Dry yeast should be stored at below 10°C; it is best kept in a refrigerator.

To restore their function yeast cells must re-absorb all of their cellular water. This step of rehydration is perhaps the most critical phase in using dry yeast cultures. Only proper rehydration can ensure healthy cells which retain good fermentation characteristics.
When dry yeast comes into contact with water or aqueous solutions the cells rehydrate, absorbing the needed water within seconds. If rehydration in not properly carried out, the cell can leak important cellular compounds through the membrane, which is extremely permeable at the time of rehydration. As a consequence the yeast will lose viability and the remaining populations will be unable to initiate a rapid fermentation. Difficulty will also be experienced in dispersing the yeast as the granules will clump and stick together. 

For proper dry yeast rehydration and inoculation:-

Several hours should be allowed between adding SO2 to the must and adding the rehydrated yeast.
Adding rehydrated yeast at the same time as SO2 would result in loss of yeast viability if inadequate mixing of SO2 occurs, as the yeast will also be susceptible to SO2. Molecular SO2 is the active chemical which inactivates the microbial cells, and concentration increases with decreasing pH. Molecular SO2 inactivates wild yeast or bacteria within minutes of addition to the must, and then becomes slowly bound to juice components over a period of hours.

The container in which the yeast is rehydrated should be of a size so that the liquid is shallow; the large top surface will then allow it to cool at the correct rate.

Rehydration:
Some yeast producers say: it is preferable to rehydrate in pure water rather than in must.
The must does contain sugar which improves dispersion; however, it may contain SO2 or residual fungicides which could be lethal during the rehydration stage. Once rehydrated the cells can resist SO2 and low concentrations of fungicides, but not during water uptake.

Other yeast producers say: rehydration in plain water would lead to osmotic shock, resulting in high cell mortality, so a 1:1 water:must(wine) mix should be used. I normally use this method and have never had a stuck fermentation.

Quantity of yeast to use:
Recommendations vary but to ensure a short lag time and rapid onset of fermentation, the yeast cell density in the must at inoculation should be equal to or greater than 5 million viable cells/ml; such a density would normally be obtained by using 25 grams of rehydrated dry yeast for each 100 litres of must.
A higher yeast density should be used if the grapes are in poor condition.
Cloudy must at 10 °C, high in SO2, may need 50 grams per 100 litres.
A clean must at 15 to 20 °C may need only 10 to 15 grams per 100 litres.
Low inoculation can result in a long lag phase, and can allow natural yeasts to multiply.
High inoculation has no detriment other than higher cost.

The volume of water to use:
Should be 5 to 10 times the weight of dry yeast to be rehydrated.
For example, with 25 grams of dry yeast the correct amount of water is 125 to 250 ml.

Rehydrate in warm water at 35 to 40 °C (not above 43 °C, or below 35 °C).
Do not add yeast to cold water and then heat up.
Addition of dry yeast to cool water or must can decrease cell viability by as much as 60%.

Add the yeast slowly and evenly to the water, not the reverse.
Sprinkle it gradually on the liquid surface, stirring all the time until a smooth creamy consistency is obtained.
Adding water to yeast can cause uneven rehydration and clumping of the granules.

Allow the yeast to sit in the warm water for 5 minutes before stirring.

The yeast should not remain longer than 20 minutes in water.
Longer periods will reduce the activity of the cells.
After 15 minutes a certain amount of foam should have formed on the surface, the yeast is now ready, and then:-

The rehydrated yeast solution should be cooled slowly to a temperature of not more than 8 °C above the temperature of the must to be inoculated.
It is important not to add the rehydrated yeast to cold must. It has been documented that a sudden change in temperature of 10 °C or greater can cause petite mutants which exhibit a greatly reduced rate of fermentation. This also can cause physiological changes in the yeast such as the accumulation of hydrogen sulphide.

Inoculation of must for white wine:
Current technology for making white wine often involves clarification of juice by filtration or centrifuging at low temperatures. Juice might also be stored at low temperature for considerable time before inoculation with yeast starter culture, followed by fermentation at low temperature. Rehydrated yeast should not be added to must at temperatures lower than 15 °C (certainly not below 10 °C) if good fermentation characteristics are to be retained. While the rate of fermentation by actively growing yeast can be controlled by decreasing or raising the temperature, yeast cannot tolerate temperature shock.

