Learnings from a Key North American

Winery
Millipore Food & Beverage Annual Meeting, July 2006, Molsheim
Corporate Overview
 World’s largest Winery* by both volume of wine produced and wine sales
 Estimated 20% WW market share
 World’s largest Brandy producer
 Supplier:
 Concentrate
 Crowns, Closures, Cases, Bottles, Labels
 Neutraceutical & Vitamins
 Crops (sweet potatoes, watermelons, grains, corn, etc)
 Purchases a significant quantity of grapes from CA, AZ farmers based on 10-15
year contracts
 Owns and operates its own sales, warehousing and distribution networks across
the world. Self-owned distributors in 49 of 50 US states (NOT MASS!).
 Real financials difficult to estimate
Brands
 Gallo of Sonoma  McWilliams  Rancho Zabaco
 Turning Leaf  Hanwood  MacMurray Ranch
 Turning Leaf  Bridlewood  Indigo Hills
Coastal Reserve  Louis M. Martini  Black Swan
 Carlo Rossi  Frei Brothers Reserve
 Whitehaven
 Peter Vella  Mirassou
 Boone’s Farm (Malt)  Redwood Creek  Red Bicyclette
 Bartles and Jaymes (Malt)  Gallo Family Lines  Cooperage by E&J Gallo
 Burlwood  Twin Valley  Night Train (Spirit)
 Ecco Domani  Single Vintage  Tott’s (Champagne)
 DaVinci  Sonoma Reserve  Livingston Cellars
 Marcelina Vineyards  Estate Series  Liberty Creek
 Napa Valley Vineyards  Anapamu
 Wild Vines
 Patriarch (Brandy)  Gossamer Bay
 Bella Sera
 E&J Brandy Lines (Brandy)  William Wycliff
 E&J Cask & Cream (Spirit)
 VSOP
 Barefoot Cellars
 Caramel Temptation (Spirit)  Thunderbird (Spirit)
 VS  Chocolate Temptation (Spirit)  Andre (Champagne)
 XO  Indigo Hills Blanc de Blancs
 Cognac (Champagne)
 White Brandy
 Winking Owl
 Ballatore (Champagne)
 Hornsby Draft & Ciders (Malt)
Operations Overview

 Modesto
 Central Coast, Northern CA
 Central Valley
 International Operations
Modesto Operations
 Bottling Department
 17 Bottling Production Lines
 16 Filtration Skids
 6 12-Round 30” Housings per Filtration Skid (3,456 10” elements)
 Two Identical Sets of one 0.5-0.65 um Prefilter housing followed by two 0.45 um final
filter housings in series (redundant final filtration)
 Flow rates range from 25 to 160 gpm
 Millipore filters (Bevigard M, Vitipore II Plus) used on high volume, high flow lines
 Pall Ultipor used on lower flow, not as utilized lines
 All production lines currently involved in 7 yr $100M Modesto renovation. Filtration
skids will be upgraded with more automation and proper sizing tied to flow rate and
historical performance
 Production Water Systems
 Filtered Hot and Cold CIP / Rinse Water
 8 12-Round 30” Housings
 24-hour recirculating 180 F (82 C) hot water line uses Vitipore II, much longer service
life than competitors, first Gallo process filters to switch over to Millipore.
Modesto Operations

 Brandy Dept.
 Three Brandy production lines, no membrane filtration
 Wine Making / Process Technology Dept.
 R&D / Winemaking specialty line, no membrane filtration
 Cellar Dept.
 RO Units
 8 Pall OenoFlow cross flow systems being installed to replace
existing pressure leaf (Est. $10+M project)
 No filtration at other Modesto facilities; Closures, Cases
& Labels, Glass
Central and Northern Coast Operations

 Sonoma
 One production line w/ microfiltration
 Demo-ing Pall Crossflow in 2005 as replacement to plate and
frame
 Martini
 One current production line w/ microfiltration
 Installation of second “show production line” underway
 Bridlewood and Other Boutique
 Mobile bottling – Many mobile bottlers use Millipore
Central Valley Operations

 Crush Facilities
 Livingston Winery
 Crushes 450,000 tons annually (~83.25 MG)
 Fresno Winery
 Crushes 650,000 tons annually (~120.25 MG)
 About to begin trialing Pall Crossflow as replacement to
12-16 pressure leaf filters
Central Valley Operations

 Other Facilities
 GVI – Vineyards, farming, waste treatment
 Pilot Winery – Full sized winery for specialty winemaking/R&D
 McCall Brandy – High end brandy facility
 Barefoot Cellars – New purchase, production being moved to
Modesto
 GrapeCo – New acquisition, supplement concentrate
 SJVC – Primary concentrate facility
Central Valley Operations

