Perilous Times in Okanagan Wine
Keith Holman’s vision of a wine empire withered on the vine last November as his company, Holman Lang Wineries, went into receivership. It’s a cautionary tale for other vintners in the fast-growing Okanagan wine industry.
Keith Holman built the largest winery company on the Naramata benchlands, only to watch the global credit crunch drive his multi-million-dollar enterprise into the ground less than seven years after he planted his first grapevine.
Even though the experience cost him everything he had, Holman says he’d do it all again in a minute. “If I knew the result was going to be the same, I would probably do the same thing again because the things I’ve learned and the places I’ve been are worth more to me than any amount of money,” says Holman, founder of Holman Lang Wineries Ltd., which until recently owned seven of the 22 cottage wineries that dot the Naramata bench region of the Okanagan. “When you’ve been worth millions of dollars, you realize there’s only so much money you need. The rest is superfluous.”
After struggling to stay afloat for the better part of three years, Holman lost control of his company last November when the courts approved a receivership application from his primary lender, the Bank of Montreal. He sat wistfully on the sidelines last winter as the receiver, Vancouver-based Wolrige Mahon, auctioned off his properties piece by piece.
The package of assets included the home and two-hectare orchard where Holman and his wife, Lynn, have lived for 30 years, as well as the life savings they invested in the winery venture, including some 55 hectares of orchard that Holman bought and paid for during his previous 25-year career as tree-fruit farmer and 24 hectares of vineyard they purchased when they entered the winery business.
Wolrige Mahon placed an estimated value of $23 million on the assortment of properties, buildings, equipment and inventory, including seven different wineries, 42 hectares of prime farmland at various locations in the region and more than 100,000 litres of bulk wine.
The largest and most valuable asset up for grabs was Soaring Eagle Estate Winery, a 12-hectare vineyard with a million-dollar warehouse, wine shop and banquet facility overlooking Okanagan Lake. Also in the mix was Lang Vineyards, a 20-year-old winery with a solid international reputation located on 3.6 hectares of mature vineyard, as well as a handful of boutique labels that Holman started or purchased during his short-lived stint as a winery mogul: Spiller Estates, Stonehill, Mistral, K-Mountain and, lastly, Zero Balance, a name that would prove prophetic.
From a distance, the demise of Holman Lang Wineries could be taken as a sign of larger malaise beneath the storybook success of Naramata’s wine tourism industry. But up close, Holman’s story is more a cautionary tale about the perils of trying to grow too big too fast and a stark reminder of the tiny region’s fragile foothold in an increasingly competitive industry.
Holman Lang Wineries
Holman Lang Wineries began as an experiment in value-added tree-fruit marketing, when Holman was searching for creative ways to survive in the struggling orchard industry. In 2003 he and Lynn bought the historic Spiller’s Corner property on Upper Bench Road near Penticton, featuring the oldest fruit stand on the Naramata Bench, and turned the property into a fruit winery and bed and breakfast.
Less than a year later, convinced that the wine industry had reached a takeoff point, Holman decided to expand, launching Mistral Estate Winery and buying Stonehill Estate Winery, a three-hectare operation next door to the Spiller’s property.
Keith Holman and his wife, Lynn, at Spiller
Estates.
“When we built Spiller’s and experienced the walk-in customer aspect, I could see the huge potential of what’s happening on the bench with the wine industry,” says Holman. “I’m still a big believer that the wine industry is the future in the Okanagan. To me it’s the goose that laid the golden egg.”
In 2005, with the province’s economy booming, Holman embarked on what he describes as a six-year “infrastructure building” plan, starting with the acquisition of Lang Vineyards, coincidentally located on land that Lynn’s father farmed when he settled in the area in the early 1900s. With newly planted vineyards starting to bear fruit, Holman doubled Lang’s output from 5,000 to 11,000 cases a year and claims he “still didn’t have enough product.”
That led to the purchase of the Soaring Eagle property, a rundown tract of orchard land that Holman promptly converted to grapes. Opened in 2007, Soaring Eagle’s warehouse and production facilities were designed to handle 30,000 cases annually and to serve as the production hub for Holman’s growing empire.
With economic storm clouds gathering in 2008, Holman started two more wineries – K Mountain Vineyards, a boutique operation in Keremeos, and Zero Balance, next door to Soaring Eagle – bringing the total number of labels under the Holman Lang banner to seven. But almost before the ink was dry on those deals, the U.S. subprime mortgage crisis took hold and Holman’s lenders got cold feet.
“We happened to be out there searching for new loans when subprime hit and then all of a sudden there was nothing,” he says. “We lost our lenders right in the middle of our infrastructure rebuild and survived for three years with no help at all from the banks.”
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