Hey guys! If you pick up a copy of the Long Island Business News on stands right now, you will notice this busy little fox has the cover story this week. I wanted to write the real story of Long Island wine country - worry and hard work included - something I believe has been sorely underreported in the media. So I did. And that's awesome!
LI'S Struggling Wine Country Gets Better With Age
Others are looking to transition management to the next generation – not an easy dream to sell to outside investors, or even to one’s own children.
Turning a profit by growing grapes and producing wine is challenging enough, with everything from extreme weather to insect infestations working against you. Add the high price of doing business on Long Island, where land and labor costs soar, and even the most hopeful vigneron’s head will spin.
“There’s a saying out here on Long Island,” noted certified sommelier Pascal Zugmeyer, who’s held leadership roles at several East End wineries and currently manages operations at Sannino Bella Vita Vineyard in Peconic. “‘If you want to make a million dollars in the wine business, start with two million.’”
Bad label
For sure, the winery business – on Long Island and everywhere else – is not for the faint-hearted. Some people “like the challenge,” according to Zugmeyer, and others find vineyards to be useful tax breaks. But if you don’t have “the backbone to sustain what you spend,” he noted, the wine industry will crush you like a grape.
That goes double on Long Island.
“Here on Long Island we don’t seem to have two good growing years in a row,” Zugmeyer said. “You can do very well if you’re smart, but you need to start small and take baby steps. The ones that go too fast, they crash.”
He has seen this firsthand. Before Sannino Bella Vita, Zugmeyer managed operations at Peconic Bay Winery, which closed its doors in 2013 after transferring its tasting-room operations to its Riverhead wine outlet, Empire State Cellars. According to the former manager, Peconic Bay Winery failed because of General Manager James Silver’s fiscal-management policies, including the 2011 opening of Empire State Cellars at Riverhead’s Tanger Outlets, where the rent alone cost $20,000 per month.
Silver, who now lives in California, countered that Zugmeyer wasn’t privy to the company’s complete financial situation, and said Peconic Bay Winery failed because of a “sustainability issue that’s inherent to the region.”
“I was hired to save a dying business,” Silver said. “Just because I couldn’t save it doesn’t mean I’m bad at business.”
According to Silver, the East End’s high input costs made it virtually impossible to sell Peconic Bay Winery products at a high enough price to create a sustainable business model. Even a burgeoning local tourism industry proved problematic, Silver noted, as more winery visitors increased labor costs.
“The nature of the business overall is to break even if you’re lucky,” he said. “The nature of the business in New York is to lose money. The only way the Long Island wine industry can succeed is if their bottles cost $60 to $80 each and they shed their inferior reputation.”
Kathy LeMorzellac: “It’s not hard to sell a winery because people don’t love the concept. It’s hard to sell the work that goes along with having a winery.” PHOTO: Gianna Volpe/LIBN
Family matter
Peconic Bay Winery is by no means the only Island vineyard to feel the pinch, or the only one whose owners have considered greener pastures. Pindar Vineyards, the region’s largest producer, went on the market in 2013 for $65 million, which would get a hypothetical buyer some 500 winemaking acres and operations at four different wineries, including the Southold spinoff Duck Walk Vineyards.
Meanwhile, first-generation winemakers are looking to transition operations to subsequent generations, who aren’t always ready to take the reins – or vice-versa.
Twenty-seven-year-old sommelier Gabriella Macari is absolutely ready to jump into her family’s business, but her mother – Alexandra Macari, owner of Macari Vineyards in Mattituck and Cutchogue – has her doubts.
The Macari matriarch said she loves having her four children involved in the family business, though she does occasionally worry about their future when considering the hefty investment of time and money it takes to make Long Island wine.
“Having a vineyard is a very big undertaking,” Alexandra Macari said. “Is anybody making money out here? Absolutely not. Is it something that you want to pass on when you know the burdens of paying taxes on this land and payroll of a crew of this size? You worry, no doubt about it. Can they do it? Can they afford it?”
No matter how bad a rap Long Island Wine Country might have, Gabriella Macari sees a bright future – not only as a saleswoman for her family’s vineyards, but for the Island’s wine region and the U.S. wine industry in general.
Citing a 2011 Wine Spectator study that showed the United States becoming the planet’s largest national wine consumer by 2011, Gabriella Macari said now seems an excellent time to ply the family trade.
“New York wines are better than they’ve ever been before,” she noted. “Even my friends are trying to learn more about wine. Joining the family business, having it actually be relevant and being able to educate people my own age, and a little older and younger – that’s really exciting.”
She’s not the only Island winegrower who’s enthused. According to the Long Island Wine Council, local winery tourism is up 10 percent over the last year, rewarding the faith of vintners like Ron Goerler Jr., owner of Jamesport Vineyards and a longtime Wine Council member.
Goerler said it costs between $15,000 and $18,000 to plant a single acre of grape vines, but even that hefty buy-in doesn’t mean a Long Island vintner can’t squeeze out a profit. He himself began planting Jamesport Vineyards in 1980, after his father’s $150,000 land investment, and three-and-a-half decades later he still believes the future is bright for those serious about producing wine here.
“Macari’s got kids,” he said. “I’ve got my family. You’ve got Wölffer, Paumanok … the big players of the future out here are going to be the ones with the kids and the ones with financial staying power. Anyone that’s got that generational thing.”
Staying power
For others, though, even an optimist like Goerler admits the wine industry – particularly on Long Island – can be daunting.
“For everyone else, it’s an investment,” he said. “At some point they’re going to want out, and it’s very difficult to sell a wine business.”
That has certainly been the experience of Kathy LeMorzellac. Five years after the death of Robert Palmer, her father and the founder of Riverhead’s Palmer Vineyards, LeMorzellac is still searching for someone passionate enough to continue the dream.
“It’s not hard to sell a winery because people don’t love the concept,” she noted. “It’s hard to sell the work that goes along with having a winery.”
In that way, running and simultaneously attempting to sell Palmer Vineyards “is what it is,” LeMorzellac added. The 48-acre Riverhead vineyard and winery is on the market for $5.3 million, with an additional 60 acres of vineyards in Cutchogue available for $2.6 million (55 acres for growing, LeMorzellac noted, with space left over for a new tasting room or other operational facility).
The deal is not for everyone, she admitted – “You can’t just want the business, you need to be the business” – but one thing is certain. Come hell or high water, these vineyards are here to stay.
“We won’t sell it to someone that’s going to level it,” LeMorzellac said. “Either someone is going to come here and fall in love with the place and buy it because this is what they want their life to be, or not.”
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