Step 3: FINANCIAL CONSIDERATIONS

The wine business is composed of four functions, Production, Manufacturing, Marketing and Sales. Some have accepted the challenge of "going it alone" and doing all these tasks as a one-man operation. Others have created partnerships or hired professionals to assist in each or all of these areas.

In the first 5 years of operations, investment in the infrastructure of grape production is the highest cost for vineyards. Most of these costs are fixed, like the cost of wire, stakes, equipment, rootstock, fruitwood and the like. Others are not, such as labor. Once established a vineyard requires ongoing care, this cost stabilizes and become more fixed after the third year.

The capital requirements needed to become successful in the wine business depend on ones goals. The cost can range from as a few thousand dollars for those who own an acre of vines and sell their grapes to a winery, to millions of dollars to develop vineyards, a winery and market a brand of wines. The Per-Acre cost of bring a vineyard into production is estimated at between $6,000 and $15,000. Its will take 3-5 years for grapes to mature enough to be used in wine production. There are additional cost for land, equipment, machinery, staff, consultants, marketing and other expenses. Starting a vineyard is capital intensive and should be viewed with a Return on Investment (ROI) horizon of 10 years. Additional cost and ROI information is provided below, one should evaluate these figures carefully prior to making a decision to enter the business.

Resources:

Sample Vineyard Proforma

Move onto Step 4

Return to Start A Vineyard