When Dan and Olivia Sullivan decided to enter the world of wine a few years ago, they considered every corner of the globe.

When Dan and Olivia Sullivan decided to enter the world of wine a few years ago, they considered every corner of the globe.

The Texans then narrowed their search to the West Coast and ultimately settled on the Rogue Valley.

"We felt this was the best combination of potential for making really fine wine with lower cost of entry," said Dan Sullivan, a former Symantec technology salesman and now a consultant in the field. "Southern Oregon's wine industry is still in a growth phase without bigger, mature and more expensive players. We felt we could build a business and reputation and not be drowned out by huge players already there."

The Sullivans connected with winemaker Linda Donovan — who relocated here in 2000 from California's Sonoma County — in early 2006 and bottled their first Domaine Paradox in 2007. The partnership, which followed in 2008, has led to the development of Pallet Wine Co., Southern Oregon's first exclusively custom-crush winery.

A custom-crush winery creates, stores, bottles and labels wines for grape growers who typically are not large enough or well-financed enough to have their own full-blown operation. While the growers avoid expenses on the end of the process, the custom crush business saves on the front end.

"The path we're taking is quite a bit faster than waiting three or four years for grapes to grow and costs significantly less," Sullivan said.

Neither atop an idyllic knoll, nor clinging to the edge of a picturesque ravine, Pallet Wine Co. is instead located in a historic warehouse along the railroad tracks in downtown Medford.

The Sullivans and Donovan are converting the 21,000-square-foot Cooley-Neff Building at 340 N. Fir St. into a winery that could eventually serve as many as 30 clients.

"The number isn't so important as the volume," said Donovan, whose personal label was launched in 2005. "But with the clients we've signed on with, our growth potential is to be full within the next year."

Barrels of the winemaker's Donovan brand and Domaine Paradox were transferred to the site Friday and three or four employees will be brought in during harvest. A wine tasting room known the Side Door will open off Third Street next year.

"We're dedicated to making wine for other people and not dedicated to our own brand," said Dan Sullivan, the managing partner. "Our customers are our business, not a sideline to our business. A lot of the bigger wineries offer custom crush, but their ability to offer custom crush services is shrinking as their own brands grow."

The building, placed on the National Historic Register in 2007, is owned by Asher and Avara Yaron. Built in 1924, and designed by the builders of the Craterian Ginger Rogers Theater, the building once was a warehouse for Sherm's Thunderbird supermarket and then donated to Rogue Valley Medical Center Foundation. The Yarons acquired the property for $440,000 in 2006 and hoped to attract clients wanting to set up shop near the yet-to-be-realized Commons project downtown.

Tom Hammond of Southern Oregon Brewing Co. took a look and Medford Food Co-op gave it a once-over, but it wasn't until Pallet Wine's owners came along that someone saw the possibilities.

"There were a couple of issues they faced," Asher Yaron says. "There's a downstairs, a basement and upstairs. There was no access to the basement except through a hole with a lift in it. They figured out a way to use the basement for storage and turn the upstairs into a tasting room and laboratory."

Whether it's under the urban-renewal, trend-setter or opportunist heading, Pallet Wine Co. brings something new to a part of town hence cluttered with corrugated pipes, automobile storage and plumbing fixtures.

Although the paved part of Evergreen Way ends a couple of hundred feet to the south, the winery is within a three-minute walk of Red Rock Italian Eatery and Porters.

The urban movement is gathering momentum in the wine world, Donovan said, noting such an establishment as close as Salem.

Dan Sullivan has been in the technology sales field and admittedly wants to make a gradual transition.

"Custom crush is basically like being an outsourcer for technology," Sullivan said. "Data clients have raised floors, big network connections, big servers and large amount of data storage. Here, instead of computing equipment, you have de-stemmers, a wine press, fermentation tanks and bottling lines."

He anticipates peak production of 25,000 cases annually, making wine for clients in the range of 5,000 to 7,000 cases per year down to a couple of barrels. The tank capacity will start at about 36,000 gallons with a barrel room capacity of about 1,000 barrels.

It will be another year before Sullivan and his family relocate from the Dallas-Fort Worth area. Nonetheless, he expects soon to begin promoting Oregon and Rogue Valley wines in Texas as well and states east of the Mississippi River.

"Rogue Valley wineries could sell most of their wine in and around Medford when they first started and then maybe into Portland and Northern California," Sullivan said. "But the region's ability to absorb all that wine is pretty quickly crossing the line. Oregon has a great reputation, but it's going to require some marketing and shoe leather to promote Oregon and Rogue Valley wines in other markets."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.