wYne Combinator

After all the great presentations yesterday, I started thinking about whether there were winery incubators. I imagine that many passionate wine drinkers and business people that want to create new wine brands may not have access to equipment, funds, winemaker talent, and industry relationships. On the other hand, there may be many talented winemakers coming out of places like UC Davis that would like to own their own winery and do not want to give up creative control, but don’t have brand, marketing, and operations experience. In many ways, the problem seems akin to GSB entrepreneurial students wanting access to engineering talent and venture funding. There may also be high net worth individuals in the wine industry that would like to support emerging wine brands and invest in the next great winery or wine company.

While brand marketing agencies exist for the wine industry and there are certainly companies incubating their own brands, I do think there would be a business opportunity to support and invest in new wine entrepreneurs, perhaps creating the Y Combinator for wineries (wYne Combinator?).

I looked into this and some incubator-like programs to exist to support wine entrepreneurs. For example in Walla Walla, the state government and port authority funded a “wine incubator neighborhood” near the Walla Walla Airport in the early 2000s, originally to support graduates from Walla Walla Community College’s enology and viticulture program. Dr. Myles Anderson of Walla Walla Vintners and Norm McKibben of Pepper Bridge Winery helped to design the 5-building row of wineries. Each building was constructed to meet the requirements necessary to operate a stand-alone, 2,000-case production winery and tasting room. With a cheap monthly rent that slowly increases over time, the fledgling wineries are allowed a maximum stay of six years.

 The five incubator wineries in the Walla Walla Regional Airport wine district currently include Palencia Winery, Walla Faces, Corvus Cellars, J&J Vintners and Eternal Wines.

“The Incubator program put everything I needed in one place, a marketable location, existing nearby winery businesses and a thoughtfully designed production facility I could grow from,” says Victor Palencia, who earned his winemaking degree from Walla Walla Community College in 2005. “Since I didn’t have to make an immediate investment into retrofitting a building, I was able to focus my energy on growth and expansion, quadrupling production in the first year.”

Tasting room guests also appreciate supporting the incubator wineries and tasting the wine right where it’s made. With low overhead, these wineries are able to spend their cash flow on the best grapes and make higher quality wines faster. Removing some of the barriers to starting a wine business may allow investors to see proof of concept more quickly and double down with the winners.

A more hands on approach, talented winemaker Bartho Eksteen has developed the Wijnskool Entrepreneur Support Program (WESP) as an incubator initiative on his new farm in the Hemel-and-Aarde Valley in South Africa.

With the first intake in 2015, eight businesses were selected to be supported for three years. Aspiring wine entrepreneurs submitted a business plan with an application to Eksteen. The program supports the entrepreneurs in the areas they need, including funding, technical support, administrative and marketing department development, personal development and more.

I don’t think it’s a coincidence that you see these types of programs emerging in the regions that many of us picked for our midterm assignments. Washington and South African wine regions are growing quickly, perhaps due in part to a receptive and supportive climate to wine entrepreneurs. I’m curious how the class feels about a “wYne Combinator” in Silicon Valley. Would it succeed? Why or why not?