How to Start a Vineyard Business

Part 1 - How to start a Vineyard business - Background

A vineyard cultivates grapes for wine, juice, and fresh fruit for local markets and consumers. Some vineyards process the grapes for consumption in-house, while others concentrate on the farming aspect, selling directly to wineries in the area.

Our guide is in 3 parts:

• Part 1 - How to start a Vineyard business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a vineyard business?

Because a significant amount of land is required to grow your grape crops, it is important that you do extensive research regarding required start-up capital. Most vintners do not realize a profit for the first three years. Your first year’s budget will be approximately $12,000 an acre. The plants, equipment, tools, pesticides, and trellising are included in this estimate. Second year costs decrease to $1,200 to $1,500 per acre and third year costs will be approximately $1,000 an acre. These figures do not include the cost to purchase or lease land. As a vineyard owner, it is critical that you invest in land that has soil with the right PH balance, proper sunlight, and irrigation. Your land will be one of your highest expenses, so thorough research prior to making any decisions is critical. Purchasing a plot of land in prime vineyard country can set you back anywhere from $100,000 to over $350,000 per acre.

What are the ongoing expenses for a vineyard business?

Managing a vineyard is complicated, with a number of ongoing expenses. In addition to land lease/ownership expenses, your budget should include approximately $8,000 per acre over a three-year period. After the first three years, the crops should be producing grapes, reducing your annual costs to $1,500-$2,000 per acre. Costs include labor, insurance, irrigation, vine cuttings, and machine repair and maintenance.

Who is the target market?

As mentioned, target markets for grape vineyards are not limited to wineries. Since wine grapes are the most profitable, this is the niche that many vineyard owners choose to target. Regardless of which option you choose, be sure to thoroughly research market saturation in your area. Aligning market needs with your passions will make your business venture much more enjoyable and, in turn, profitable.

How does a vineyard business make money?

Vineyards can be set up to process the grapes in-house or to distribute harvested grapes to other local businesses. Before making an initial investment, carefully consider your options. Market needs, coupled with your personal knowledge and experience will assist you in identifying which path will yield the highest profit.

How much can you charge customers?

For a vineyard in full production, recent studies indicate an annual return of $2,500 to $5,000 per acre. These numbers vary depending upon quality and demand.

How much profit can a vineyard business make?

Profits vary depending upon a number of factors. A 35-acre vineyard earning an annual return of $2,500 per acre will see a profit of approximately $88,000.

How can you make your business more profitable?

While the investment and operating costs will be significantly higher, many vineyard owners open their own winery onsite. The increase in annual profits make this a worthy investment. If you own more land than you wish to cultivate, consider leasing acres out to other aspiring vineyard owners in the area. Entrepreneurs with extensive knowledge could educate others on the subject in exchange for education and/or consulting fees.

Day-to-Day and Growth

What happens during a typical day at a vineyard business?

Managing an operation of this magnitude requires consistent, hands-on care of your crops. Your vineyard’s success is dependent on placement of crops, lighting, water quality, and health of the soil. Since this type of crop can be very sensitive to these outside elements, testing and supervision should remain consistent year round. Management of your vineyard’s crop, however, is just one component. You must also cultivate and nurture relationships with current and prospective customers. This ensures your crop has a final destination once harvesting is complete.

What are some skills and experiences that will help you build a successful vineyard business?

There is a great deal that goes into managing a healthy and profitable grape vineyard. Substantial knowledge in plant production, pest control, harvesting, and post-harvest handling is a must. This, however, is just one ingredient. Your vineyard will require the hard work of multiple staff members. Therefore, your skill set must include employee management, attention to detail, financial management, marketing, and the ability to delegate. In this industry, it is important that you recognize your strengths and weaknesses, building a team of professionals that complement your abilities. Hands-on experience would prove invaluable to your vineyard’s long-term success.

If selling your grapes to wineries is part of your business plan, knowledge of what grapes are best for each type of wine is important. Developing a close relationship with the winemakers you plan to sell to will ensure the right decisions regarding crop maintenance are made. There are a number of educational resources available to aid you in your in your quest for a successful vineyard. Purdue University Extension and the Indiana Wine Grape Council have quality educational programs. Attending conferences and workshops, reading printed publications on the subject, and one-on-one consultations would all prove helpful as you get started on this business venture.

What is the growth potential for a vineyard business?

The wine industry, particularly in the Midwest, has grown exponentially over the last decade. While new wineries continue to open, vineyards have not expanded at the same pace. As a result, demand for quality grapes is high. This has led to significant business opportunities for entrepreneurs with dreams of running a grape vineyard. While grapes grown for wine typically yield more growth and profit, there is still great opportunity in the juice and table fruit facets of the industry.

What are some insider tips for jump starting a vineyard business?

Experienced vintners offer the following advice:

• When researching your land investment, the United States Department of Agriculture or the National Institute of Food and Agriculture extension should prove to be an invaluable resource.

• If you are unfamiliar with the various types of grapes, the National Grape Registry offers a complete and detailed listing, as does The Vitis International Variety Catalogue.

• Should you require guidance in selecting a location for wine grapes, The Alcohol and Tobacco Tax and Trade Bureau can provide you with the necessary information.

• You will need to plan ahead when it comes to ordering your grape vines, as grape nurseries grow vines for the next year’s planting season. When placing your order, be sure to specify that you wish to only have one year old vines. This will help ensure you receive healthy, productive plants. Prior to placing your order, make sure the nursery provides you with proper certification.

How and when to build a team

Vineyards of three to five acres can be managed by one person throughout most of the year. You will require additional hands during pruning and harvest season. Farms over five acres will require year round assistance. Each team member must be knowledgeable about grapes and vineyards, able to identify any issues as they arise. Students and migrant workers are a viable option for the more laborious seasonal help. Labor studies indicate years two and three require the largest number of man hours – almost five thousand hours for a 35-acre farm in the second year and a little over four thousand hours in the third year.

For a business of this magnitude, it is recommended that you seek professional guidance. A financial advisor, attorney, and insurance agent can offer you the guidance needed to make informed decisions regarding the management of your enterprise. Many experienced vineyard owners hire a vineyard management company to ensure a strategy for success from day one.

Part 2 - Is a Vineyard business the right fit for you?

Part 3 - Action plan to launch your Vineyard business in 90 days