it will happen sooner will be pretty surprised. It is not about the money for us. We have some personal assets to live off until this starts making money.” He has also fielded inquiries from investors about buying his business. “If somebody wrote us a cheque today, I’d start again tomorrow,” he says.

At Laughing Stock Vineyards, David Enns earns a good enough living that for several years he kept a pricey European motorcycle in South America for his winter vacations. He credits bottom-line discipline to his wife, Cynthia, who has an MBA. “I am married to a spreadsheet queen,” he says with a laugh. “We are in a manufacturing business. We have a lot of passion around it, but you can’t forget it is still a business.”

The couple previously owned a successful investment consulting company in White Rock and ran it from the Okanagan for four years after they moved there in 2003 to start the winery on an orchard they had bought. “That was the perfect storm of way too much work and pressure,” says David Enns, who was taking winemaking courses in California at the same time. The couple sold the consulting business in 2007 once Laughing Stock was established. “We now joke that we have the lifestyle that everybody thought we had 10 years ago,” he says.

The winery, with production capped between 5,000 and 6,000 cases, is profitable because they got in in 2004-05 when land and constructions costs were much lower than today, and were able to self-finance the more than $5 million that has been invested in Laughing Stock. In June 2012, the winery was 159 on Profit magazine’s list of the 200 fastest-growing companies in Canada, with five-year revenue growth of 279 per cent. The winery has succeeded with premium wines, 40 per cent of which are sold to its wine club and 30 per cent to restaurants. The remainder is allocated to wine stores and a corporate gifting program built around business contacts the owners made in their previous career. The biggest surprise, David Enns says, is that the winery now has a cult status. “We had no idea there was any kind of fanfare in it,” he says.