Investing
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6 minutes
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Vineyard Investment: How To Do It, and Is it Worth It?

By
Thomas M.
-
September 14, 2020

Do you want to invest in a vineyard? 

A vineyard investment may be a dream for many, and could even return handsome profits over time.

But, is it the smartest way to invest in the wine market?

We’ll help you answer these important questions. After reading this article you’ll know exactly how to invest in vineyards. You’ll also discover a far easier and less-risky approach to invest in the high-growth fine wine market.

This article contains:

(Click on the links below to jump to a specific section)

Vineyard Investment: What Does it Mean?

You could invest in vineyards in two ways:

Vineyard Funds

Vineyard funds allow you to buy vineyard stakes in renowned and upcoming regions, from Napa Valley to Mendoza Argentina.

Buy Vineyards

The other option is to buy a vineyard anywhere in the world - Napa Valley, Santa Barbara in Northern California, or Australia’s Central Coast.

You can buy entire vineyards, some of which will come with a winery, a chateau, and other amenities for residents to enjoy. 

Or, opt for vineyard micro plots - smaller holdings of a large plot, usually less than a hectare of land. And, grow your wealth by planting Pinot Noir, Chardonnay, Sauvignon Blanc or Cabernet Sauvignon variety of grapes and running your own winery.

How to Buy and Develop a Vineyard

There’s no hiding it - buying and developing a vineyard is a complex exercise.

Before you do it, you have to take care of all these aspects:

Build deep contacts in the wine industry

Get actively involved with wine industry associations like the Napa Valley Vintners Association, and attend auctions and tastings. Connect with winery owners, wine critics, and the whos who of the wine business in the region. 

Get help from experts

You may need to rely on vineyard advisory services providers or wine real estate agents to spot the right investment opportunities.  Also, consult a tax advisor specialized in vineyards or agriculture for tax planning.

Where to buy a vineyard

You can scout for vineyards in the prestigious viticultural regions of Bordeaux, Burgundy or Napa Valley. (Fun fact: The earliest Bordeaux vineyard owners began making wines using grape vines brought from Spain!) 

Also, look at other upcoming regions, including China, Tasmania, Greece, and Georgia.

Have a clear idea of what you want to do with it 

Do you want to grow grapes or own a winery? Is it pure investment, or do you want to relocate to Napa Valley wine country? Do you also want to build a luxury hotel on the premises?

Forecast the cost of doing business

Estimate the capital and operational costs that you’ll have to incur - including real estate, equipment, machinery, workforce, and raw materials for the winery. 

Cost of buying a vineyard 

The renowned viticultural regions are heavily priced for a good reason. The less saturated areas are generally more affordable. 

For instance

  • Vineyards in Napa Valley start from around $250,000.
  • AOC vineyards in France are worth around $60,000 per acre, on average (AOC is appellation d'origine contrôlée - a way of certifying geographical indications for wine). 
  • Non-AOC vines are much more affordable, starting at $5,700 per acre. 

Cost of developing and maintaining a vineyard

Growing grapes is more pocket friendly to begin with. But, if you want more attractive returns, you are better off running a winery as a sole proprietorship or a limited liability company like the Wine Group LLC. 

Planting vines in steep, rocky terrain will need at least 3.5 times more investment than a flat piece of land (which will cost $74,000+ a hectare).

Also, factor in the cost of prepping the soil, designing the vineyard, and installing an irrigation system. In addition, you will incur recurring sales and marketing costs, insurance, and taxes.

Now:

Assume you’ve hit upon a vineyard that you want to buy. Time to assess it thoroughly from all angles!

Important factors to consider before buying a vineyard

Scrutinize all these aspects of the vineyard before you sign the dotted line:

1. Whether it’s already operational or needs to be developed from scratch

It is easier to buy a planted vineyard than to develop an uncultivated piece of agricultural land.

2. Capital requirements

Apart from the cost of buying the vineyard, assess the needs for machinery, equipment, storage spaces, tasting room, storefront, and office buildings.

3. Availability and accessibility to water sources.

Make sure there are proper sources of water, that you have the rights to use these water sources and a proper system of irrigation.

4. Due diligence on diseases, soil quality, and weather.

Find out every single detail on:

  • Soil quality and analyses conducted.
  • Micro-climates and environmental factors that could affect the farm produce.
  • Viruses and known crop diseases.

5. The time required to see your investment bear fruit

Patience is key here. It will take at least 3-4 years for your first harvest. But, it will take a few more years of effort before you eventually enjoy a profit.


Also, here are some common mistakes we’ve seen people make.


How to Buy and Develop a Vineyard

There’s no hiding it - buying and developing a vineyard is a complex exercise.

Before you do it, you have to take care of all these aspects:

Build deep contacts in the wine industry

Get actively involved with wine industry associations like the Napa Valley Vintners Association, and attend auctions and tastings. Connect with winery owners, wine critics, and the whos who of the wine business in the region. 

Get help from experts

You may need to rely on vineyard advisory services providers or wine real estate agents to spot the right investment opportunities.  Also, consult a tax advisor specialized in vineyards or agriculture for tax planning.

Where to buy a vineyard

You can scout for vineyards in the prestigious viticultural regions of Bordeaux, Burgundy or Napa Valley. (Fun fact: The earliest Bordeaux vineyard owners began making wines using grape vines brought from Spain!) 

Also, look at other upcoming regions, including China, Tasmania, Greece, and Georgia.

