Yellow Hawk Cellar had its first vintage in 1998, releasing its inaugural wines two years later. The winery was the fourteenth in Walla Walla Valley, an area that now boasts over one hundred wineries. Yellow Hawk has been run out of Tim Sampson and Barbara Hetrick’s home south of downtown Walla Walla. “He’s the winemaker. I’m the wine taster,” Barbara Hetrick says. A downtown tasting room was subsequently added in 2008. Both the tasting room and the winery will be closing their doors next month.

While this is not the first such story to be written since the start of the recession and surely will not be the last, Yellow Hawk Cellar holds a special place in my heart. Their 2001 Sangiovese was one of the first Washington wines I fell in love with. I vividly recall discussing the wine with the proprietor of Wallingford’s City Cellars. I went home, had a glass, and soon returned to the store and bought multiple bottles, something I had not done for any wine previously. As time went on, I would open a bottle of the wine each year for Thanksgiving to celebrate the occasion, the wine, and its special place in my wine journey.

Over the years, Yellow Hawk has distinguished itself from other Washington wineries in a number of ways. First, the varieties they have focused on are different than most – Sangiovese, Barbera, and Muscat Canelli to name a few. Second, their price points have always been very reasonable, with most of the wines priced under $20. Third, their wines have always been restrained and food friendly. These were all deliberate decisions on the part of the winery, some of which also made things difficult. Consumers are often reluctant to try grape varieties they are unfamiliar with. Additionally, people often equate lower priced wines with lower quality. Finally, cocktail wines have been in vogue of late.

While Yellow Hawk has been different than many Washington wineries in these regards, its story is still a familiar one and is therefore a cautionary tale of the difficult times many state wineries are facing. Like most Washington wineries, the winery is small – 2,500 cases per year – and family run. And like many small wineries, the barriers to success are high and include high production costs, high distribution costs, onerous in-state regulations, and a tangle of state-by-state regulations.

The production cost numbers are relentless: labels $0.42 to $1.66 per bottle; foil $0.22 – $0.28; glass $0.80; cork $0.32-$0.50; and basic insurance – $5 for every case of wine ($0.42 per bottle), to name just a few. These costs are so high because all of the Yellow Hawk wines are made in limited quantities. This does not even include grapes and other associated costs. For wineries, unlike many other businesses, these costs cannot be offset until the wine is sold one to three years later.

The costs of being small make it particularly difficult to compete against large production wines from areas such as Australia, Argentina, Chile, and France where good value can be had under $15. Especially in a poor economy where consumers are increasingly focused on value, there is a tremendous amount of pressure. “People are always pressuring for the lowest price. I think we are expecting a Wal-Mart mentality at times,” Barbara Hetrick says.

Yellow Hawk could always have charged more for their wines, and some even encouraged them to. However, the Sampson and Hetrick wanted to make wine that people could enjoy in a casual way rather than only for special occasions.

For Yellow Hawk and other wineries, even once the wine is made, distribution is always an issue with pressure on price and promotion. Many nights are spent on the road – an increasing number since the economic downturn with wineries looking to sell larger amounts of wine out of state. For small wineries where the winemaker is also the bookkeeper, the marketer, and the traveling salesman, this is particularly difficult, especially when trying to balance running a winery with raising a family (not to mention many winemakers often work day jobs). Like many, over time the Sampson and Hetrick enjoyed the process of making wine more than the often arduous process of selling it.

Then there are the numerous regulatory hoops to jump through. When Sampson and Hetrick decided to open a tasting room in downtown Walla Walla, it took considerably longer than they ever imagined. There was, of course, the health department to deal with, the business licenses to acquire, and the like. Between this and having several potential locations fall through, the tasting room opened several years later than they wanted.

Similarly, working to sell wine out-of-state was onerous and filled with bureaucracy. Barbara Hetrick says, “I will ship two cases of wine to a particular state. I need to file three reports over two cases of wine! The economics of us staying in compliance with all of the various states is very difficult.” Even when there were no sales, reports still needed to be filed, costing time and money.

Factor all of this in and the numbers add up very quickly as does the emotional cost. It needs to be a labor of love. And for twelve years, that is what it has been for Yellow Hawk Cellar. While the winery has not lost money over the years, it has not made a great deal of money either. Tim Sampson has run the winery full time since 2000. Barbara Hetrick works as an optometrist with Tim essentially “donating his time” to make the wine.

The decision to close the winery was not an easy one or a sudden one. Barbara Hetrick says that they have been discussing the possibility for about eighteen months. Looking at the big picture, they saw expenses going up and profits remaining static. Finally, Sampson said early last year, “If we don’t make money in 2009, I don’t think we should continue.” Yellow Hawk took a year off buying grapes in 2009, with a few exceptions for critical contracts. They are one of a number of wineries to make such a decision.

Ironically, the winery has actually done well in the economic downturn as the Yellow Hawk Cellar wines are all positioned at price points that consumers are focused on. However, working for very little profit became increasingly difficult, especially as costs and competition mounted. With many Washington wineries barely holding on, Sampson and Hetrick made the decision that it would be better to get out early than get out late.

Comically, rumors abound about why the winery is closing with people speculating about the usual suspects – love and money. “I’ve heard such wonderful rumors,” Barbara Hetrick says. One of them was that she and Tim had split up. One of her patients went so far as to set up an appointment to comfort her.

Yellow Hawk Cellar’s last day open with be July 3rd with the following day a bittersweet Independence Day. Sampson and Hetrick plan to maintain their business license for the time being and sell down their remaining stock (there are, I should add, good deals to be had). While the decision to close the winery was a sad one, Hetrick says life goes on. “It’s like when you’ve had a loved one die, it’s always difficult. Many people have been upset when they heard we were closing. We’re grieving too, but we’ve been grieving for a long time. We’ve seen this coming. I want people to know that we’re fine.”