Pinot noir, cabernet sauvignon, or chardonnay? Whatever wine you prefer, it’s possible to turn a love of the fermented juice into a profitable business by opening a vineyard.
Whether inspiration comes from driving through California’s Napa Valley or just recognizing that the wine industry is a growing market, opening a vineyard can be profitable and fun. If you’re toying with the dream of becoming a winemaker, read on for the ins and outs of how to start a vineyard.
Working for yourself is, for many entrepreneurs, incredibly rewarding in itself. There are no bosses to report to and plenty of flexibility (as additional work is delegated to managers, cellar masters, harvest interns, et al).
However, vineyard owners can also count on opportunities for business-related travel, and plenty of tax write-offs for things like wine and food. Perhaps best of all, you’ll get to enjoy savoring your own wine and watch as other people appreciate your creation. Even if you don’t know how to start a vineyard, you’ve probably already pondered the benefits of owning one.
There’s a lot of waiting and at least four years of negative net income for a vineyard or a winery, there’s also a lot of work needed before, during and after production. Starting a vineyard is a long-haul business with the potential to rake in good profits, work for yourself, and enjoy the fruits of your labor. We’ve provided a checklist for getting started here.
1. Create a Business Plan
Writing a business plan isn’t just busy work. It helps clarify your idea and identify the competition and key challenges. Set SMART goals (specific, measurable, attainable, realistic, and time-based) to stay on track and prove to investors that their money won’t go to waste. After all, you’ll need capital for land, vines, buildings, equipment, labor, and marketing.
Banks, government grants, angel investors, and others need to know you’ve done your homework. Can you prove you’ve learned about growing grapes, the difference between table grapes and wine grapes, and the types of barrels you’ll need? You also must show how you’ll find experienced labor, whether the winery will sell food and have a tasting room, and who’ll develop the wine-pairing menu. Tip them off if a well-known chef has agreed to come on board. Also share your price points by the glass and bottle.
Basically, the more detailed your plan, the easier it is for investors to understand your proposition and potentially come on board. Sitting down to create a plan now will also save you from the common, costly mistakes many make by charging in unprepared.
2. Choose a Business Structure
Most small wineries choose between partnerships and S corporations. As needs change, the business structure of your vineyard or winery could, too. But because alcohol and potential interstate or overseas shipping is involved, seeking legal advice in advance is a good step.
S corporations provide better protection against personal liability, but they may require outside help with startup paperwork. Profits, losses, deductions, and credits from the winery are passed through the company and taxed on owners’ individual tax returns. That avoids double taxation.
It takes a sizable investment to start a vineyard and winery, so it’s best to consult with a certified public accountant before you start to stomp those grapes.
3. Determine your Vineyard Costs
Calculating fixed costs, expenses, and one-time costs for a vineyard or winery will go far beyond formalities like applying for an LLC or buying land and gear. Do your research by studying the available USDA resources on viticulture, and read through industry magazines like American Vineyard Magazine or Wine Business Monthly. They’ll help you figure obvious costs including land, vines, equipment, buildings, and labor, as well as the less obvious ones such as pesticides, trellising, tools, irrigation, vine cuttings, bottles and labels, and machine repair and maintenance.
Calculate business taxes, salaries, loan interest rates, utilities, marketing, travel, attorney and CPA costs, and filing fees for things like compliance certifications and annual reports.
How do you fund your startup costs?
With ballpark startup costs for a vineyard ranging from $560,000 to over $2 million, funding will play a major role in whether your dream business soars or sours. The key to unlocking startup funding is a well-researched business plan with solutions to meet the challenges faced by grape production.
These may cover winter injury, disease control, and labor availability. Armed with an in-depth plan of attack, convincing lenders that a vineyard is risk-worthy will be easier. That’s true whether your money comes from friends and family, business credit cards, loans, or government-backed programs.
