updated 2:54 PM UTC, Jul 28, 2018
Four entrepreneurs who created Washington wine industry
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The young entrepreneurs who bought the state's main winery with money they didn't really have then gave their wine a name that became the soul of what would eventually be a dramatically successful industry represent the little-known "rest of the story" of Washington wine.
Details of the story were recalled by two of those four entrepreneurs after they read last week Flynn's Harp, which focused on Ste. Michelle Wine Estates and the role its president and CEO, Ted Baseler, has played in presiding since 2001 over the growth and success of the company and its impact as leader of the Washington wine industry.
As detailed last week, the 1967 Washington Legislature had approved a bill to, for the first time, permit California and other quality wines to be sold on retail shelves alongside the basically fruity wines produced by the couple of wineries located in this state. At some point, the Washington wine industry would have to change to survive.
The four who emerged to save the wine industry became dramatically successful in various business sectors over the coming years. Wally Opdyke, Kirby Cramer, Don Nielsen and Mike Garvey came up with the money to buy American Wine Growers, a producer of mostly fruity wines with high alcohol content that Nielsen referred to jokingly as "skid road" wine.
Nielsen and Cramer, with Garvey and Opdyke as investors, had already formed a young company called Environmental Sciences in 1969 to take advantage of the need for high-quality rat cages for the pharmaceutical industry, becoming eventually the largest in that industry.
Then Opdyke, the only one who had much knowledge of or interest in wine, convinced the three friends to join in putting up the $100,000 necessary to buy the $3 million-revenue American Wine Growers, its winery and acreage.
Cramer recalled, in an interview this week, that the families who had owned AWG for years were convinced to sell the business for $3 million and the purchase took place after Cramer and Opdyke convinced Seattle First National Bank and an insurance company to each put $1.5 million with plant and acreage as collateral.
"We basically bought it on our good looks." Cramer chuckled, "but we thought it would be an interesting investment and Wally was a marketing genius, leading us to change the name to Ste. Michelle Vintners, start putting corks in the bottles, and started work on the chateau that is now the company's headquarters."
Meanwhile, knowing that creating quality red wine would take several years, Wally, as president of the company, guided growing and bottling of riesling, a white-grape with what Cramer referred to as a quick turnaround time.
In what Cramer described as "a marketing coup," Opdyke entered the Ste. Michelle riesling in a California wine competition and it took the gold medal.
"For a Washington wine to take the gold medal in a California competition in the early '70s was something no one could have imagined," Cramer said. "The gold medal made the Washington wine industry."
The legacy of that marketing coup is that today Ste. Michelle is the nation's leading producer of riesling.
Under Opdyke's leadership, the four put together a prospectus looking to raise $3 million to grow the company with more land, grape growing and production. Cramer recalls putting together an eye-catching prospectus cover that displayed a number of wine labels, including the new label for Ste. Michelle.
The four would be the first to concede that luck plays a huge role in success. But not the roll-the-dice kind, but rather where preparation meets opportunity. So it was with the four, over the years, prepared t seize opportunities that came their way.
Thus the prospectus, instead of landing in the hands of prospective investors, which Cramer admits now probably weren't many, the prospectus landed on the desk of a top executive at U.S. Tobacco, which was seeking to diversify at the time. Before long the deal had been struck that paid off the loans and left the entrepreneurs with $4 million in stock to share 18 months after their $100,000 investment.
"The dividends the year after the sale equaled my original investment," Nielsen quipped.
Having overseen dramatic growth for Environmental Sciences Corp, in 1972 they purchased Hazleton Laboratories from TRW and took the name of Hazleton, a contract laboratory that conducted toxicology testing. They took Hazleton public in 1977, had additional stock offerings in '78 and '80.
By 1982 Hazleton had become the largest independent biological testing company and life sciences laboratory in the United States, as well as the largest manufacturer of laboratory equipment in the world.
Garvey, who in 1996 launched a law firm that would become one of the most respected in the Northwest, and Opdyke were involved in the purchase of K2, which had been bought by Cummins Diesel from founder Bill Kirschner, who had bought it back. And the four also bought some 140 condos at a Colorado resort from Ralston Purina.
"It became the big thing in the early '70s for big corporations to think they should diversify and so they bought businesses they knew nothing about and eventually new leadership would ask 'what are we doing with this' and would sell it off for a cheap price," Nielsen observed. "Entrepreneurs looked for those and that's how we got into K2 and Colorado condos."
In 1987, Corning, Inc., purchased Hazleton but retained Nielsen as CEO for five years and when he retired in 1992, Hazleton had grown to $165 million in sales and employed 2,500 people in five countries on three continents.
For the past approximately three decades, Nielsen and Cramer have continued to guide companies and serve on numerous boards while Garvey proceeded to build Garvey Schubert and Barder into one of the region's most respected law firms. Opdyke stayed for some years at the helm of Ste. Michelle before becoming closely involved in a corporate role with U.S. Tobacco.
Cramer was named a few years ago as a laureate of the Puget Sound Business Hall of Fame. Nielsen was selected this week to join the Business Hall of Fame as a 2017 laureate and will be honored in May at the annual induction ceremonies.
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