Do you want to start a winery without owning a vineyard? If YES, here is a complete guide to starting a winery with NO money and no experience plus a sample winery business plan template.
Starting a winery can be a very exciting and rewarding business if you are focused, dedicated and plan very well. There are various aspects to the business and you can decide to start on a small scale or large but an important fact of starting this business is that you will need to be very patient and have substantial funds as this is a business done with a long term approach and with a lot of money invested in it.
If you intend to start and run a winery as a profitable business do not look forward to having immediate returns on your investment.
This is why people who go into the business are generally seen as doing it not for their own gain or benefit but as a future investment they can leave behind for their children and grandchildren although this is not always true in all situations as there are people who start turning in profits some years after starting the business.
What Does It Take to Start a Winery Successfully?
An important decision you will have to make before starting is to know what aspect of the business you will like to do or if you will prefer to handle all aspects. For instance you can decide to own a vineyard which is a farm that grows grapes a major ingredient for wines.
After growing the grapes you can sell or export them to wineries who are involved in producing the wine. You can also decide to start and own a winery where you will produce the wine and distribute them to consumers or another option is to do both by having an estate winery where you grow the grapes and produce the wine.
In a situation where you do not have enough money to invest, you can choose to partner with more established wineries that have their own vineyards and wineries to grow their grapes and produce their own wines. These wineries give people the opportunity to make a barrel for their own private consumption or make hundreds of barrels for commercial purposes.
All you have to do is bring some money and choose the variety of grape you will like as well as the site of the vineyard and choose a winemaker to work with you to choose your flavor then go ahead to market your product. You do not need to worry about buying property, machinery and other tedious aspects of the business. The investment is still huge but not as much as starting from the scratch.
Other factors you will also need to consider is the cost involved in setting up the business as this could be substantial, licensing requirements and marketing and distribution plans. All these factors and components are essential as they go a long way in making the business a thriving and successful venture.
Steps to Starting a Winery Without a Vineyard
1. Understand the Industry
As stated earlier, the winery business is an exciting one and can be a rewarding experience if properly done and well planned. The industry is fast growing as despite the huge capital outlay needed to start the business a lot of people are still coming in leading to it being a vibrant industry.
Interesting Statistics About the Industry
The wine institute which represents about 500 wineries in California states that total wine sales in the united states both from foreign and domestic avenues was around 600 million gallons some years ago which recorded a retail value of 19 billion dollars.
Also, wine exports have been a good source of revenue with 79 million gallons exported providing about 500 million dollars in revenue.
California accounts for most of the wine markets in the United States but steadily over the years, the business has become very popular and there has been an increase in wine markets in various regions around the country. This has seen vineyards available in about 40 states with 49 states having wineries, leading to about 2000 wineries around the country.
In 2014, a major landmark was achieved when the United States of America for the first time became the largest wine consumer by volume with an annual consumption of 29.1 million hectoliters over taking France in the process. This has gone on to explain why wine brands from the United States are dominant in the world market and are continually on the rise.
Statistics also show that wine consumption in the United States is set to rise by 11% over the next few years and this growth will make the total market share of the country double what is expected from the market of China.
This is an industry that is characterized by the top individuals in the society such as celebrities or top business men and women who have made their money in other industries and are ready to invest in the winery business as not everybody can enter this type of business without substantial funds.
There are several factors to consider like where to buy the land, cost of the land, planting of the grapes harvesting of the grapes, bottling the product, marketing and lots more making it a daunting and challenging task. For instance, if you decide to start the business from the scratch you will have to be extremely patient and be ready to spend huge money.
It can take up to four years before you produce grapes that are commercially viable and the process of making the wine can take a further two years which means whatever you budget for the business should be for a long term basis and you should be in it for the long haul.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of people and organizations that need the services of wineries cuts across various sectors of the society as there are many people who require their services. Below is a list of the people and organizations that need the services of wineries
3. Decide Which Niche to Concentrate On
As stated earlier, there are various aspects of this business you can choose to start. The business also has various niches that as an entrepreneur you can choose from. Some of the niches you can go into and still make good profit and excel include the following
- Tours of vineyard
- Tasting rooms
The Level of Competition in the Industry
No matter the aspect or niche of the business you decide to specialize in, entering the winery industry is no tea party or piece of cake as you will need more than your expertise and you will have to be dedicated and focused to survive and compete in the industry.
Despite needing substantial amount of capital to start the business there are still a lot of major and established players in the industry making it very competitive.
Apart from competing with local producers and business owners there is also intense competition from imported wine products from all over the world which gives customers a lot of options which means when coming into the business you will have to offer something very different that will make customers consider patronize your brand of wine.
The good thing though is that despite this competition there is still room for more people to come into the business. There are various factors to consider to enable you compete favorably in the industry. It is very essential you create your niche, something unique that will give you the edge and make you avoid going into head on competition with established players in the industry.
First of all you have to define your target audience and know your customers. Decide on what type of wine you want to make. Will it be high quality wine, low end wine or flavored wine or a wine that will appeal to a particular segment of the society?
Do some market research and get to know what the people will like. When this is done you will be able to access your own customers on a long term basis who will identify with your brand of wine and remain loyal to your business.
4. Know Your Major Competitors in the Industry
There are several well-known brands in the winery industry producing top quality products and giving customers various options as there are many wines to choose from. Below is a list of some of the well-known brands in the industry:
- Rideau Vineyards
- Theopolis Vineyard
- Abbey Creek Vineyard
- Brown Estate
- Everett Ridge Winery
- Seven Sisters
- Simply Vino
- Sharp Cellars
- Wisdom Oak Vineyards
- Marke Wine
- Earl Stevens Selections
- Heritage Link Brands
- E&J Gallo Winery
Setting up a winery business is definitely not an easy task to establish which means you have to be serious and focused when planning the business. A critical economic analysis must be done to make sure that any risk or threat that can come up when starting the business or with the business already established can be dealt with.
If you intend starting a winery business in the United States, there are a lot of factors you have to consider to make the business both successful and profitable.
For instance if you are starting the business from the scratch you need to acquire a good property to suit the needs of the business. Where you choose the property and land to be used is very essential as it has to be in an area where the climatic conditions suit the grapes you intend to use.
Mostly grapes thrive in dry climatic condition and this should be noted when making your plan for the business. The variety of the grapes to be used is also vital as good grape specie will enhances your chances of having good crop yield and in the long run quality wine so this should also be looked into when making your economic analysis.
Another factor you should consider as a very important issue is hiring competent and quality staff to help in building the business as well as finding the best ways to secure and retain the loyalty of your customers.
Despite needing huge amount of capital to start the business it can still be cost effective because you do not need to hire and maintain a large workforce the whole time as you will only need many hands during the period of harvesting the crops.
5. Decide Whether to Buy a Franchise or Start from Scratch
It is very possible to buy a franchise from a successful winery company or partner with a big and successful winery if you intend to invest in the winery industry.
There are several reasons based on certain factors and incentives that encourage people to start a business. If your intention is to build and grow a business that you will like to have complete control over creating a strong business brand along the way which you can even sell as a franchise and also hope to give it to your children in the future then starting the business from the scratch will be a great idea for you.
On the other hand if your sole aim and ambition is to make more money and increase your wealth then buying a franchise from a successful winery company will be a good idea as you will have a business established on whose platform you can execute your plan.
6. Know the Possible Threats and Challenges You Will Face
Basically in the winery industry, both the already established winery companies as well as start-up winery companies are subject to threat and challenges from policies of government, global economic recession which usually affects spending habits of the companies and natural disasters that happen unexpectedly.
Another threat and challenge is finance. Most times when people enter the winery industry or start the business they usually underestimate the amount of money needed for the business. There are various costs to consider from land to machinery and labor which cost a lot. People who are not financially buoyant enough and start the business can get frustrated along the way because of inadequate funds which can lead to a halt of the business and competition running them over.
There is also the threat of your vines or crops getting damaged. If by mistake or for whatever reasons the vines planted are not suited to the area where your property is located they can die which means you will have to start from the beginning which is will take a lot of time and you will need another round of investment. Your vines can also be hit by pests which can kill them or affect the quality of the product they can produce.
Another threat that you should be wary about and are most likely going to encounter when you start your own winery company is the arrival of well – established winery companies in the location where your business has grown a strong customer base along with a strong brand.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When preparing to start your winery business, there are several legal requirements and regulations that you will need to fulfill. It is very important to get in touch with local, state and national government authorities to know the licenses you require for the business.