Inoculation of must for red wine:
Due to the presence of skins, must for red wine will contain a significant population of indigenous yeast of many genera, including species of spoilage yeast. The population of yeast in the must will be directly related to the quality of the grapes, the temperature of the must, the use of SO2, and the time the must is held before inoculation. The time of inoculation of red mash depends upon the rate of crushing and filling of the fermenter and whether the must is cool.
Often a fermenter will take longer than half a day to fill. In these cases, the yeast inoculum can be added to a partially filled fermenter as long as the must temperature is above 15°C (certainly not below 10 °C). The total amount of rehydrated yeast required to give 5 million viable cells/ml for the filled fermenter can be added at one addition. Alternatively, rehydrated yeast can be added in several lots during filling of the fermenter.

Do not use an already fermenting must to inoculate a new must.
A properly rehydrated culture should be used.

Phases of yeast growth observed in fermentation:-
1. Lag phase: The cells prepare for budding, a short lag phase which depends on proper reconstitution of dried yeast and on a high cell density.
2. Accelerated phase: The yeast cells begin to bud and divide; the sugar is degraded and mainly directed to production of cell biomass and not ethanol.
3. Exponential growth: The cell population doubles in equal time intervals. This period can be restricted under wine making conditions; it is limited by low temperatures, high sugar concentration, low pH and low concentration of nutrients.
4. Linear growth: Exponential growth changes to show a linear rate of increase in cell numbers with time, with the greater proportion of sugar being degraded to ethanol.  The rate of yeast growth during this stage is influenced by the availability of amino acids or ammonium ions to the cell, and fermentation temperature. The major part of yeast growth occurs during this stage.
5. Slow down: The cell population approaches maximum cell density.
6. Stationary phase: Cell growth and budding stops; however, growth nutrients are still required in small amounts for the yeast cells to maintain and repair cellular components.
A deficiency of amino acids or ammonium ion can result in the accumulation of hydrogen sulphide.  The main function of the yeast population at this stage is to convert sugar to alcohol; more than 50 % of the initial quantity of sugar can still be present in the must.
The rate of sugar fermentation depends upon the yeast strain, cell density, temperature and ethanol tolerance.  The 'survival factors' accumulated in the starter culture during its preparation will not be replenished in the total population.  Concentration of some of these cellular components will influence the rate at which sugar can be converted to ethanol and the ability of the yeast to remain viable.
7. Decline: Death phase; viable cell population and rate of sugar fermentation decreases.
It is important for the winemaker to manage the fermentation through steps 1 to 4 as efficiently as possible, particularly in balancing the benefits of cool temperature fermentation with the need to attain a yeast population capable of completing fermentation in a reasonable time without causing sluggish or stuck fermentations.

Notes:-

Whilst addition of water to wine is not permitted under EEC regulations article 15 of issue 822, of the 1987 allows for the dissolving of certain permitted additives if it is an essential condition of their use. Annex 6 of the same issue lists certain additives which includes yeast. From this article it would seem that the rehydration of dried wine yeast in water is an essential condition of it's use. However, some manufacturers of dried wine yeasts available in England recommend that the yeast can be added directly to must and some even recommend this in preference to rehydration and temperature acclimatization in water.

When yeast is properly rehydrated, as outlined in this article, then fermentation will start with a minimal lag period and will run to dryness with no problems. If dried yeast is added directly to must the amount needed is considerably greater, the onset of fermentation is late, and in some small scale trials hydrogen sulphide has been produced in the later part of fermentation.

It is advisable to add the biological yeast activator and yeast nutrient Erbsloh VitaDrive in the same amount as the yeast to the rehydrated yeast after about 10 minutes time. VitaDrive strenghtens the yeast at an early stage providing it with important amino acids, microelements and vitamins, promotes the proliferation rate, increases cell activity and improves resistance to better overcome stress situations. Thus the yeast ferments through completely, a tendency towards sulphide off-flavours is reduced and the development of clean aromas is successfully advanced and supported.