 Neutraceutical & Extraction Facilities

 Activin, antioxidant recovery from seeds/skins
 Wine production of “lesser quality”, high demand products with
insufficient vineyard planting (i.e. Pinot Noir, White Zinfandel)
through extraction techniques (also to supplement low quality high
volume common white wines)
 Tartaric Acid plant located at Livingston
International Operations
 Partnerships with International Wineries
 Some R&D, Engineering, Winemaking Support
 Products are Marketed, Sold, Distributed as Gallo Products
 Some are bottled in Modesto, some bottled at home winery
 Italy
 Ecco Domani
 DaVinci
 Bella Sera
 France
 Red Bicyclette
 Australia
 Black Swan
 McWilliams / Hanwood
 New Zealand
 Whitehaven
 Chile
 Joint wine-making with one, future plans not announced
Process Flow

Initial Blending
&
Fermentation Centrifuge
Stabilization

Final Blending & Rough DE

Stabilization Filtration
(or aging if high end) (Skip if high end)

Polish DE Filtration
Microfiltration
(Plate & Frame
& Bottling
Pad if high end)
Process Flow
Detailed Modesto Operations
 Filtration Skid Sanitation
 Every product change requires changing to second filtration set.
 Old units are blown dry with N2, cold rinsed, hot water back-flushed, cold water
rinsed, integrity tested and sealed (a filter set could see 7-12 per week)
 Certain product changes involve hot or cold water rinses of filler -- water
sent through new filter set
 Full hot water sanitation (forward direction) performed on start-up, shut
down of line, periodic intervals for “sensitive” varietals
 Monthly 1% NaOH caustic treating of fillers and piping
 Housings are bypassed
 Tri-monthly caustic treating of lines, fillers, housings
 Filters are removed
 All water is 0.45 um filtered, with ClO2 added at 50 ppm
 ClO2 tested as compatible with Durapore
 Housings are sometimes filled with Divosan (used to use Oxonia) for
weekend shut down
Detailed Modesto Operations

 Plugged Housings
 Units plug and second set is immediately put in-line
 Less than 5 minutes back in production
 Plugged units are N2 blown dry, cold water rinsed, hot water back-
flushed, cold water rinsed, integrity tested and sealed
 Filters are regenerated and re-used until (1) housing fails IT or (2)
pluggage occurs after < 2 hrs of production on a set w/o being
obviously faulty wine (typically the latter)
 Product Issues
 Difficult to filter products run through both sets of units in parallel to
reduce per filter flowrate, throughput (ex. Hornsby, Sangria)
 Most commonly plugged product is Champagne
 Flavored wine (i.e. Wild Vines – not wine coolers), difficult to filter
Detailed Modesto Operations

 Filtration Considerations
 All points in process have reclaim; manage which areas are
re-combined, refiltered at microfiltration skid, sent back to
tank farm
 ClO2 has some flavor concerns with wine coolers
 Citric Acid rinse used to mitigate
 Pumps, filler feed valve radio controlled to filler operation to
control flow rates and water hammer
 End of tanks closely monitored; no N2 blanketing leads to
increased dissolved O2, plugging due to microbial growth &
surface films
Detailed Modesto Operations

 Filtration Considerations Cont…

 Perform DE filtration (clarification) at coldest possible temperature --
cooling during final filtration can cause precipitates
 Monitor filler overflow -- refiltration can lead to significantly lower
“final” throughputs
 Frequently vent housings, particularly on carbonated products
 Avoid product topping off or mixing after DE or rough filtration. Even
mixing same wine types & vintage can lead to interactions and
create precipitates
 Wine makers have 0.65 um membrane available for high end
products. No rule for selection, wine maker decision. Estimate 1%
of bottling runs use 0.65 um.
Detailed Modesto Operations

 In-Line Blending
 Move away from large scale (600K) tank blending of malt-
based wine coolers
 Combine feed streams just prior to filtration skid and
carbonate
 Dry flavors added to RO water then mixed with malt alcohol, liquid
flavors, carbonated, SO2 added, filtered and cloud added
 Preliminary tests showed no effect on filterability
Future Operational Plans

 Family has Expressed Desire to Build Winery of the

Future
 Combine Central Valley facilities
 Current interest centered around R&D, high technology
winemaking not economically feasible given location and
existing capital constraints (have list of technologies)
Future Operational Plans

 Many Renovation & Expansion Projects Underway

 Ultra Low Cost Component Wine-making Initiatives
 Use technology to beat out “2 buck chuck” competitors
 Water + recovered grape alcohol + pomace extracted
flavor & aroma compounds = wine targeted at 30-50%
production costs of current bulk jug products
Future of Products

 Ultra-low cost wines

 Mid/High end range less common varietals
 Increased US focus on “marketed” foreign wines
 Malt wine cooler & wine based beverage sales have flat-lined in US; still
strong in South America, Asia
 Dessert wine (port, sherry) sales continue long time decreasing trend
 Fight off pressures from China
 25 % increase in Chinese wine production & winery capacity each
year for past 4 years
 Current products not considered acceptable to US tastes
 Low cost grape alcohol products
 US regulations state alcohol used in wine, wine based spirits, brandy must
originate from grape fermentation; leads to Gallo dominance in these markets
Questions?