How much does it cost to start a winery?

8 Comments

1. J says:

   July 30, 2010 at 2:21 am

   Why do people try to answer when they have absolutely no clue?

   I have some ideas, since one of my closest friend started and owns a vineyard in Napa, and I know him for most of the time when the project was being done.

   First, it will depend on whether you want a winery or a vineyard. A winery makes wine, and a vineyard grows the grape that makes wine. Huge difference, both in term of cost and prestige.

   If you own a winery with own vineyard, you can make an "estate" wine, which will increase the value of the wine. Most of the well known wineries, such as Mondavi and Beringer and Chateau Montelena, own their own vineyards and wineries. They grow grapes and, for most part, make the wine of premise. The prestige factor translates to names such as Mondavi Oakville Cabernet Estate Grown, which makes the wine even more expensive and more desirable in the market.

   Many other wine producers, on the other hand, have either vineyards or wineries without the other. For example, many of the boutique and cult wines from Napa, such as Coup de Foudre, have their own vineyard to grow the limited amount of selected grapes, but they do not known a winery. Neither do they need to, since they have small production (<500 cases) and will be cheaper to make wine at a wine making facility rather than own their own equipment. Others have winery but without the vineyard. A lot of vineyards grow grape only, while others sell the lesser quality grapes, so some of the wineries, such as Ridge, Bonny Doon, and Rosenblum, buy grapes from difference sources and use them to make wines. The problem is that the quality of your wine will be dependant on how reliable the growers are. Like I always said, you pay peanut, you get peanut.

   Having said that, you also need to look at the logistics. Buying a brand new vineyard means that you will start from scratch, and it will take you at least 2-3 years and possibly longer (depending on grape types; white in 2-3 years, red in 3-5 years) for you to have any grape that is worth making wines. That means that you will spend 2-3 years in red, spending money to grow the vines, manage the vineyard, still have to pick the grapes and testing whether the condition is optimal, etc. That is a lot of money to be spent. Neither is the land cheap. Many of the vineyards are highly sought after, since it has become a hobby of wealthy people to own vineyards - Firestones, Arnold Palmer, Francis Coppola, Andretti, Darioush Khaledi (well known Middle Eastern grocer chain owner), and a number of physicians and pilots to name a few. In the prime estate of Napa Valley, an acre of land can easily cost $100K. Keep in mind that 1 acre of land can give you enough good quality grape for only about 100 cases, or 1200 bottles of wine. Even if you sell it for $50 each, you are looking at $600K earning from that acre, before paying for all of the labor, management, processing, bottling cost, marketing, and shipping. Profit margin is not that in the short run.

   Buying grapes is easier, and many people buy grapes and make their own wines. A few of my friend and acquintances do that. Best known example I know personally is Francis Audesirk, who makes Audesirk wines. He started out with small production but now had grown into a huge business. Like I mentioned before, other big name producers who buy grapes include Rosenblum and Bonny Doon. They have grown to own their own wineries, but they started out slow.

   To own winery, you will need multiple equipments, from machine to remove stems/crush grapes to large stainless steel container for early fermentation to lots of barrels - some are very expensive French oak barrels that can only be used two or three times - to a huge facility that is cooled to about 60-70 degrees for storage. Then there are the labs to test for the residual sugar/brix, alcohol content, blending, etc. If you want to be ultra-cool, you can make your own cave in the mountain to keep your barrels and wines cool. It is a huge undertaking. That will take probably another acre of land or more, as well as construction fee of the winery. Depending on the size you are looking for, at least $2 million alone for the winery and equipments.

   I saw my friend built his Napa vineyard from scratch, and then he built his winery on top of his vineyard. For his measly little 10 acres vineyard, he probably had spent at least $5-6 million before he got a single penny out of it, 5 1/2 years later (3 years to grow vine, harvested 4th year, fermented/barrelled for 1.5 years). Sure, it is an estate wine. Sure, he gets low 90’s rating at Wine Spectator and Parker. However, it is very expensive. Only those with deep pocket can afford.
2. i_8_my_girlfriend says:

   July 30, 2010 at 2:21 am

   3 dollars.
3. brianchaaban says:

   July 30, 2010 at 2:21 am

   um….i think its like 5 maybe 6 bucks
4. TR says:

   July 30, 2010 at 2:21 am

   Wow–that will mostly depend on the costs of suitable farmland. I’m guessing that it would cost millions in California, high-hundreds of thousands in New York, and low-hundreds of thousands in Ohio.

   Then you’ve got to invest in the vinestock, agricultural machinery, and large buildings, plus the actual squeezing and fermenting equipment and the barrels to age your product in. Finally, the cost of bottling equipment–

   Think at least 2 million, my guess.
5. tabascohotinhere says:

   July 30, 2010 at 2:21 am

   I think alot. If you are lucky it’d only be the same as buying a second house. You need land, and then machinery to process the grapes and treat them. Then you need storage space and barrels, etc.
   Its the cost of entry thats the barrier, else everyone would have a winery.
   Actually maybe you could convert part of your backyard - that could be affordable - you’d never retire on it but if its homegrown stuff you are after… I reckon that would be cheaper and feasible - assuming you are not a millionaire by the way.
6. bonnie says:

   July 30, 2010 at 2:21 am

   7 grand. yum wine.
7. Paul Ding says:

   July 30, 2010 at 2:21 am

   To start a winery on the cheap, you’d want to produce wines that are immediately drinkable, and buy the fruit you’re using, instead of raising it yourself.

   You need the ability to produce $250,000 worth of wine annually to be full-time. You’re making one year’s wine, while selling the previous year’s wine, so you’ll need $500,000 to cover your inventory.

   Equipment to produce and bottle 20,000 gallons per year isn’t particularly expensive. Add that to your wine inventory, and losses while you’re getting started, and you probably need $500,000.

   If you are going to produce your own fruit, it’s going to be even more. However, one advantage of NOT producing your own fruit is that you can buy premium quality fruit, instead of having to settle for what you were able to produce. You can also switch gears easily, choosing the varieties that you want to blend for your wines.

   If you’re trying to produce wines that have to be aged 10 years instead of 10 minutes, your investment in inventory is obviously going to be considerably higher. There’s a nice market, though, if you want to produce inexpensive apple wine for table use.
8. ooz?? ????? ??? says:

   July 30, 2010 at 2:21 am

   I looked into one that was for sale. They were asking 1.5 million. I figured that since they were established that was a pretty reasonable price. It also included a house that was worth close to a third of that. I think that to do it right you are going to be somewhere in that neighborhood.

   It is going to be expensive in any event. It depends a lot on the state you are in as to how many legal hoops you have to jump through. It is also going to depend a lot on the price of the farmland that you want to purchase. Most people that drink wine really don’t think of the fact that wineries are mainly farms. The good grapes won’t grow just anywhere and if you pick one of the top regions like Napa the land is VERY expensive.

   To do it right you need to invest money in the tasting room, lab, and many have some type of event center. Then you need to realize that it takes several years to get the vines mature enough to get enough grapes to really have a good production run so there won’t be much income for a while. Then you are going to have to spend a little on advertising and such.

   And all this depends a lot on you actually knowing how to raise grapes and make wine. If you don’t, you are going to have to hire consultants and take classes to learn. Either that or you are going to have to hire someone who does.

   It doesn’t help to have the first wine you are selling suck. I live in Texas and there are 105 that I know of in this state. (it is the fourth largest region and getting close to 3) I don’t spend a lot of time going back to the ones that I think their wine sucks. There are just too many good ones that are a safe bet, so even if you improve the next year, it takes a while for that to get around.