How to Start a Winery in 2021 (+Business Plan)
December 16, 2019
Wineries are some of the most romanticized backdrops in history.
Who wouldn’t enjoy drinking a glass of delicious wine while watching the sunset over a beautiful vineyard?
Better yet, what if you owned that winery?
WHAT WE’LL COVER:
- Chapter 1: Building a Winery Brand
- Chapter 2: Selecting Your Grapes
- Chapter 3: Find a Location for Your Winery
- Chapter 4: Winery Business Plan
- Chapter 5: Licenses and Permits for Wineries
- Chapter 6: Winery Equipment
- Chapter 7: Winery Building Design
- Chapter 8: Marketing
- Chapter 9: Cost of Opening a Winery
- Chapter 10: Free Winery Business Plan Template
Owning a winery can be a wonderful, romantic business. However, that does not mean it is easy. In fact, starting a winery is an incredibly tough field to break into. It takes large investments in time and money and a lot of determination and good work ethic.
If you are up for the challenge of opening your own winery, this article will act as a guide in your initial research. It is meant to walk you through the general steps you’ll need to take when opening a winery and give you information to better estimate the budget you’ll need when opening your winery.
How to Open a New Winery in 2020
Below are eight steps to follow when opening a winery. Of course, each step will need to be modified to your specific business, but the following guide will help get you started.
Before anything else, it’s imperative that you build a vision for your winery.
Branding is a huge part in selling to customers. Your wine may be the best wine in the world, but without proper branding to entice your target marketing, no one will know!
Consider the reason you want to open a winery – what is its purpose?
On top of that, what kind of wine are you planning to make? Is there a vibe that your wine will bring to consumers that you can hint at on the bottle? What kind of experience do you want your consumers to have while drinking your wine?
Once you can answer the brand’s purpose, identity, and mission statement and start building the brand design around that.
Choose a name, logo, colors, fonts, etc. Choose these wisely, as you’ll want your winery brand to look good on all your products. How will your brand look in your establishment and in marketing materials? Will it look good on tote bags and t-shirts? Most importantly, will it look good on wine glasses and bottles?
Consider consulting a design/branding agency for this stage. They can give insight on what designs will be eye-catching and help bring your vision to life.
It’s important to note that, being in the wine industry, there are a lot of trademark and copyright laws to research when building your brand. Make sure you do in-depth research that your brand’s name, logo, bottle design, etc. are all unique to your brand and not stepping on any other wineries’ toes. The last thing you’ll want as a new winery is to have to pay legal fees on top of the costs of opening a winery!
Steps two and three can be flipped depending on what is more important to your winery: the location or the grapes.
Regardless of which step is of higher importance to you, the most vital factor in opening a successful winery is, you guessed it, the wine! Therefore, the order of these steps does not matter as long as the grape type and land are compatible.
If location is more important, you can skip to step three first, then find the right grape for that land after. However, if you have a specific type of wine you’re looking to make in mind, then you’ll need to decide on the type of grape you want to use in your vineyard before choosing a location.
This factor will greatly impact step three, as you’ll need a location that will allow that grape type to grow well.
There are hundreds of types of grapes to choose from to make wine, and each grape type and even batch of each grape type will influence the final product of how the wine tastes. However, a small amount of these hundreds of grape types are most common and recognizable.
To get an idea, these are the core types of grapes used for popular red wines:
- Cabernet Sauvignon
- Pinot Noir
- Cabernet Franc
- Sanji Evades
If you’re not looking to make red wine, these are core types of grapes used for popular white wines:
- Sauvignon Blanc
- Pinot Grigio
- Pinot Blanc
Where you grow your grapes is an essential component in being a successful winery. As mentioned above, your location either depends on the type of grape you plan to grow or the grape type depends on the location.
In general, grapes grow better in warm climates – which is why you see so many wines from California, South France, and Spain.
It’s not uncommon for wineries to open near one another, because it’s less of a risk to grow a vineyard in the same climate as another successful vineyard. Plus, while you may think this would cause nothing but competition, it could also spark networking opportunities and local support.
Other considerations when choosing location include size – how many wines are you planning to grow? – and any soil preferences and restrictions.
This one should not come as a surprise, as anyone planning to open a business of any kind will need a business plan prior to laying down any money.
In your business plan, consider your brand and your long-term plans to keep it afloat and thriving. Now that you know your grape type, location and size, you can better estimate a budget.
Consider production and distribution costs and operations. Prepare for the future.
How long will it take the grapes to grow? How long will the wine need to be produced and matured? When will you break even? Will you need to take out loans for this business venture? Who is your biggest competition?
Consider all factors that could influence your business to succeed or fail, and have thought out answers to any issues that may arise while your business is already in full swing.
While all businesses need licensing and permits, the wine industry is particularly strict on its regulations in this field.
