If you want to see how successful Canada’s estate wine industry has become, check out land prices in prime grape-growing regions.
“Back in the pre-free-trade days (in the late 1980s), land was going for $4,500 an acre, but recently a neighbouring winery paid $100,000 an acre,” said Ben Stewart of Quail’s Gate Estate Winery near Kelowna, B.C.
“We have seven acres of serviced land with a vineyard on top of it right now.”
Imagine that – growing grapes can be such a good business that even housing developers can’t compete for land.
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Quail’s Gate is one of the Okanagan’s best-known estate wineries. Production has grown to 50,000 cases annually and the winery, restaurant and gift shop are so busy that the Stewart family requires 130 employees during the peak of the tourist and growing season.
Of course, today’s success was yesterday’s gamble. Stewart started his winery in 1989 and saw his first modest profit only in 1993. In the meantime, despite an infusion of capital from his family, he heaped on debt by planting quality grapes, building production facilities, hiring a winemaker and storing wine until it was ready for sale.
Credit Stewart’s vision, courage, and business acumen, but he said one of the most important ingredients in Quail’s Gate’s success was one you might never guess. It was his decision to form a board of directors, complete with an outsider.
Stewart’s three siblings are shareholders. They get along fine and have a common vision on where they want to go and how to get there. That’s what gave them the confidence in 1993 to bring in a person from outside the business to sit on the board and help run the business.
“Having an outside individual who was trusted by the family helped reinforce the decision making,” Stewart said. “It wasn’t that we were making incorrect decisions, but it gave us confidence that we were heading in the right direction.”
This isn’t easy stuff to explain, but Stewart points to one of the board’s first decisions to build a $300,000 warehouse as a good example. Until then, he stored wine in rented facilities off the farm.
It was a cash drain and highly inefficient. Building the warehouse was an obvious move but an agonizing one.
“It was a necessity, but here we were with, for the very first time, more money coming in than going out and we’re talking about doing a building project of a magnitude we’d never done on the farm,” recalled Stewart.
“That’s why I wanted somebody who was a trusted family friend but who was independent and could look at what we were doing and say, ‘does this seem right?’ “
The board has since made several more big calls, like a $2.5 million expansion in 1998, an even bigger one this year, and to seek additional capital during a cash flow crunch in 1999.
The real value of having a board, and an independent voice on it, is how it changes the dynamic of the business, he said.
“Ours is a decision making board, not an advisory board, and that brings with it a whole new level of accountability.
“First of all, it really focuses you on making sure the board has all the information it needs to make decisions, and second, you have to be prepared for any and all questions it has.
“It’s a step up from having coffee with another farmer and talking about how the business is going, let’s put it that way. As you put together information for the board, you’re always asking yourself, ‘what is the state of my business? How could I do things better?’ because you know that’s the conversation you’re going to be having with the board.”
Stewart said every enterprising farmer could benefit from having a board of directors.
“I don’t care what kind of farming business you’re in. It’s a very tough and competitive world out there and you need all the expertise you can get at the table.”
Glenn Cheater is editor of Canadian Farm Manager, the newsletter of the
Canadian Farm Business Management Council. The newsletter as well as archived columns can be found in the news desk
section at www.farmcentre.com.
