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Historic Michael David Winery Builds on its Vintage Past

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The recent completion of a more than $30 million winery expansion makes Michael David Winery one of North America’s 25 largest wineries.

Michael David Winery has a rich and heralded history that dates back more than 150 years. With the calendar recently turning to 2020, the Lodi, Calif.-based operation has positioned itself to add even more to its celebrated past with the recent completion of a more than $30-million winery expansion.

“We live the business, and we breathe the business,” says Kevin Phillips, a sixth-generation grape grower whose family began cultivating wine grapes in the early 20th century and whose father, Michael, began the winery in 1984. “We are the epitome of what the wine business is all about — a multi-generational, family-operated, sustainably minded, local success story. We have a very deep connection to our land and our community, which I believe directly translates into the quality of wine in the bottle.”

Kevin Phillips is vice president of operations for Michael David Winery and one of many family members involved in the business. (Michael’s brother and Kevin’s uncle, David, joined the business in the late 1980s, which led to the name Michael David Winery. Kevin’s sister, Melissa, is the company’s vice president of sales and marketing.) The Phillips name is entrenched in the wine-making annals of Lodi, which is known for producing and processing more wine grapes than any other California region. 

With its expansion, Michael David Winery, one of North America’s 40 largest wineries (it used to be in the top 25 before selling off its largest brand in 2018), will greatly add to the number of grapes it processes. 

While the company was growing before the expansion — Phillips calls the growth “unprecedented” — the capital resources resulting from it were invested in growing inventory, which led to an abundance of outsourcing. “There was very little left to grow the infrastructure,” Phillips adds.

Michael David Winery had been partnering with seven other winery facilities to process the grapes needed to make its wine. The business was also using 12 different facilities for storing, bottling and case storage.

“Infrastructurally, we were very scattered and spread out,” Phillips says.

It was a logistical nightmare, he adds. It’s not that the company’s partners weren’t up to their respective tasks — Phillips says they were all excellent allies — it’s just that coordinating the business was becoming extra challenging for the Michael David Winery staff.

“It was just a lot of work … overseeing all the processing at all these different places,” Phillips says.

It was time to bring all of that outsourcing back home. And to help generate the funds to do that, Michael David Winery decided in 2018 to sell its signature offering, a red zinfandel brand called 7 Deadly Zins, to The Wine Group, a Livermore, Calif.-based wine company.

“It was bittersweet to sell a brand that you’ve nurtured from scratch and grown,” Phillips says. “[That brand] put our winery on the map. But it was difficult because we had to outsource so much of our supply and processing to make that brand. We wanted to bring everything we could back in-house.”

Michael David Winery offers a slew of successful brands, including Freakshow, Earthquake, Inkblot, Michael David Wines and Reserve Wines, and the house favorites 6th Sense, Incognito and Bare Ranch. With the expansion, which was mostly completed in 2019, the brands are all growing in sales.

Get this: In 2018, the Michael David Winery processed about 5,000 tons of grapes at its facility. In 2019, when the expansion was completed, it processed about 11,000 tons.

“We more than doubled [the tonnage], but our wage base only increased by 6.5 percent,” Phillips notes. “That’s because we captured so many operational efficiencies while maintaining our existing trusted employee base”

Pumped Up with Best Practices

Those efficiencies have everything and more to do with best practices. For instance, Michael David Winery implemented a new air mixing technology in the fermentation process that highlights those efficiencies. The company is using a new wine cap management and blending technology from Pulsair Systems Inc.

Previously, the crushed red grape fruit juice that contains skins and seeds, which is called “must,” had to be continually mixed in tanks by two employees several times a day in order for the wine to achieve the desired color, tannins and flavor extraction. The process is called a “pump over” because the cap of the must that forms on the top of the tank has to be pushed back down to be remixed.  But with the Pulsair technology, large compressed air bubbles are released beneath the grape cap to bring the juice up into and over the top of the cap in the fermentation tank.

    “A bubble of air will basically roll that entire cap to the bottom of the tank,” Phillips explains.

A process that was formerly labor-intensive now only requires the push of a button, Phillips notes. “We still do traditional pump overs, but we supplement them with the very efficient Pulsair technology,” he adds.

The expansion also includes three new 100-ton Euro-presses to go with the already existing two 50-ton presses and one 25-ton press. “When you include the pomace trough and auger, our pressing efficiency has increased by 250 to 300 percent,” Phillips says.

Up to the Challenges

The expansion wasn’t a cut-and-dried procedure. It took five years of preliminary planning — gaining permitting for this and gaining county approval for that — and the completion of projects indirectly related to the expansion. 

But those projects also allowed the company to introduce more best practices. One of those projects involved what to do with the large amount of wastewater the expanded facility would generate. “We were able to work out an agreement with the City of Lodi, and we built a transfer station [for the wastewater],” Phillips states. 

    The wastewater flows to the on-site transfer station and it’s pumped two miles down the road, where it flows into the city’s main process wastewater line. “The water is then treated at Lodi’s wastewater facility, and it’s used on farmland in the [Lodi] delta,” Phillips explains, noting the procedure is perfectly aligned with Michael David Winery’s sustainability initiatives.

Phillips also cites the stepped-up best practices of his production employees, who did their normal daily jobs in addition to learning all of the nuances related to the expansion.

“Most wineries that undergo an expansion of this size have a team of dedicated people. I didn’t have that,” Phillips says. “I’m very lucky to have the people I have working for me.” 

While the new operation has many new bells and whistles, Phillips says he took a conservative approach to the upgrade. He didn’t want to implement any new technology that he wasn’t completely sure about. Phillips knows the company has achieved a fine reputation for its wine, and he didn’t want to mess with a good thing.

“We are making a consistent quality product that people know — year in and year out — will be a good bottle of wine,” he says.

While Michael David Winery continues to add to its history with the expansion, it’s poised for even more growth, something Phillips anticipates. As part of the current expansion, Phillips made sure that the infrastructure is in place for future growth. So there is plenty of room for more presses and additional automation to grow again. “It’s plug and play at this point,” Phillips says. “I hope we get to expand again.”

For an already-historic California winery, one could say it’s even more history in the making.

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