Ste. Michelle Wine Estates drops more wine grape acreage in Washington state

Winter-weathered wine grape canes are sheared from cordons and fall to pruners’ feet. 

The brittle twigs cascade in every direction, littering the stripes of bare soil or sod between grape rows, like the game pick-up sticks.

Right now, wine grape vineyard managers are sprinting to get all their pruning done, as recent warm weather means tender buds will soon be burgeoning. 

Shorn grape canes litter vineyards this time of year from recent pruning near the Columbia River in Washington state’s Columbia Basin. (Courtesy: Andy Plymale)

Hand pruning costs about $250 to $300 an acre, said Chris Larson, a viticulturist for Gilbert Fruit in the Columbia Basin. Some individual vineyards in Washington state and Oregon are hundreds of acres in size. Some are even in the thousands. 

But the cost of pruning could be an expense that some vineyard owners might not recoup this year with the harvest. 

Ste. Michelle Wine Estates — one of the largest wine producers in the U.S. — is holding a series of meetings with its growers across Washington. The producer is curtailing or breaking their wine grape growing contacts. 

The meetings may have started in late February. Additional meetings with growers were held last week. 

Ste. Michelle wouldn’t disclose the scope of the total cuts. In an email, Lynda Eller, a spokesperson for the company said, “Like many in the industry, we’ve had to make strategic adjustments to ensure the long-term sustainability of our business. We are continuing to work with various grower partners to bring our grape supply into balance, a necessary step for the health of both our business and the broader wine community.”

Ste. Michelle is owned by Sycamore Partners – a private equity group based in New York. It slashed grape contracts by more than 40% in 2023, but this year growers say the pruning of acres could turn even more bitter. 

It’s already either sold off or closed several major brands or facilities, like: Col Solare, 14 Hands and Columbia Crest. 

Ste. Michelle owned and contracted more than 30,000 acres a few years ago, now what remains isn’t clear because the wine commission said it hasn’t done a statewide acreage survey since 2017. But a recent estimate by the Washington Wine Commission, in partnership with the Washington Winegrowers Association and Washington Wine Institute, shows that there are about 50,000 acres of wine grapes in the state.    

Wine grapevines nestled by a tumbleweed are pruned and ready for the season near the Columbia River in Washington state. (Courtesy: Andy Plymale)

Grow woe 

But the parting terms or diminished contracts handed out by Ste. Michelle appear to be crushing to those growers who say they’ve invested heavily in Ste. Michelle’s success.

Many of the well-known and large Ste. Michelle growers wouldn’t talk on record because they say they’re bound by Ste. Michelle’s non-disclosure agreements, or NDAs.

What they would say is this: There are meetings happening, and those meetings are cutting grape contracts dramatically. It’s happening quickly, sometimes after they’ve already incurred expenses to manage the grapevines for this year. 

Tidal wave 

The amount of fruit to be unleashed from contracts has yet to be tallied by those outside Ste. Michelle this year. But it could amount to a tidal wave of fruit and wine into an industry that’s already experiencing a glut of unspoken-for juice. 

Adam Schulz is the founder of Incredible Bulk Wine Company, and he brokers more than a million gallons of wine each year from Washington and Oregon. He also deals with wine from California and abroad. Schulz said there’s likely 25 million gallons of unsold wine sitting in wineries’ tank farms – big cooled stainless steel tanks in large commercial buildings – across Washington state. 

That doesn’t include all the wine set to push out of the swelling buds on vines that might not have a customer this season. With a much diminished Ste. Michelle, “Washington’s market will become more of what Oregon’s has been,” Schulz said.

That means smaller, more boutique operations and mid-sized wineries.

“I don’t know that they’ve found the sales floor that they expect to build back from,” Shultz said. “Maybe this is their shortest trip to get to inventory balance.”

In fact, the Washington State Wine Commission’s budget is based off the money that it brings in every year from assessments. 

In the annual assessments, every grape is taxed twice — once with every ton of fruit harvested in the state, and with every bottle or in bulk wine sales.

