INVESTING - 4 MIN READ
How to Buy a Vineyard: A Complete Guide (and a Reality Check!)
Want to know how to buy a vineyard?
Life among the vines is the stuff of dreams for wine enthusiasts. And, there’s nothing like it if your vineyard gets acquired for a whopping “undisclosed sum”, right?
But, the real journey may not go down as smoothly as your glass of Cabernet Sauvignon!
And, is buying a vineyard the best way to invest in wine?
In this article, we’ll get down to the nitty-gritty of buying and developing a vineyard. We’ll also introduce you to a far easier way to invest in fine wines.
This article contains:
(Click on the links below to jump to a specific section)
- Buying a Vineyard: What Does it Mean?
- How to Buy and Develop a Profitable Vineyard.
- 7 Tips to Remember When You Buy a Vineyard.
- The Reality of Buying a Vineyard.
- Investing in Wine Bottles through Vinovest.
Let’s do a deep dive.
Buying a Vineyard: What Does it Mean?
Buying a vineyard could mean that you own either (or all!) of these:
- An uncultivated piece of agricultural land.
- A planted, operating vineyard.
- A vineyard with a winery (winemaking) unit inside.
- A rural ranch style vineyard with a 5 bedroom house or a 17th century Chateau to entertain friends and family.
It all depends on your goals and your budget.
How to Buy and Develop a Profitable Vineyard
As exciting as it sounds, buying and developing a profitable vineyard is a complex proposition.
Your first question should be:
Where to Buy a Vineyard
Just make sure you have all the following aspects sorted out.
Purchasing a Vineyard
It is best to work with commercial real estate agencies and vineyard realty service providers like Sotheby's International Realty. Ensure they have a thorough knowledge of wine market dynamics, the viticultural work required, and legal and administrative requirements.
How much does a vineyard cost?
A stunning grand cru vineyard or a renowned chateau in saturated areas like Napa Valley, Burgundy and sparkling wine regions like Champagne will come with hefty price tags - as compared to an Oregon or Santa Barbara.
Here are some price estimates of planted vineyards (per acre):
However, price is just one measure of a vineyard’s value.
Developing and Farming the Land
A vineyard that just grows and sells grapes is more financially accessible to start with.
But, running a winery or wine business will give you far higher returns, although the fixed and variable costs are substantially higher.
Once you’ve bought the land, you need to get back to the drawing board with a viticulturist to:
- Pick the right varieties of white or red wine grapes - be it sauvignon blanc, pinot noir, or chardonnay.
- Prep the soil with nutrients.
- Lay out the vineyard design.
- Install an irrigation system and trellis wires, unless you want to go to with the dry farming route
- And, more.
Cost of Developing and Farming a Vineyard
The cost of planting will depend on the terrain, the number of vines planted, and the irrigation method. It could range from $74,000 a hectare for a flat terrain, to over $240,000 per hectare for a steep mountain vineyard - over a 3-year period.
After the initial years, maintaining your vineyard will cost you between $4,000 to $9,000 an acre annually.
The other key cost components would be
- Vehicles, machinery and equipment.
- Vat house, barrel rooms, office building, tasting room - for a winery.
- Storage and treatment facilities.
- Staff salaries.
- Marketing, licensing, distribution.
- Insurance and property taxes.
And if you are more adventurous? A chateau, luxury homes or a hotel!
7 Tips to Remember When You Buy a Vineyard
Remember these pointers before you make this huge investment.
1. Be clear of what you want to do.
Be clear if you wish to sell grapes, create a winery, build a house or a hotel, or grow another fruit as well in your vineyard.
2. Forecast the financials before you buy.
Estimate how much grapes or wine you’ll make, prospective buyers, and what your margin will be.
3. Do thorough due diligence before buying.
Do a thorough research on the following areas before you buy any plot.
- Soil quality.
- Terroir (environmental factors that affect the crop).
- Water sources.
- Layout design.
- Price of grapes.
- Purchase agreements.
- Known crop diseases.
- Permits, patents, copyright certificates.
4. Be passionate about what you produce.
You should be genuinely enthusiastic about growing grapes or running your winery.
5. Have an appetite for risk.
You need to have an appetite for all the risks and chaos that come with owning a vineyard, such as natural disasters, wine stock contamination or crop diseases.
