BCBusiness

TIME WINERY: DARREN HULL JULY/AUGUST 2017 BCBUSINESS 125 and it's capital-, labour- and inventory- intensive. "It's an expensive business, and the biggest money is made in the sale [of the business]," McWatters quips. "We're not in this just for the money, but we're sure as hell not in it to not make money." Before the Encore management team— McWatters, McWatters Bond and director of winemaking Lawrence Buhler—make a business decision, they ask themselves three questions: will it enhance the qual- ity, will it enhance the brand's image, and will it enhance e„ciency? "It doesn't take away from the passion or the romance of what we're doing; it just makes us a little more e„cient," says McWatters. Encore will always be a small winery competing against the big players of the world, he observes. People will pay a premium for handcrafted wines, but not a $5 premium, and there's more than a $5 diŠerence between somebody doing 1,000 cases and 100,000 cases, he says. "So we play in that in-between where we can compete with the bigger winer- ies, giving consistent high quality with greater e„ciency than the little guys." A prime example is Evolve Cellars, Encore's third brand, which launched in 2015. "We said, 'We think there's a sweet spot in the market here that needs a little more approachably priced entry-level wine,'" McWatters Bond explains. The other two brands, Time and McWatters, target older consumers, although there are plans to change that, with Time aimed at a younger, brand-conscious hipster type. "Our style for Time is a little more Old World, a little more elegant, whereas McWatters is bigger, bolder, more like him, a little more in your face," says McWatters Bond. Evolve wines are more like her: friendly, fresh and often bubbly. The price ranges from $15.99 to $30 a bottle, compared to $19 to $35 for Time and $23 to $25 for McWatters Collection. "Smart money says you need to have the volume to get the e„ciencies," McWatters says. Encore produced 13,000 cases in 2016, but how many of each brand isn't deter- mined until closer to bottling time, when the reds are blended. If a wine doesn't št the prošle of Evolve, Time or McWatters, it's sold as bulk product. "Even Evolve, our market entry-level [brand], I'm not going to compromise the quality of that," McWatters Bond says. "So we sell our pressings; we sell anything that doesn't št within what our brand essence is for each of the brands. But we look at opportunities šrst and foremost. We talk about it." Not every decision relies solely on the business case. McWatters plans to pro- duce a port-style solera, a style of wine he particularly likes. Apart from vintage ports, the market has shrunk, partly because the terms "port" and "sherry" are restricted to products from Portugal or Spain. Since the category isn't grow- ing, it's been overlooked. "If you look at the business model, nobody would say, 'I want to be a port or a solera producer,' because it's a tiny market," he says. The market for sparkling muscat, however, is one of the fastest-growing in North America, according to McWatters. As a judge at three or four wine competi- tions in the U.S. every year, he's noticed how large the category is and how many medals it wins. "So that's one where the business case is going to drive what we're doing," he says. "What we're going to do with our port style and sherry style, the business model says, 'Don't do it.' It's a shrinking category, but nobody's doing it here, so there's an opportunity for us to develop a niche." The McWatters ventures continue to evolve, like the province's wine indus- try, whose sales grew from less than $7 million in 1992 to $254.5 million in 2015, according to the B.C. Wine Insti- tute. "There's nobody in the business in British Columbia that was here when I started," McWatters notes. "Less than half the people were here 10 years ago, so we're an industry under huge growth." Some of the more established wine- makers are now seeing their children get into the business. McWatters encour- aged his own children to try something else, he says, "because this is a lot of hard work, and it's my dream. You can't come into it and wake up when you're 30 or 35 years old and realize you're in the middle of your dad's dream. But there's a mag- netism about the lifestyle and the region that brings them back. It's the kind of industry that becomes an obsession." 2009 2015 2011 2016 2013 2017 2014 Co-purchases Local On Lakeshore restaurant in Summerland Launches McWatters Collection of wines with the 2007 vintage Meritage (red) Starts construction of Time Estate Winery at Sundial Vineyard Establishes Encore Vineyards Ltd.; releases first Time wines Launches Evolve Cellars Sells Sundial Vineyard and buys PenMar theatre in down- town Penticton Opens Time Winery in renovated PenMar theatre

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