2017 Wine Issue: Ste. Michelle Vineyards was created in 1967, and two years later, the California Wine Bill was passed.
HALF A CENTURY AGO, there wasn’t much of a Washington wine industry — just a dozen wineries, making primarily sweet, fortified wine. And there were laws blocking all out-of-state wines. By today’s standards, it was a bleak landscape.
Two events changed everything, molding the industry into what it could become. Without both, it is unlikely we would have the abundance of wineries and vineyards we enjoy today, along with the quality-of-life amenities that come with a thriving wine industry (like a robust food culture).
• Five decades ago, a company called American Wine Growers had the vision to create a new brand called Ste. Michelle Vineyards, and hired Napa Valley’s most famous winemaker as a consultant.
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• Two years later, the Washington Legislature passed what has become known as the California Wine Bill. House Bill 100 allowed for the reawakened California wine industry to enter the lucrative Seattle market. This essentially wiped out the fragile Washington wine industry, which had been struggling to exist since Prohibition’s repeal in 1933. Instead of a curse, the California Wine Bill turned out to be a blessing. It wiped the slate clean and gave the state’s wine industry a do-over, a chance to get it right. It also provided something for Washington winemakers to compare and compete against, and inspired them to reach for something that would shape what we have today: the second-largest wine-producing state in the country, and an industry that proudly stands as a member of the global wine scene.
IN 1919, THE WASHINGTON STATE Legislature unanimously ratified the 18th Amendment, known as Prohibition. On Jan. 16, 1920, the dark shadow of “the great experiment” became the law of the land.
When Prohibition took over the nation, there were no Washington wineries in operation, according to “The Wine Project,” a 1997 book by Ron Irvine of Vashon Island and the definitive history of the state’s wine industry. That’s because Washington had instituted its own early version of Prohibition in 1918. Draconian laws passed by the state Legislature essentially shut down all production, importation and sale of alcohol statewide, shuttering the few wineries across the state that were trying to make a go of it. The Anti-Saloon League had been effective in reducing consumption of the devil’s drink.
At least temporarily.
A loophole in the federal Prohibition law allowed the production of up to 200 gallons of wine each year per household. That led to an explosion of interest in home winemaking. It helped vineyard operations in Mason County’s Grapeview and in the Yakima and Walla Walla areas survive. Railcars filled with grapes from California also began to arrive for those private barrels in basements.
By the time Prohibition ended, there was no Washington wine industry to speak of. Then the industry restarted in earnest, first with St. Charles Winery on Stretch Island in Mason County, followed by others — most important, the National Wine Co. (known as NAWICO) and Pommerelle.
A year after the repeal of Prohibition, the state Legislature passed the Steel Act, later known as the Washington Liquor Control Act. In essence, it set up protective laws that restricted wines made from out-of-state fruit to sales exclusively through the Washington State Liquor Control Board. Because the state could control pricing, this locked out third-party distributors and out-of-state wine producers from competing inside state borders.
It was still tough times for a wine lover. No Washington wineries were producing wines like they are now, with classic European wine-grape varieties. Back then, most Washington wines were made from other fruits — such as loganberries, apples or strawberries — or fortified with brandy, meaning they were sweet and high in alcohol. California was producing wines in this same style during the post-Prohibition era.
BY 1938, THE STATE’S No. 2 and No. 3 largest wineries — Pommerelle and NAWICO — merged to create American Wine Growers.
By 1942, there were 26 wineries operating in Washington, and a storm was brewing between Olympia and Sacramento. The booming California wine industry was pushing to enter Washington, even threatening to block Washington apples if California wine weren’t let into the state.
The folks at American Wine Growers recognized the change coming. In 1967, Howard Somers, whose family owned and operated St. Charles Winery, became a winemaker with American Wine Growers. That same year, Andre Tchelistcheff retired as the longtime winemaker of Beaulieu Vineyards in Napa Valley, considered America’s best winery. American Wine Growers hired him as a consulting winemaker, as talk of the looming California Wine Bill made them realize they needed to produce wines like California and Europe did.
An American Wine Growers director had a daughter studying in France, and she happened to visit Le Mont-Saint-Michel, an island commune and abbey near Normandy. As a result, a label called Ste. Michelle Vineyards was created in 1967. The first two wines released were 6,000 cases of cabernet sauvignon and pinot noir. The winemaking staff also played around with varieties such as riesling and sèmillon.
In 1969, state lawmakers began debating House Bill 100 for a second time, after an attempt in 1967 failed by one vote.
Walter Clore, who would later be known as the father of Washington wine, even traveled to Olympia from his home in the Yakima Valley to testify in favor of the California Wine Bill. It seemed a strange move for the wine-industry advocate, but historian Irvine believes Clore thought the competition from out-of-state wineries would force Washington wineries to improve their products by shifting from sweet, simple wines to more-serious offerings using European wine grapes.
