The economy has taken a toll on the Virginia wine industry this month as Kluge Estate winery near Charlottesville has been taken over by its bank, which appears determined to sell off the winery’s vineyards, inventory and property at auction. Sweeley Estate winery in Madison, north of Charlottesville, is also in foreclosure and several wineries are said to have decided to sell off their grapes this year rather than make wine because of high inventories of unsold wine.It would be nice to think that similar fates are not going to befall microbrewers here and there. For one thing, microbreweries are not real-estate intensive--ask anyone that's seen a brewery relocate from one industrial park to another, or close up the brewpub in favor of a less customer-friendly but more work-friendly location. Thus, microbreweries are safer from recent volatility in real estate markets and financing. Second, most microbreweries are built upon hard work and sweat, and aren't a creative bookkeeping dodge for farming or agriculture subsidies or tax shelters supposedly common with far too many boutique wineries. Third, most brewpubs and micros around this region managed to establish themselves on reasonably secure financial footing before the current recession, and the few newcomers (like Ruddy Duck) seem, for the most part, to be doing all right.
The foreclosure and bank seizure are the latest setback for Patricia Kluge and her husband, William Moses, who established the winery in 1999 on several hundred acres of land not far from Monticello, where Thomas Jefferson struggled to establish Virginia’s wine industry more than 200 years ago.
If Farmers Bank of the Virginias has its way in selling off Kluge Estate, it will deal a severe setback to the Virginia wine industry. With 164 acres under vine, Kluge Estate is not only Virginia’s largest winery, but Kluge and Moses have been outspoken in their ambition to build the company into a powerhouse with national distribution for its Kluge SP sparkling wines, New World Red blend and Albemarle wines. A Kluge fire sale will send the message that Virginia’s wine industry is not ripe for outside investment.
But nationally, are there any micros or craft breweries a missed mortgage payment away from financial disaster? I haven't heard of any such closings yet, but I'll confess I'm not looking very hard.