Some paperwork you will absolutely come across when opening a winery include:
- Permit to operate/Business License
- Registration with the FDA
- Label Approval from Alcohol and Tobacco Tax and Trade Bureau (TTB)
- Local regulations – this will vary on country, state, and even county.
Other paperwork you may need to consider include:
- Laws on selling across state or country lines
- Trademarking your label
- Liquor License
- Employer Identification Number (EIN)
- Certificate of Occupancy
- Extra licenses if you plan to serve food
If you’re worried you may miss a license or permit specific to your winery and location, consider hiring a wine-compliance agency. These agencies help wineries to understand and abide by all local and national regulations, preventing you from any avoidable mistakes with the government.
In order to actually turn your grapes into wine, you’ll need winery equipment – and this does not come cheap.
Consider the size of your winery, how much wine you’re looking to produce at a time, and how much storage room you’ll need. Once you have all those numbers figured out, you can begin to search for winery equipment that will fulfill your demand without overdoing it in size and costs.
Some equipment to consider when opening a winery includes:
- Winery POS system
- Cultivation and farming equipment, such as
- Grape crushers
- Fermentation tanks
- Filtration system
- Bottling, corking, labeling, and packaging system
- Pumps to transfer the wine throughout production
- Temperature control system
By now, it’s likely you’ll know how big your vineyard is, so you can start designing the interior and floor plan layout design of your winery, where your wine will be created, stored, sampled, and sold.
Consider what you need in your winery, such as equipment and storage space, then consider what you want in your winery.
Do you want a fancy tasting room for guests? If so, where? In the retail space? Outside on a patio? In the cellar? All will showcase your hard work, but it depends on the experience you want your tasters to have.
Additionally, are you planning to have a retail shop where visitors can buy bottles of wine, glasses, or brand merchandise? If people are visiting your winery and tasting your wine, you’ll probably want somewhere they can buy the wine they sampled and, likely, enjoyed.
Will you serve food with your wine or will it simply be a winery? Crackers and cheese are always a good pairing with wine, but what about full meals? If you’re planning to offer food to complement your wine, you’ll probably need an area specifically for this – and likely a kitchen as well!
Lastly, your winery should be up-and-running from steps one through seven. However, that doesn’t mean people will be knocking down your door.
The wine industry is highly competitive, and to get noticed, you’ll need to market your wine well.
Consider your target market and what your consumer wants out of a wine. What do they care about when buying wine? Region? Age? Label design? Price? The market research done in your business plan should give insight into this.
Whatever the answer is, play into it. Market your grand opening on social media, in shops, on the television, etc. Where you find your target audience is, you should be there too.
Name recognition plays heavily into a customer’s purchasing decisions, and if they’re at the grocery store and recognize your name or label, that’ll put you as a front runner wine they may choose to drink that night.
Consider opening a wine club to keep customers coming back, and promote it on your label. If they enjoy your wine and see there’s a chance to learn more about it online or in person, that wine club sticker or stamp can create loyal customers – which is key to surviving in the wine industry.
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In today’s market, opening a winery can cost around $600,000 at minimum.
As mentioned in the beginning of this article, opening a winery is not a cheap task. It takes large financial investments to open a winery, and does not offer immediate sources of income. Grapes take time to grow – around five years – and wine takes additional time to age.
Therefore, while you may have a great plan to make money in the long run, you have to be prepared to be at a loss when opening your winery. Your business plan is a great source to figure out your budget and how it will be distributed among all your costs.
Breaking Down the Startup Costs for New Wineries
The largest costs will be your vineyard. Currently, for instance, in the United states one acre of vineyard land costs at minimum tens of thousands of dollars – and this amount is estimated to significantly rise over time.
It can’t be forgotten that those are simply the initial land costs.
Additional costs will come at a steep price when developing the land, particularly in the first few years of business. This can cost the price of a less expensive acre of land – adding another few tens of thousands to the bill.
On top of your vineyard costs, you’ll also need to consider equipment costs to maintain the vineyard and then actually produce the wine. This can add on another large sum to your tab.
Not only that, but you’ll need to build the winery where your equipment will be kept, wine will be created and stored, and tasting room will be. This construction will rack up the bill immensely.
Don’t forget about the grape vines you’ll need to purchase. The price of these will vary depending on the grape and the age of the vine.
You can’t forget about the smaller purchases that will continue to cost you over time. This includes factors like marketing materials, brand merchandise, bottling and labeling your wine, licensing and permits, and paying staff.
So, as you can grasp, your winery is going to come at a price. However, if you have the patience and determination, wineries can be extremely lucrative in the long term.
Starting Your Winery Journey
This article may have taken the romanticism out of opening a winery, but it’s better to know the nitty gritty work that will have to be done in order to open a successful winery where you can relax and watch the sunset.
Opening a winery is hard work and costs a great sum. However, if you’re patient and willing to wait to see a return on your winery investment, then using this guide can help kickstart your journey.
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