So you want to open a winery? A guide to starting up in Minnesota

Chankaska Winery’s barrel room // Photo by Kevin Kramer

So you’ve decided to make the leap from amateur to professional winemaker. Your fondness has grown so great for the prominent stone fruit flavors of La Crescent or the well-balanced Itasca, that you’ve been coaxed into putting your name onto a bottle and getting it into the hands of grape-indulgent gallivants.

The road to professional production will test your ability to navigate a complex web of legislation and overlapping regulatory agencies at the federal, state, and local levels. To navigate this entangled undertaking, let’s cover the steps and possible roadblocks you’ll encounter in bringing a new wine, cider, or mead to the people.

Trademarking your name

It’s time to go from “Nell’s Homestyle Red” to something more marketable. To make it official, trademark your name with the U.S. Patent Office and determine what business structure you’ll be establishing, namely a sole proprietorship, a partnership, an S corp, or an LLC.

Urban Forage Winery & Cider House in Minneapolis // Photo by Tj Turner

Researching local legislation

In locating your production site, you’ll need to ensure that it complies with local zoning and business ordinances at the city, county, or township level. In an urban setting, a common prohibitive factor to alcohol production is being zoned as a residential area. In a rural setting, you will likely have to present your business plan to a municipal board for approval.

Prior to applying for her farm winery license, Nicole Dietman, owner of Buffalo Rock Winery, had to secure a conditional use permit from local authorities, which established limits on patronage and operating hours on her winery. Beware: unanticipated costs will arise. Jeff Zeitler, co-owner of Urban Forage Winery & Cider House references a nearly $6,000 sewage fee attached to his property, which he learned had gone unpaid.

Photo by Tj Turner

Licensing and inspection

Once you have your site located, you can begin the process of applying for a license through the Alcohol and Tobacco Tax and Trade Bureau (TTB). The TTB is responsible for approving alcohol production at the federal level, approving brand labels, and taxing the proceeds of alcohol sales.

Once approved at the federal level you’re eligible to apply for licensure at the state level through the AGED (Alcohol and Gambling Enforcement Division), which requires an inspection of your facility. You’ll either be applying for a farm winery license or a manufacturer of wine license. But, more on this later.

All your equipment must be in place in order to pass inspection by both AGED and the Minnesota Department of Agriculture (MDA)—from your fermentation tanks down to your Star-San sanitizer solution. Because delayed approval (90 days is standard) results in delayed earnings, fundraising and craftiness is a must. In addition to crowdfunding $23,000 for equipment purchased on Craigslist, Zeitler and his wife, Gita rented out their would-be taproom to a local Personal Care Assistant business to shore up funds.

A variety of red grapes growing on one of the vines of Schram Winery // Photo by Brian Kaufenburg, The Growler

A variety of red grapes at Schram Winery // Photo by Aaron Davidson

Are you a farm winery or a manufacturer of wine?

Unlike breweries, which face no regulations on buying hops rather than growing them for their beer, the state legislature draws a distinction between a farm winery—operations located on agricultural land (as of 2012) that manufacture wine composed of at least 51% of fruit grown in Minnesota—and a wine manufacturer—those located on non-agricultural land that are not necessarily governed by the 51% rule. (See The Growler’s Great Debate on the 51% rule to learn more.)

If you’re going the farm winery route, licensing fees are significantly reduced. A farm license costs $50 with no additional fee for registering an FDA-compliant brand label to the AGED for each new variety brought into production. Whereas a manufacturer’s license costs $550 along with a $40 brand label fee for each new label.

Steve Hance, co-owner of Number 12 Cider, which opened last year in the North Loop under the manufacturer’s license, bemoans this added cost, noting, “It’s hard to keep track of. We have produced over 20 products, and even those that don’t make it to cans because of small production lot require a label.” A farm winery is also able to sell their product to consumers off-site at locations such as restaurants and liquor stores, while a manufacturer must contract the services of a distributor, which captures 25% to 30% of revenues. Zeitler credits farm wineries for having “Advocated hard for themselves since the 80s[…] to bring the laws up to the modern age.” Considering the costs of distribution and insurance is critical to factor into a business plan.

Regardless of the specific license you’re applying for, one thing’s the same across the board: State authorities are far more responsive than the federal bureaucrats at the TTB; Zeitler implores repeated contact with the AGED agent assigned to you to check on the status of your application.

Being a good neighbor & contending with the haters

Though most community members will be supportive of your efforts to bolster the local economy through libations, inevitably some will portend the doomsday consequences of increased commotion. Dietman explains that you have to do your research to separate the valid critiques from the noise. In her case, some neighbors worried that county roads and infrastructure near her winery were at maximum capacity. After speaking with local engineers, she confirmed that they were in fact designed to handle significantly more traffic. She also won hearts by speaking to the merits of a woman-owned, family-centered business.

Cannon River Winery’s Cannon Falls Minnesota tasting room and awards // Photo by Tj Turner

Realizing The Dream

“There was no plan B,” Zeitler explains, recalling the moment when the final permits needed to open were delayed and his credit cards were maxed. Average processing time for getting through all the steps can run from six months to a year, with ever- evolving legislation and amendments. Though there’s no single formula for success, you’ve got the support of those who came before you.

Those interviewed recommended joining local associations such as the Minnesota Cider Guild, the Minnesota Grape Growers Association, and local chambers of commerce. “Talk to other winery owners; bring yours in, and I’ll tell you what it’s missing,” says Mark Hedin of Two Rivers Vineyard.

With the drive for survival, comes innovation. With the right stroke of genius, you’ll be taking gold at the International Cold Climate Wine Competition, GLINTCAP (Great Lakes International Cider and Perry Competition), or a blue ribbon at next year’s State Fair in the professional class.

 

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