SE ARIZONA WINE AND THE ROLE OF MONEY

If you think I’m here to call the influence of money in the Arizona (AZ) wine industry evil, you’re going to be disappointed. Running a successful vineyard takes a lot of money. There will always be a number of small “Mom & Pop” vineyards that simply can’t hang in there. The financial risks and costs, particularly in the early years, are huge.

Money Isn’t the Villain

Let’s go over a few of those costs:

1. The cost of the land itself.
Land that was purchased 30–40 years ago when the AZ wine industry was in its infancy would have been so much less than land purchased recently. Also, you need the right soil. So now you need to hire professionals to analyze the soil for the “right” blend.

2. The grapes themselves.
You need to pick the correct varietals for the soil and climate. In SE AZ that would lean towards Rhone and Spanish varietals. Also, today many owners like to graft clones onto their plants to produce a superior grape. This takes even more money.

3. Preparation of the soil.
This includes use of organic nutrients if needed and installing a possible drip irrigation system.

4. Labor costs.
Since the grapes won’t harvest and process themselves, we’ve just added more cost.

5. Aging infrastructure.
The need for quality barrels to age the red wine and metal containers for whites.

6. Bottling and shipping costs.

Why Scale Matters in the Wine Business

These fixed costs affect every vineyard, large or small, but obviously have a much larger effect on smaller wineries. If you’re a small winery, you need to bottle and sell every vintage you produce. That cash flow is very important to stay in business.

But not every vintage is superior or even just good. Some years are not up to par. Some larger wineries on the West Coast can afford to dump an inferior vintage or sell it to another winery at a discount. Some of these large vineyards make so much wine they can comfortably sell excess, but still superior vintages, to other labels.

Trust me, Costco does not own and operate Kirkland vineyards around the world. They buy quality excess wine from quality vineyards. These large, quality vineyards want to maintain their reputation with us wine drinkers so we keep coming back to buy more.

But this is not a policy decision smaller AZ wineries can make. They need that income from each annual production, and that can lead to inferior wine being sold under their label. And I can tell you that us wine drinkers have long memories of consuming bad wine. I myself had this experience over ten years ago with a certain label which I won’t mention. I dumped the rest of the wine into the sink.

Now, I’ve been told by others that that vineyard is now producing a good wine, but no thanks — I’m still staying away.

Three Southeast Arizona Vineyards Getting It Right

So, let’s move on and do a quick review of three SE AZ vineyards that are producing award-winning quality wines. We’ll start with the youngest to the oldest. Obviously, the older two vineyards have a major advantage in that those fixed costs we discussed would have been much lower when they started.

Los Milics Vineyard

Started in 2018 by Pavle Milic and Mo Garfinkle. Milic has a heavy background in the restaurant industry in locations in New York, Napa Valley, and Arizona. He currently is associated with the FnB Restaurant in Scottsdale. Mo has a much stronger business background, so he brings that ability to the partnership.

Los Milics has three AZ wine awards in its short history and has been awarded as one of the top five tasting rooms in the US, and in 2024 was rated the 2nd best tasting room in the US. Because Los Milics is privately owned, revenue numbers are hard to come by, but the estimate for revenue is $400,000+. Currently, Los Milics has roughly 20 acres of grapes and two tasting rooms — one at the vineyard and another in Scottsdale.

Dos Cabezas Wine Works

The original winery started in 1995 and was purchased by the current owners, Todd and Kelly Bostock, in 2006. Dos Cabezas has two vineyards with anywhere from 40–52 acres under cultivation.

They have earned multiple AZ wine awards and a number of wines that have obtained 90+ point ratings from wine reviewers. Dos Cabezas has one of the larger staffs among SE AZ wineries. Their tasting room is located in Sonoita, AZ. Revenue is not published, but some estimates have it at $5,000,000+.

Callaghan Vineyards

Started in 1990, Callaghan Vineyards focuses primarily on Rhone and Spanish varietals. The owner, Kent Callaghan, is an Arizona native. The Callaghan label has won numerous awards, including eight Double Gold awards in California tasting events. The 2016 Caitlin wine obtained a 98-point rating, and Callaghan wines have been served at the White House four times.

They have roughly 25 acres of grapes. Revenue is an estimate, but most sources put it at over $1,000,000 annually. The Callaghan Vineyards tasting room is located in Elgin, AZ.

Looking Ahead

So, that’s a quick review of the monetary issues facing the vineyards and three out of many vineyards in SE AZ. Later this month, a group — including myself — will be visiting these three vineyards and tasting their wines. I’m very much looking forward to that and will return with tasting notes in the next blog.

Have a great day and keep drinking and enjoying Arizona wine!