When the bill passed in 1969, Washington was down to 12 wineries, and Napa Valley had 16.
By 1973, American Wine Growers was sold to an investment group, and the name changed to Ste. Michelle Vineyards. A year later, U.S. Tobacco Co., of Connecticut, bought the company.
Here lies the genesis of today’s modern Washington wine industry.
UST’s acquisition meant an infusion of cash and capital. By 1976, UST had built a French-style winery on the grounds of the old Hollywood Farms in Woodinville. With the manor as its showpiece, the company’s name became Chateau Ste. Michelle.
It can be argued that this would not have happened without the California Wine Bill.
“In hindsight, to say that someday we’d compete with the very best in the world, was very visionary and way ahead,” says Ted Baseler, CEO of Ste. Michelle Wine Estates, a company so dominant in Washington that it uses 2 out of every 3 wine grapes grown in the state.
The chateau was built for $6 million. In honor of Ste. Michelle’s 50th anniversary, the chateau recently reopened after an extensive remodel and renovation that cost $7 million.
Part of the lore of the original winery is that Jim Zorn — the Seahawks’ first quarterback — was on the construction crew. Apparently, he hadn’t received a huge signing bonus, so he worked construction to support his family.
“When the chateau opened in ’76, that was quite a leap of faith for the owners then to build a $6 million chateau in the hinterlands of King County and create the culture for wine tourism and fine-wine production before any of that existed, really, in Washington,” Baseler says. “Well, it turned out to be brilliant. And I’m not sure they recognized that at the time.”
BUT THE PASSING of the California Wine Bill meant there would be competition for Ste. Michelle. Ken Smith owned a Seattle distributing company called Birkenwald, and he recognized the opportunity in bringing in out-of-state wines. At the time, he sold refrigeration units to grocery stores, so adding wine to his business was a good fit.
In the meantime, Don Kragerud had gotten into wine sales after getting out of the military. The Portland native had an office in San Francisco and worked markets in Oregon and Alaska.
“I was the Northwest sales manager for United Vintners,” Kragerud says. “We had Italian Swiss Colony, Inglenook and Beaulieu Vineyards.”
Smith hired Kragerud soon after the California Wine Bill became law, and he set up shop in Seattle.
“So when the bill passed, we had the wines, put together the company and had it running,” Kragerud says. “I set up about 80 percent of all the wines being sold in the area. We were working with United Vintners and had the choice of the areas we wanted, so we chose King County, Everett, Tacoma and Spokane.”
One key issue that arose as more wines entered the marketplace was education. The people selling wine in grocery stores didn’t understand the product. So Kragerud became the state’s first wine educator, providing tastings and classes across the state.
“There were wine tastings, and we’d have the difference between all the wines, and how to market and set up displays,” he says. “At the beginning, we’d have to have these displays because it was the new thing on the block. … and show them how to set up wine sections, how to market, just all kinds of things we had to go through. How to cut cases to stack ’em. They just didn’t know.”
The consumer also wanted to know more about wine, so Kragerud created a cassette tape that explained the differences between grape varieties, and how to taste and enjoy wine. He packaged and sold it in the same grocery stores he was working with to sell wine.
“We sold thousands of copies of the tape,” he says.
After suffering a heart attack, Kragerud left the business, and started a company called Wine Spirits, which he eventually sold. Today, Kragerud, 82, is retired and living in Kitsap County.
WHILE THE COMPETITION from California and beyond temporarily hurt the Washington wine industry, it ultimately invigorated it, forcing companies such as Chateau Ste. Michelle to invest in better vineyards, winemakers and technology. Later, the company expanded, creating such brands as Columbia Crest, 14 Hands, Domaine Ste. Michelle and Northstar. Today, it makes more riesling than any winery on the planet.
Baseler has transformed the company since becoming CEO in 2000 — not by making more wine (though it makes dramatically more wine than it did then), but by forging international collaborations with companies such as Antinori (Italy), Torres (Spain), Loosen (Germany) and Nicolas Feuillatte (Champagne).
In a twist of history since that fateful House Bill 100, Chateau Ste. Michelle now imports and distributes wines from around the world, in addition to its own. It also owns several California brands, making Ste. Michelle Wine Estates a truly large, diversified and important global wine company. Its focus remains on Washington, and it has fueled growth in vineyard plantings, research and education, and in marketing Washington wine internationally.
It’s owned now by Altria, which purchased UST in 2009.
Today, Ste. Michelle is Washington wine’s guiding light, selling its wine in all 50 states and 100 countries.
Chateau Ste. Michelle’s humble beginnings were rooted in California’s push to get into Washington state, and it ended up helping to create and fuel one of the country’s most dynamic wine regions.