4. Create a Name for your Vineyard
Your vineyard’s name is your brand. Look for available, existing, and pending trademarks and trade names filed with the Alcohol and Tobacco Tax and Trade Bureau. Also look for brand names in the TTB’s label approval records. Assuming your vineyard will also be licensed to make and sell wine, things can get a bit more murky.
Compliance issues involve brand names (e.g., what’s on the bottle), bottling trade names (also known as the DBA for “doing business as”), operating trade names (the principal name on the winery’s permit) and corporate names (the formal name filed with the secretary of state).
5. Register your Vineyard
It’s worth paying someone well-versed in compliance to avoid a legal tangle. You’ll not only be registering names, but also printing labels, business cards, souvenirs, and signs. You’ll open bank accounts and credit cards, create social media profiles, and register one or more domain names online as well.
Once the vineyard’s business structure is registered (as a partnership, S corporation, or other entity), turn to license and zoning permit requirements. Look into getting general liability insurance too, and opening financial accounts. Although laws vary by state, you may need a food production license, liquor license, and general business license.
An insurance broker can help ensure you’ll get the necessary coverage for your vineyard or winery. Open dedicated business banking and credit card accounts to keep personal assets and business assets separate. Get an employer identification number (EIN) from the IRS, because this unique number helps identify the vineyard/winery business for tax reporting.
6. Equip your Vineyard
Depending on the size of the vineyard, you may need to invest in large equipment like a tractor, trimmers for pruning, a trellis system, a spray system, and a grape harvester. Reach out to the agricultural extension agency in your state to get advice on what factors may impact your vineyard and what equipment is vital vs optional.
If you want more detail on what gear and machinery you’ll need to start the dark drink flowing, check out Grape Vine Magazine’s guide on winery equipment.
7. Marketing for your Vineyard
Whether you do your own marketing or source a professional, promotion isn’t optional. Start by identifying the top social media platforms like Facebook, Twitter, and Instagram to leverage “free” marketing. You can also engage with customers through Google Maps with a free Google My Business listing.
Encourage satisfied customers (consumers or businesses) to leave reviews on your website or on platforms like Yelp. Search engine optimization on blogs and websites that use keywords like “vineyard,” “winery,” and “wine” can drive traffic to your site, and to free or low-cost wine tastings.
Hosting a virtual wine tasting that you promote to the media can drive sales and bring repeat customers. Print collateral like billboards, banners, postcards, and brochures can complement paid advertising in tourism and industry publications.
While a vineyard is like a farm to grow wine grapes, a winery is the licensed property that makes the wine. You don’t need to expand to include a winery, though. Some vineyards simply sell the grapes to outside wineries and are only involved in the grape growing.
Other businesses have a winery on site that produces wine sold off-site to other companies. This cuts down on operating expenses by letting the vineyard avoid the costs associated with serving alcohol and food, including some licensing, labor, insurance, building expenses, utilities, and associated zoning and permit costs.
If you’ve always dreamed of starting your own vineyard, don’t let the costs or hard work stop you. There are plenty of resources to help you raise capital to launch a wine business, and plenty of experts to ensure all aspects of the company are feasible, legal, and profitable. While patience is a virtue that can help you through the first few years, the profits — and the wine — can be well worth the wait.
1 All prices and services presented above were reviewed and verified as of 11/2/19.
2 The Starter plan is $49/year the first year and increases to $119/year after that
3 This chart does not include state fees because those will vary in each state.
- Where should I incorporate my vineyard business?
A vineyard’s business structure will be created with the secretary of state where you plant your wine grapes.
- Is a vineyard profitable?
Although it may take several years to move from planting, harvesting, and aging to bottling, marketing, and selling, vineyards and wineries can be incredibly profitable.
- What do I need to start a vineyard?
Land, vines, equipment, irrigation and labor will all be necessary to start a vineyard. For vineyards that also serve as wineries, plan to invest in machinery, barrels, refrigeration, bottles, a truck, and a facility.
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