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Category >> Left Foot Charley

Jul 16
2007

Auto analogy No. 2: Swelling supplier ranks

Posted by Cari Noga in northwest regionLeft Foot Charleybusiness

When writing about Michigan’s wine industry, I like to draw analogies to the auto industry, since it’s the best known and understood in Michigan. One comparison that reveals just how much the wine industry has matured is the existence of a growing supplier base.

Michigan’s carmakers, also known as original equipment manufacturers, developed what’s known as a three-tier supply system. Tier 1 supplied the carmakers directly, Tier 2 supplied Tier 1, and Tier 3 supplied Tier 2 – although there’s overlap between the layers.

Until recently, Michigan’s wineries were the winemaking equivalent of OEMs. They grew their own grapes – though many must supplement with other growers – and produced and bottled their own wines. Again, there’s exceptions – for instance, most sparkling producers outsource the carbonation facet of production. But by and large, most wineries did mostly everything, and relied on only a first tier of suppliers – the makers of barrels, tanks, presses and other winemaking equipment.

Now, however, there’s operations like Bryan Ulbrich’s Left Foot Charley, which this month opened its winery and tasting room near downtown Traverse City. Not a vine on the premises. Ulbrich plans to contract for all his grapes, making his growers effectively Tier 1 suppliers.

Then there’s other businesses that are Tier 1 in the sense that they work directly with wineries, but are more like Tier 2 or 3 in the sense that they’re distanced from the actual end product. One example is Traverse City’s Safety Net, a technology company that offers point-of-sale solutions including inventory control, high-speed credit card processing, customer information capture and marketing specifically to wineries.

“We help them with everything once it’s bottled from then on,” says Greg Williams, business software manager. For example, the system enables a winery to differentiate and record customers who buy red or white wines, and then market to each accordingly.

“It’s getting more information out of the system so you can make more intelligent marketing decisions,” says Williams, who brought the idea to Safety Net after he moved north from the Detroit area. He remembered meeting Napa company called Elypsis at a trade show a few years back. They offered a similar service. In three years, they had 300 tasting rooms online.

While Michigan’s industry doesn’t yet offer that potential for growth, in just the two years Safety Net has offered winery POS, the sector constitutes 10 percent of Safety Net’s business, and 40 percent of its retail business, Williams said.



Jul 11
2007

When winemakers start new wineries

Posted by Joel Goldberg in Two LadsMike de SchaafMatt MoerschLeft Foot CharleyHickory CreekFree Run CellarsCornel OlivierBryan Ulbrich

It's not by design, but a common theme runs through several recent MichWine articles: for the first time, experienced Michigan winemakers who've worked for others are striking out on their own (or, given financial reality, with the backing of partners) to start new wineries.


This "new wave" consists of folks like Bryan Ulbrich (Left Foot Charley) and Cornel Olivier (Two Lads) in the north, Mike de Schaaf (Hickory Creek) and Matt Moersch (Free Run) in the south. They've all made wine elsewhere, and each now has an ownership stake in his own winery.


Previously, most Michigan wineries seemed to arrive in two ways, not mutually exclusive: (1) People with a passionate desire to make wine, whether or not their dreams were well-grounded in theirskills and experience; (2) Well-to-do individuals or groups of investors for whom owning a winery was a second or third business -- part investment, part trophy, part country retreat.


To these, we can now add a third model: the experienced winemaker as winery entrepreneur.


Why is this worth talking about? Because it reflects the new reality in Michigan's wine industry: wineries with a quality product backed by a strong business plan stand an excellent chance to reap sizable financial rewards -- and critical recognition -- in Michigan's emerging wine boom over the next decade or two.


These new winemakers / winery owners are closer to the ground than any of their predecessors, and one has to assume that they see this most clearly. Their experience means that they approach the wine business with few romantic illusions -- just the need to make a profit to stay in business. That's a powerful motivator.


And here's the question their actions are answering: would you have taken advantage of the chance to buy some land for a winery in Napa Valley in 1970?


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