Things You Should Know Before Taking the Leap into Winery or Vineyard Ownership
Rule One: Passion and Commitment are definitely required for a successful winery or vineyard business.
The odds of creating a profitable vineyard or winery are very slim despite the fact that the US wine industry has experienced continuous growth since 1994 and is currently a $70.5 billion dollar market. According to experts, owning and operating a winery is capitally intensive with no formula for success other than finding the right place, terroir, and vineyard and giving it the needed years before the first commercially viable harvest can occur. And to be really successful, you have to be incredibly committed and passionate about what you produce.
Rule Two: Full immersion into the industry is required.
And not just in the industry but in the region you will be operating in. Have a clear idea of what you want to do with the property you may be considering. Do you want to sell fruit and have a nice home on a vineyard or do you was to produce wine? Selling grapes is usually more accessible financially but often does not cover the costs of operating a vineyard. However, growing and bottling wine offers better returns but requires larger capital expenditures upfront for equipment, facilities and staff. Both options require years of investment before you see any profit. Understand the economics of a vineyard and how to make the best use of it by surrounding yourself with people that can guide you, such as a viticulturist, a winemaker and a financial advisor who is knowledgeable in the wine industry.
Rule Three: Take a Real Estate Reality Check.
A commercially viable vineyard should be at least 10 acres. Research the pricing per acre in the areas you are interested in. For example, offerings in Napa will typically be higher priced than offerings in Sonoma or Mendocino Counties due to reputation and demand. Additionally, you will need to test for viruses, perform soil analyses, and know the weather in the areas you are considering. And it goes without saying that working with an experienced real estate agent who specializes in the wine industry is key.
Rule Four: Know the Costs of Doing Business.
You will need to plan for farming and maintenance of a vineyard, which can be done with a management company. It is typically a four or five year process before you will begin to see any money from selling grapes. In addition there are costs related to permitting, land preparation, and water management to name a few. You should be up and running during your fifth or sixth for the vineyard, which doesn’t include winemaking facilities and processes, staff salaries, marketing, licensing, distribution, insurance, property taxes and other miscellaneous costs. And even if you have tons of passion, you still need to know what you’re doing. In short, operating a vineyard or winery is a lifestyle more than just a career choice. For those that are willing to take the risk and learn the ropes, this lifestyle can be an amazing, fulfilling adventure.
By Michelle Magnus
Research for this article included: