How much does it really cost to start a winery?

It always sparks my interest when people ask me about getting into the wine/viticulture business. Just yesterday my finance and I were in a tasting room in Healdsburg, I like to check out other tasting rooms to get ideas for our own which is starting construction soon.  I pulled out my John Tyler business card and the couple standing next to me were curious about my name. It is a conversation starter anywhere I go pretty much. Once I said that my family owned vineyards they couldn’t stop asking me questions about growing grapes. The couple was from LA and come up to wine county once a month, they confessed they would really like to live here but their jobs prevent them from moving out of the city to the country.

“What do you think about growing grapes verses owning a winery?” asked the husband. Wow, where do you start with that question? Neither of course is easy by any means, I said. But if I had to think about which one was more cost effective I would have to say growing grapes. With a winery you spend literally millions on equipment that basically stands idle for more than half the year, except for when you are crushing.  Lets just say you spend 3 million, on a small winery. Then if you don’t own your own vineyards you must go out and by grapes. Depending on the wine you want to make, Two-Buck-Chuck verses a 45$ bottle of Pinot Noir will dictate how much you spend on the grapes.

In our area, (the Russian River Valley), it is not unheard of to charge $4,500 a ton for high-end Pinot Noir or Chardonnay grapes. So right there you are looking at a nice chunk of change on buying grapes. Lets just say you spend $27,000, which would buy you about 6 tons, not a lot but enough to do a few hundred case of wine.

So you have your winery, and your grapes but what about a winemaker? Unless you plan on making the wine yourself you will need a hire a wine maker, running you approximately $85,000-$100,000 a year, maybe more.

Unless you are planning on bottling the wine in glass bottles and making a homemade label on your PC, you will need to develop a label for your wine.

If you are talented enough that you don’t have to hire a graphic designer you can save a bundle there. Hiring a designer for a wine label can run you $4,000-$10,000 dollars, this might include the development of a website too, which is crucial it you want to sell this wine.

And, this price does not include wine making supplies: yeast, dry ice, labor etc. Those can run you a few thousand dollars as well each year. Lets just say $10,000 a year. What about corks and foils? You will need those too… rough estimate for 500 cases, top grade corks and foils $5,000.

What about bottling this wine? Renting a bottling line can be very pricey and cost you a few thousand dollars, probably about $3,000 each time you plan on bottling.

How do you plan on selling this wine? And please don’t plan on just selling it to family and friends, it is not that easy. Especially if you want to build a brand. So you will need marketing efforts, sales people and travel expenses. If you are a new brand, be prepared to give a lot of wine away to competitions, media outlets and distributors to try and get your name out there.  This can be thousands upon thousands a year, lets just say $20,000 a year as an estimate, it could be more or less depending on your situation.

Needless to say, when you add everything up, starting a winery if not for the faint at heart. Nor is it profitable until you have been up and running for years.  I have heard the average is 10 years to pay off the cost of starting a winery and to become profitable.

With my calculations, just for one year of starting and operating a small winery you are looking at around $3,200,000.  Wow! We are not talking about a few pennies here, And keep in mind this is for your first year of operation, not to mention I am sure I have forgotten other misc things, like hiring an accountant, monthly electricity bills and other expenses that occur with running a business.

So overall starting a winery or planting a vineyard can be time consuming and expensive. But anything worth doing is worth doing right and if your passion and love lies within starting your own wine label or vineyard go for it!