Have a clear idea of what you want to do with it 

Do you want to grow grapes or own a winery? Is it pure investment, or do you want to relocate to Napa Valley wine country? Do you also want to build a luxury hotel on the premises?

Forecast the cost of doing business

Estimate the capital and operational costs that you’ll have to incur - including real estate, equipment, machinery, workforce, and raw materials for the winery. 

Cost of buying a vineyard 

The renowned viticultural regions are heavily priced for a good reason. The less saturated areas are generally more affordable. 

For instance

  • Vineyards in Napa Valley start from around $250,000.
  • AOC vineyards in France are worth around $60,000 per acre, on average (AOC is appellation d'origine contrôlée - a way of certifying geographical indications for wine). 
  • Non-AOC vines are much more affordable, starting at $5,700 per acre. 

Cost of developing and maintaining a vineyard

Growing grapes is more pocket friendly to begin with. But, if you want more attractive returns, you are better off running a winery as a sole proprietorship or a limited liability company like the Wine Group LLC. 

Planting vines in steep, rocky terrain will need at least 3.5 times more investment than a flat piece of land (which will cost $74,000+ a hectare).

Also, factor in the cost of prepping the soil, designing the vineyard, and installing an irrigation system. In addition, you will incur recurring sales and marketing costs, insurance, and taxes.

Now:

Assume you’ve hit upon a vineyard that you want to buy. Time to assess it thoroughly from all angles!

Important factors to consider before buying a vineyard

Scrutinize all these aspects of the vineyard before you sign the dotted line:

1. Whether it’s already operational or needs to be developed from scratch

It is easier to buy a planted vineyard than to develop an uncultivated piece of agricultural land.

2. Capital requirements

Apart from the cost of buying the vineyard, assess the needs for machinery, equipment, storage spaces, tasting room, storefront, and office buildings.

3. Availability and accessibility to water sources.

Make sure there are proper sources of water, that you have the rights to use these water sources and a proper system of irrigation.

4. Due diligence on diseases, soil quality, and weather.

Find out every single detail on:

  • Soil quality and analyses conducted.
  • Micro-climates and environmental factors that could affect the farm produce.
  • Viruses and known crop diseases.

5. The time required to see your investment bear fruit

Patience is key here. It will take at least 3-4 years for your first harvest. But, it will take a few more years of effort before you eventually enjoy a profit.

Also, here are some common mistakes we’ve seen people make.

Mistakes people make when buying a vineyard

Problems arise when people enter the vineyard business with unrealistic expectations about the effort and investment required to manage one.

Not planning a good team to manage and work on the vineyard.

You’ll need a reliable team, including a vineyard manager and farmers, to ensure smooth vineyard operations.

Not having long-term buyers for the grapes.

Make sure you have long-term purchase contracts with buyers for your grapes to ensure a steady revenue stream.

Not being passionate enough.

If you aren’t deeply passionate about growing grapes or making wine, you won’t make it too far in the vineyard business.

Not being aware of the risks.

You must be prepared for bad spells in the form of stock contamination, natural disasters, and crop diseases.

Given all these hurdles in investing in a vineyard - what could be smarter is to invest in fine wine bottles through an expert wine investment company.

How does that work? 

An Alternative Way to Invest in Wine: Investing in Wine Bottles through Vinovest


Investing in fine wine bottles through a wine investment company like Vinovest will help you reap the benefits of the high-growth wine market! 

How do you Invest in Wines via Vinovest?

It’s as simple as this:

  1. Sign up on the Vinovest website. 
  2. Answer a questionnaire on your risk appetite and investment preferences.
  3. Fund your account with a minimum $1,000 investment. This will be allocated to your fine wine portfolio.

You can then sit back and watch your portfolio grow over time as Vinovest selects, authenticates, buys, stores, and sells the fine wines for you

Here are some of the benefits:

Best wholesale prices

You get the best prices as the bottles are sourced directly from winemakers and top wine merchants.

Tracing provenance and authenticity

Vinovest traces the provenance and verifies the authenticity of each bottle of wine.

Storage

Vinovest stores your wines in bonded warehouses under perfect conditions of humidity, temperature, light, and vibration.

Why is it Better than Investing in Vineyards?

There are several reasons why investing in wine bottles through Vinovest is a far better alternative to investing in vineyards.

Easy to buy and sell your assets

You can easily buy and sell your wine bottles using the simple, intelligent online platform.  

Expert wine advisory team 

You get a wine portfolio, which is carefully curated by a team of three Master Sommeliers and an Advanced Sommelier using Artificial Intelligence-driven investment models.

Access to a deep network

You get access to an extensive wine network, including limited releases of new wines and private winery sales.

Much lower investment 

Your total investment will be significantly lower than owning a vineyard. This includes funding your account and paying a 2.85% annual fee (2.5% for a portfolio above $50,000) - for buying wines, fraud detection, storing wines, insurance, portfolio management, and selling.

You also get a full insurance policy at market value. Besides, you get tax advantages that are passed on to you as bonded warehouses don’t charge VAT and excise duty.

Hedge against market volatilities

Investing in wine bottles helps you diversify from the inherent volatilities of stocks and bonds. Also, wine is a steady growth market. Despite global economic slowdowns, it has beaten the S&P 500 index by 1,000% over the last 20 years.

Conclusion

A vineyard investment may be an exciting prospect for wine enthusiasts and a great portfolio diversification strategy. But, it is capital intensive and comes with its own set of complexities.

If you want an incredibly simple, modern wine investing experience - Vinovest is your answer!

Start now, and build your high-growth portfolio of fine wines right away. 

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