Over the past several decades, the wine production industry has expanded into a number of new markets in South America, North America, Africa, and more. While it has been discovered that incredible wine is able to be successfully produced in each of these regions, some vineyards are proving to be quite successful with mediocre wines and others are not profitable with spectacular varieties. Wine making can be profitable for the right person and reason.
One Expensive Hobby
Many individuals believe that simply by having a sophisticated and well-trained palate for drinking wine equates to becoming an excellent wine maker. This is far from true. Many of the greatest sommeliers in the world may not have the business, agricultural and management skills to run a profitable winery. To become profitable, you must treat your endeavor as a business rather than a hobby. The best business people recognize their personal weaknesses and surround themselves with the best team available to create the greatest chance for success.
Location and Harvest
Wine making is essentially working in agriculture, and a number of variables will directly affect your profitability before you even fill your first bottle of wine. You must consider land value. In some of the most desirable wine regions in the world, the land value may exceed the possibility for profitability in the first few years. Land must be examined from all perspectives prior to making a purchase. If you wish to produce a pinot noir, purchasing land that already produces a top chardonnay may not be a wise business decision. If the land you wish to purchase has never produced grapes, this may not be a wise investment for someone new to wine making.
If you purchase land in another country, you should hire a local attorney and carefully review all importing and exporting regulations, production restrictions, etc. prior to making a purchase. Also, do not forget to carefully examine the climate and weather patterns of the region. If a region is prone to years of poor harvest, the land may more ideal for animals rather than grapes.
Sales and Marketing
Once people purchase the land and create a spectacular product, they often forget about sales and marketing. You may have the best malbec in the whole of South America, however if no one knows you exist, you will not be profitable. You should constantly be networking with vendors throughout the entire process. You should also work closely with a marketing professional to perform in-depth market and industry analyses to maximize your profitability. The region currently consuming your products may not be the most profitable regions for your business. You should evaluate your target audience and trends each year.
To become profitable in the wine industry you must think long term. The initial investment will be far more substantial than the return in the first years of production. As long as you consider the areas and elements previously mentioned, your chances of profitability will increase greatly. Perhaps individuals who truly appreciate wine see the greatest reward of all not as profitability but rather simply to create a spectacular wine to be appreciated, if only by a few.
Sources:
http://www.forbes.com/2008/07/01/winery-start-success-drink08-forbeslife-cx_ea_0701winebiz.html
