Can You Afford a Vineyard? Can You Finance a Wine-Making Operation?

A lot of people would love to have a vineyard. The simple bucolic life of a winemaker and the romantic draw of the Old World vines is too much to resist for many of us. But how on Earth can anybody afford to get into winemaking. You have to pay for land, equipment, education, marketing, upkeep and so much more.

This lens is going to provide some alternatives that vary from impossibly intricate to fun and silly to surprising in elegant simplicity.

We're going to find out if YOU can finance a winemaking operation.

Furthermore, this study doesn't include the costs of storing, shipping, marketing or distributing the wine. Fat lot of good it does to make a million dollars worth of wine and then not be able to move it anywhere in time to make more wine the next year.

Also, the study uses a sort of mean average for grape insourcing costs. To make wine that you don't immediately want to spit out, you're gonna need to buy good grapes.

How much will it cost if you just buy grapes and own the winery and equipment? A LOT.

It's true that a lot of the cost comes from running the vineyard, but there are still several very large costs to running a winery. While there is a lot of money to be made by making wine out of other people's grapes, it's still cost-prohibitive for most people who just love wine and aren't millionaires.

For those who are millionaires, you might not have to read much further. Insourcing excess grapes from other vineyards to make wine is called a Bulk winery investment and it has several advantages, even though it's still very expensive.

I'm gonna go into some detail, to show that it is still expensive. If you are curious or a nerd, read on. Otherwise, you might want to skip to the next section where it gets more affordable. (hint: it tends to get cheaper and cheaper as you go down the page.)

A study from 2004 that tried to estimate the cost of making wine suggested using a cost of about $25/sq. ft. (Folwell & Castaldi 2004). That and equipment costs are going to make it impractical to just make 100 bottles of wine. Your building needs to be a certain size just to hold the press, destemmer, holding tanks, barrels, etc. This means your initial costs are static (they won't change much) and that they're going to be really prohibitive.

Afterwards, you've got to buy grapes and whatnot. The study ends up finding what it considers to be a favorable cost of $4.65/gallon if you're making 300,000 gallons. Unfortunately, most people don't have 1.4 million dollars to spend on making 851,000+ bottles of wine EACH YEAR. This is just way too much. The cost goes up per bottle significantly as the quantity comes down. Let's say you just make one third of that amount of wine, the cost per gallon ends up being $5.51 for a total investment of $551,000.

This isn't a linear fall either. Because the cost of the equipment and winery is static, you'll save less and less money per bottle as you lower the number you make.

Folwell, R.J. and M. Castaldi. 2004. Bulk winery investment and operating costs. XB0997E. 15 pp. http://cru.cahe.wsu.edu/CEPublications/xb0997e/xb0997e.pdf

So bulk wineries make wine without owning a vineyard. This is sort of one step removed. They just own and operate a winery. Can you be two steps removed?

Yes! Thanks to companies like Crushpad and Yo' Vineyards, you can just own a barrel or two of wine. You pay these winery owners to buy grapes for you and make wine to your specifications. You can visit the winery at various points during the year and try things out. You get constant updates about how the crops are doing and you get to see pictures and movies of people working with the plants. Then you pick the aging process and the blending.

This way, you can get 30 cases of wine (about a barrel) for as little as $5,000. That's just under $14 / bottle. If you were going to drink a bottle of red wine each day for a year, you might have spent this money anyway. Plus, instead of buying some generic BAD wine, you get to drink a wine totally personalized to you. It's as if you were the winemaker!

Okay, so we don't have the cash to own a vineyard. How about a yard of vines?

A lot of vineyards offer to let you sponsor a vine or two at their vineyard.

This is generally in the ballpark of a hundred and some dollars.

It's a fun gift to think that you or somebody you like has a yard of vines somewhere out there.

Some places literally put your name on or near the vine and will let you visit. They can even ship you some wine that your vine contributed to.

Yes. You can have a vineyard. And it will actually produce wine in about seven years.

Now, I know I threw out buying a vineyard outright at the very top. But let's revisit just in case because new developments in the global real estate market are creating unique opportunities to own vineyards or shares of a vineyard for under $100,000. For 38,000 Euro (approx. $50,000), you can get a hunk of low-interest, low-tax agricultural land that doesn't alter your residency and has no property taxes ever. You'd own a piece of land free and clear for the rest of your life in the south of France.

The plots offered at O'Vineyards are a quarter acre large. The vines produce about a barrel of wine each year. That's about a bottle a day. You can vary the yields up or down to your liking (within reason: no possibility of making 3,000,000 bottles from a quarter acre plot :D).

Each year, to get a good barrel out of the land, you have to put about $5,000 into growing the grapes and making the wine. But you can make that back by selling the wine.