The bountiful picnics that came with ownership of shares in California's Chalone Wine Group often held more attraction for investors than the far off prospect of a return on their money. The annual blowout was just one of a cornucopia of benefits that included discounts on purchases from Chalone and other wineries in the group, VIP tours and shareholder dinners.

You can do that sort of thing if you're large enough and your winery is located in la-la land. But how do you attract and satisfy investors if you're up in the winter icebox of remote northern New York State?

When Mike VonHeckler was putting together his proposal for Warm Lake Estate in Lockport, he worked off lists of wine enthusiasts who might take the plunge on a new winery in an undeveloped region. He also held out a dream that included a good return and an even better one if the winery were to be sold a few years down the line.

But mostly, he pushed a vision, his dream of a winery devoted to fine Pinot Noir, and he found 39 investor-partners to share that dream.

Warm Lake Estate, which produced 2,500 cases of Pinot Noir in 2004, sits on a unique site east of Niagara Falls, just a few miles from a Canadian wine region that has boomed in recent years. Just across the border in Ontario, there are more than 50 wineries, employing upwards of 7,000 people in wine- and tourism-related businesses.

"On the American side," VonHeckler said, "there is virtually no wine industry at all." The Canadian side is best known for ice wine produced in its sub-zero temperatures, but it can also produce premium vinifera, specifically varieties that can be nursed through a rough winter,

To protect his tender plants, VonHeckler trains the vines close to the ground and buries them in two feet of dirt. It's a technique once employed in the Ukraine by vineyard pioneer Dr. Konstantin Frank, who modified it when he founded his own winery in New York state. In his vineyards along Keuka Lake today, dirt is mounded up for about a foot, just high enough to protect the graft union and basal buds.

Full-scale international recognition of the Niagara Peninsula area's potential came in 2000 when Burgundy-based Boisset, which has been acquiring many American properties, initiated a joint venture with Vincor of Canada, the fourth largest wine company in North America. The venture launched a Frank Gehry-designed facility, specializing in Pinot Noir, while putting 156 acres under cultivation in southern Ontario, near the hamlet of Jordan.

Jean Claude Boisset joined executives of both firms at a preview of the first vintage of Clos Jordanne, in late January, prior to its initial release next autumn. VonHeckler used Clos Jordanne as a selling point, pointing out that Boisset, the largest wine producer in France, searched the globe from Argentina to New Zealand and ultimately defined the Niagara Escarpment as the most perfect piece of land for soil analysis, exposure and climatic similarity to Burgundy.

Physical Attributes of Warm Lake
What Warm Lake, with 45 acres and a target of 10,000 cases annually, shares with its Canadian cousins is that slash of land called the Niagara Escarpment, which runs from Lockport, New York north and east to Vineland, Ontario. The climate, with an assist from Lake Ontario, is similar to that of Burgundy, and VonHeckler cites the British wine authority Jancis Robinson, who wrote that "given the right sites, the Niagara area should produce wines that emulate Volnay."

The escarpment is a steep northward slope, with dramatically towering bluffs. Its elevation protects the vineyards around the Niagara Peninsula, encouraging winds that dissipate fog and minimize frost damage. Heat coming off Lake Ontario in the fall is trapped by the bluffs and reflected back to the lands nearby.

The protected area has been called The Banana Belt, not that it could produce bananas but because orchards once flourished in its hospitable surroundings. At the beginning of the 20th century, land sold for $1,000 an acre. That is the approximate price today, but it is on an upward swing.

The Creation of a Winery
In August of 1999, VonHeckler, an about-to-retire engineer and wine lover who was also pursuing a Master of Wine degree, purchased 18 acres of escarpment land. While still working fulltime at Lockheed Martin, he ordered 2,300 Dijon-Clone Pinot Noir vines for a two-acre test planting. The next year, Lockheed Martin began cutting back and he was faced with a new phase of life. "Suddenly," he recalled, "a full-time business, not a two-acre experimental vineyard, became necessary."

Close friends helped with a $5,000 investment in the vineyard and winery, the starting point for Warm Lake Estate, LLC. A limited liability corporation formed in the summer of 2000, followed soon after by an offering to raise $640,000 to $740,000. VonHeckler proudly states that his enthusiasm was a key factor in convincing his 39 investor-partners to join in his quest to create world-class Pinot Noir on the Niagara Escarpment. Warm Lake's 45 acres of Pinot Noir make it the largest such vineyard in the state.

As manager, VonHeckler has complete control but consults frequently with his board of directors, who have been selected for the business experience and acumen they bring to the table. Directors include a venture capital specialist, a corporate finance officer and a managing partner for a medical group. All are wine enthusiasts, and all of his partners, according to VonHeckler, are excited about the opportunity and their role in bringing a new industry to a small community.

Shares in Warm Lake Estate cost $10,000 a unit but are also offered in quarter-units at $2,500. An executive summary prepared by VonHeckler notes that the industry is "conducive to a strategy of ‘roll-up' of smaller wineries into broader beverage companies," and suggested that Warm Lake Estate will be well positioned for that sort of acquisition. This prospect, VonHeckler said, makes the investment more interesting to investors who might not otherwise be able to sell their holdings on the open market.

To finance operations during the initial growth period, VonHeckler took advantage of New York laws allowing him to sell wines from other producers and was, at one time, showing 65 different labels from Empire State wineries at his facility. His cellar store brought in $360,000 in sales in its first two years, but he is phasing out sales from other producers in favor of his own. "We are the destination, and people come for our wines," he observed.

Forging a Path to Distribution
While still seeking broader distribution, he has opened wholesale accounts with 50 New York restaurants and wine shops. As production increases toward an eventual maximum of 10,000 cases, Warm Lake has been producing an estate-grown Niagara Escarpment Pinot Noir, a Vin Doux Natural and two VonHeckler "negociant" wines from other sources.

Most of the 2,500 cases from 2004 were sold as futures long before harvest, many to partners at a pre-release price of $23.99 a bottle. The remainder will be released this fall, at $36 a bottle, and sales of 2005 futures at a first offering price of $25.99 began last year.

Although his cellar store will no longer sell other brands, he will continue offering approximately 500 cases of non-estate Pinot Noir at approximately $20 a bottle. Two disastrous Eastern winters, unfortunately, have drastically reduced sources for that part of the business.

For the past two years, VonHeckler has also been campaigning for a Niagara Escarpment AVA. His petition before the Alcohol, Tobacco and Tax Trade Bureau, the former BATF, may be published in the federal register in the next few months. "We are," he lamented, "on a long list of applicants."

There are five active wineries in the proposed Niagara Escarpment region, with another five in development. The recent expansion of the Niagara Wine Trail has helped tourism in the area, whose principal attraction is Niagara Falls. wbm

Mort Hochstein is a wine journalist who has written for many of the nation’s leading consumer and trade wine publications.