By CARL E. FEATHER - Staff Writer - cfeather@starbeacon.com
In an economy when most businessmen are pulling back on capital investment, Gene and Heather Sigel have signed on the line and are investing nearly a half-million dollars into their South River Vineyard this spring and summer.
A man-made wine cave, the area’s largest, is under construction behind the winery’s iconic 1892 church. The cave has two chambers, one for storing bottled product, the other for aging wine in barrels and tanks. Each chamber is 56 feet long, 24 feet wide and 10 feet high inside.
“This is actually a bridge,” says Sigel, who designed the project. The caves were purchased from Con/Span, a Dayton manufacturer who specializes in pre-cast bridge culverts. Some enterprising winery owners in Oregon, California, Virginia and southern Ohio figured out these culverts would make very cost-effective alternatives to excavated caves or above-ground pole barns. The later, a popular solution in northeast Ohio, requires significant amounts of energy to maintain at the 52-to-54-degree optimum temperature for wine storage and aging.
“Wine needs to age underground. Historically, when you look at winemaking all over the world, that comes at a high cost,” says Sigel, who started his vineyard eight years ago after working for neighboring Chalet Debonné for as many years. He continues to work for Debonne as its vineyard manager.
Caves provide both optimum temperature and humidity. Barrels breathe, and when wine is aged in wood there can be a loss of 15 to 20 bottles per month through evaporation. Sigel hopes to obtain a humidity level of 80 to 90 percent in his dank culverts, which would result in negligible wine loss.
Until this year Sigel relied upon a small cellar under the church tasting room for product storage, and the Debonné facilities for making and aging much of his wine. While Sigel could have continued this practice and saved himself the expense of the large capital investment, he felt a recession was a good time to expand.
He drew up plans last summer, but the high cost of fuel at that time forced him to table the idea — transporting the concrete components would have been prohibitively expensive with fuel surcharges.
“I never thought we would be able to build this storage,” says Sigel, who did doctorate work in economics.
When the recession hit, Sigel revisited the project from the perspective of an economist. With all the government spending on highway infrastructure, he concluded that the cost of pre-cast products would rise once stimulus money started to flow. In the meantime, fuel costs were down, materials prices stable and a skilled contract workforce plentiful and ready to work.
“It seemed to me as if it made economic sense to build this,” Sigel said. “Historically, businesses that expand in a recession will be positioned for growth thereafter.”
In the past, he’d patched together financing from unconventional sources for land acquisition, vineyard planting and amenity construction. With all their money tied up in the winery, they decided to put the 45-acre farm on the line for a bank loan.
The loan raised their debt load in a time when business has been stable – not losing ground, like most business, but also not growing rapidly. Sigel says that’s the way they want the business to operate, and he felt comfortable with taking on the additional debt in order to take advantage of the benefits inherent to the recession.
The original project was envisioned as a single room, but after looking at all the costs and work that would be involved in expanding down the road, he decided to build excess capacity so he will not have to worry about it five or 10 years from now.
As an Ohio farmer producing Ohio products, Sigel was determined to use labor and materials from the Buckeye State whenever possible. The 19 semi-truck loads of pre-cast parts were made in Ohio and hauled by an Ohio trucking firm. The masons are from Kirtland and contractor from Madison. Nolan Doors of Austinburg is supplying the cellar’s doors.
“We really tried to incorporate things from around here,” he says. “I think we’ve been happy with the response of local people (to their winery) and it seems important to support that economy.”
Work on the cellar started in mid-May. Sigel hopes to have it completed by the end of July, and definitely before harvest begins Sept. 1. A functional part of his winemaking business, the cave will also expand the winery’s ability to accommodate and please guests.
The exposed exterior concrete walls will receive a brick facade to match the porch that Sigel added to the back of the church two years ago. The top of the culvert will be insulated then covered with stone to create a patio area, half of which will be covered. The same types of columns used on the porch will be used in the new patio, which will be slightly lower than the porch, but offer guests a view of Lake Erie.
Sigel says the cost of these improvements will be around $450,000, a significant investment for any small business. However, he also sees it as one of the last large expenditures the winery will have to make for some time. Forty of the 45 acres he and Heather own are planted in vineyards. His annual sales are holding steady at 2,000 cases annually; excess grapes are sold to other producers. If his vines produce an exceptional quality of fruit, the cellar will provide the extra capacity to create his own product that year and store it.
“The last couple of years I’ve come to realize I need to take responsibility for my product,” says Sigel, who does not plan to add a bottling operation to his winery. “For the future of my business, I needed a large creation are to work in and store my product.”
Sigel admits his winery is somewhat of an anomaly in the local industry. He doesn’t offer food or entertainment; indeed, he and Heather have abandoned their original plan of offering weddings and parties there. It’s all about the wine and making it the best it can be using Ohio grapes.
To that end, Sigel recently withdrew from the Ohio Wine Producers Association and Grand River Valley group over philosophical differences. He’s disturbed by the proliferation of wineries that import juice from outside the state and market themselves as an Ohio winery. He’s also concerned about new vineyard starts being improperly managed. Sigel feels these issues stem, in part, from the influx of rookie owners who made their money elsewhere and are using it to scratch a lifestyle-change itch.
As someone who has all his assets tied up in South River Vineyard, Sigel is concerned about the long-term viability of these startups. And he’s concerned about the local tourism industry’s narrow focus on wine and the lodge as the path to economic prosperity for the entire county.
“I don’t think these wineries and vineyards are going to pull this county our of a recession,” he says. “They are kind of a rich man’s business.”