6. Involve yourself in the wine industry.
Attend auctions like the Napa Valley Wine Auction, wine cellar tastings, and be a part of groups like the Napa Valley Vintners Association. Cultivate deep relationships with viticulturists, brokers, winery owners, and grape buyers.
7. Find a broker or an attorney.
Get help from a broker or attorney to advise you on where to buy, prices, when to sell, and other aspects of vineyard economics.
So now, are you all set to own a countryside vineyard in Napa Valley?
Here’s a much-needed reality-check before you take the plunge.
The Reality of Buying a Vineyard
As you can see, the road to it is bumpy, to say the least.
You have to be ready for:
High costs: Capex and Opex.
Factor in real estate costs, and farming and maintenance costs, including equipment and workforce.
May need to explore financing options.
You may need to take agricultural loans or seek other financing support based on your financial situation.
Need to be patient.
Once the vines are planted, it will take at least three to four years before your first harvest. And, a few more years of investment before the grapes reach full maturity and you have a chance to turn a profit.
Need a team and maybe a vineyard manager.
You’ll need a strong team, a vineyard farmer, and even a vineyard manager to run the show smoothly.
Economic and Climatic Risks
Be prepared for economic and climatic uncertainties, and plant diseases.
You may have to cut through the red tape to get vineyard planting rights, may need to make obligatory payments to local authorities, and so on.
Selling a vineyard
You’ll need to entrust wine real estate experts or wine industry mergers and acquisitions consultants to dispose of your asset.
To put it simply, buying a vineyard is a long-winded process - way more complex than buying your favorite bottle of fine wine! Hermitage Rouge!
As a wine investor, it may be far simpler for you to look for an alternative way to invest in wine.
How do you do that?
Investing in Fine Wine Bottles through Vinovest
Investing in fine wine bottles via a wine investment management company like Vinovest is an excellent option to reap the benefits of the steady-growth wine market.
How to invest with Vinovest.
It’s incredibly simple.
- Sign up on the Vinovest website.
- Answer a questionnaire sharing your risk appetite and investment preferences.
- Fund your account
- Watch your portfolio grow over time.
What are the benefits of investing via Vinovest?
Vinovest selects, authenticates, buys, stores, and sells investment-grade wines for you.
Here are some of the key benefits:
You are guaranteed the best wholesale prices, as your wines are bought directly from wine merchants, winemakers, and global wine exchanges.
Vinovest stores your wines in bonded warehouses under optimal conditions of humidity, temperature, light, and vibration.
Expert Wine Advisory Team
A team of an Advanced Sommelier and three Master Sommeliers curates your wine portfolio - aided by Artificial Intelligence-driven investment models.
You get access to an extensive wine network, including limited releases of new wines and private sales of wineries.
Why is it better to invest in wines through Vinovest vs. buying a vineyard?
Investing in wine bottles through Vinovest is a completely hassle-free option as compared to the complexities of buying a vineyard.
Much lower investment
Your overall investment will be much lower than buying and maintaining a vineyard.
All you need to do is fund your account, and pay a 2.85% annual fee (2.5% for a portfolio above $50,000). This fee includes buying wines, wine fraud detection, storage, insurance, portfolio management, and selling.
You get a full insurance policy at market value. You can also enjoy significant tax advantages as the bonded warehouses don’t charge excise duty or VAT.
Low risk, and hedge against market volatilities.
Besides letting you control how much risk you take on, it provides a hedge against market volatility. Note that wine has beaten the S&P 500 index by 1,000% over the last 20 years, even during economic downswings.
Easy to buy and sell your assets.
Vinovest’s intelligent online platform lets you buy fine wines at any time. You can also sell and deliver the bottles to counterparty buyers whenever you wish to.
No hassles of red-tape
There’s no question of having to deal with bureaucracy since you don’t have to deal with any regulatory or government bodies.
In short, Vinovest lets you invest in fine wines - hassle-free!
Owning a vineyard may seem like the most attractive proposition for a wine enthusiast. But, it comes with plenty of risks and challenges.
You can reap the benefits of the lucrative wine market in a much simpler way by investing in wine bottles through Vinovest.
How about signing up now to have your wine investment portfolio curated right away?