In 2022, the commission brought in $6.1 million; in 2023, $5.3 million; and in 2024, they brought in $4.1 million. In 2025, $4.3 million is forecasted to come in. In 2026, the early forecast is $3.5 million. The 2026 number still needs final approval by the board of commissioners, but it could be high given Ste. Michelle’s recent contract cutbacks. Most of that stepdown is due to Ste. Michelle’s downsizing, according to industry leaders, who sit on the Washington Wine Commission’s board of commissioners. 

Losing acres from Ste. Michelle’s cuts could translate to diminished research and marketing for the entire industry. 

“We do not comment on our constituents’ business or operational decisions,” Heather Bradshaw, communications director with the Washington State Wine Commission, wrote in an email on Monday when asked about the Ste. Michelle cuts. “Ste. Michelle continues to be a leader in our industry, and we’ll continue to work together to grow the category of Washington wine.”  

Where to pivot?

Crops of all sorts are suffering across the Columbia Basin. There are low commodity prices. Apple prices are bobbing toward the bottom of the barrel, massive hop acres are being pulled out and there’s a slew of organic blueberries.  

So turning wine grapes into open ground isn’t that fresh of a pivot, viticulturist Larson said. 

“If you don’t have a contract or any place else to sell it, what are you going to do?” he said. “You can’t just let it sit there.”

Some are already turning to crops like carrots, on their once premium terroir ground.

“What will they turn to?” Lason said. “Apples — that could affect that market, flooding it. They’re not doing great, but they’re not as bad as grapes. They’re at least selling.”

It’s costly to put in grapes, around $20,000 an acre, and several years without any saleable fruit for new vineyards. And it’s costly to pull them out, as much as $1,500 an acre, said Trent Ball, with Yakima Valley College. He’s an economist who worked to help make a Northwest online calculator largely for the Washington Wine Growers Association.

And last year, thousands of acres of vineyards may have been pulled out or abandoned. Some industry experts at the Wine Vit growers’ seminar meeting in February recommended growers pull out another 10,000 acres this year. 

Additionally, most crops will require much more water than the grapes did, in a snow-fed thirsty basin looking at possible shortages of irrigation water in the Yakima Valley this year. 

If vineyard growers go bankrupt, or can’t afford vineyard maintenance without their contracts to pay for it, that could unleash something awful across Washington: Ghost vineyards. Like the ghost nets of the ocean that catch fish but have no men or women to tend them. 

Many acres in Washington were reportedly not even picked last year. Colleen Frei, who leads the Washington Winegrowers Association, said the industry has been talking about having a “right size for our market,” in order to have a thriving and sustainable industry. 

Problems also arise when vineyards aren’t sprayed and maintained. When that happens, vineyards could become harbors for grape mealybug, a vector for grape leafroll virus. There’s also bunch rot, powdery mildew and noxious weeds to worry about, said Alan Schreiber, a Ph.D. entomologist who owns an agricultural research firm in Eltopia, Washington. 

“If not managed, this could become a very serious problem for nearby vineyards and fields,” he said. “It would increase their pest management expenses.” 

Bare wine grapes and a wind machine show off their forms in the sunset. (Courtesy: Chris Larson)

Shoot from the hip

Overall, the Washington wine industry is wilting back from its vast, verdant acreage. 

It may be that wine isn’t that hip anymore, said Schulz. 

Baby Boomers are aging out of their wine prime. Younger generations have a lot of choices — many without the burden of having to know fancy foreign names or specific vineyards, he said. Schulz said many health concerns about alcohol may have chilled sales too.

Whites are selling pretty well, he said. But there’s a glut of Cabernet Sauvignon — good vines without a home.

Overall, Washington state might be moving into boutique status, Shultz said.  

For its part, Ste. Michelle officials say they are excited to be announcing two new premium bands later this spring, and to kick off their summer concert series. Eller said in an email: “Ste. Michelle Wine Estates has been a cornerstone of the Washington wine industry for generations and remains deeply committed to its long-term success. We are continuing to invest in the region, and the future of Washington wine.”

But for growers, wine grapes are just a month from pushing chartreuse buds and shoots into the daylight. Every day that passes is less time to react.