Another important factor you need to get done is to determine the legal structure of the business. You will have to decide whether you will run the business as a sole proprietorship or as a corporation. If you decide to be the sole proprietor of the winery business you will be the one responsible for all liabilities of the business. For instance all the personal properties you own such as cars and houses can be seized and taken away from you to settle any debt the business owes while in operation.
If you choose to operate the business as a corporation then you will be entitled to having limited liability because as a shareholder in the business you will not be held solely responsible for the debts of the business as your liability will be limited the amount of capital you have invested in the organization.
Before setting up and starting a winery business there is a lot of legal requirements you will have to fulfill before the business can be in operation. In the United States of America producing and selling wines is a big deal and involves various paper work which can be tedious and complicated.
You will need to acquire permits and licenses from the Alcohol and Tobacco Tax and Trade Bureau (TTB) and you will have to go through a longer complicated process to get approval from the TTB to get the label for the bottle. If you also plan to sell wine at your vineyard you may need further licensing for this. Apart from getting licenses and permits, later on you will also have to pay excise taxes on sales made by the business.
It is worth pointing out that licensing requirements are different around the country and it depends on the state and National legislations. Also once you have got a location where your business will operate from and have built your facility it will need to be inspected by the authorities before you use the place for business.
This inspection is done to see if your property is alright for business and if the authorities are okay with it your property will be approved. This will be done on a regular basis even after the business has started operation to ensure that standards are met and maintained.
Other requirements needed before starting the business include fulfilling some safety and health regulations. You will need to put things in place at the site of your business that show you care for the environment as well as the safety of those working at the organization. The area must be well sanitized and sterilized so that people working there or people who come to your organization are safe from getting any infections.
8. Choose a Catchy Business Name
When choosing a company name for your business, it is important you get a name that is simple, easy to know and easy to spell so that people can remember it and can easily locate your business. You can as well choose a name that can be fitted easily into a domain name or a web address.
Below are samples of business names you can use for your winery business:
- Wine & Dine
- Wine for All
- Top Wine Brands
- Excel Vineyard
- Classic Estate
9. Discuss with an Agent to Know the Best Insurance Policies for You
When starting the business you will need to have insurance policies that are required by the industry in which you operate. Having the right type of insurance could be the difference between a business that is successful and one that folds up because it is not properly insured.
In the winery industry it is very important to have the proper and right insurance for your business to protect it from damages or losses.
When seeking for the best insurance policy for the business it is important you hire a qualified and competent insurance broker who will guide you in analyzing the business evaluating the threats and risks of the business and help you choose the right policies.
Here is a list of some of the insurance policies you should get if you intend to start a winery business:
- General insurance
- Risk Insurance
- Liability insurance
- Workers Compensation
- Business owner’s insurance
- Bodily injury and property damage liability.
- Health insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you wish to start the winery business then you should consider applying for intellectual property protection. This should be done because over the years issues such as patent infringement, copyright violations, piracy and trademark counterfeiting have become major problems for several businesses. When you decide to apply for intellectual property, your business name, logo as well as documents are protected.
To apply for intellectual property as well as register the trademark of your business, you will need to begin the process with the USPTO you will be required to complete an application form. Before you receive a final approval for your trademark your form will be reviewed by lawyers as stated by the USPTO.
11. Get the Necessary Professional Certification
There are some professional qualifications you can acquire before starting the business. Certification is available for someone who wants to be a viticulturist who will be in charge of choosing variety of grapes to use, management of pest, harvesting and other duties or an enologist who is a wine maker and deals with the process of fermentation. There are also certifications for being a sommelier, a trained professional on wines and who work in various aspects of business including sales, marketing and distribution.
Below are types of training that can help you with operating the business
- Wine & Spirit Education Trust (WSET)
- International Sommelier Guild (ISG)
- Court of Master Sommeliers (CMS)
- Society of Wine Educators – Certified Specialist of Wine (CSW)
- Wine Business Management Certificate
- Direct to Consumer Certificate
- Wine Industry Finance & Accounting Certificate
- Wine Branding Certificate
- Wine Business Management Certificate (Online)
12. Write a Business Plan
When setting up a winery business, an important decision you will make is to hire experts to create a good business plan you can operate with. A business plan is vital as it will give the company a sense of direction as people we know what to do and when to do it making people to be responsible and accountable for their actions. It will also help prepare against any possible challenges that can affect the company.
The main purpose of having a business plan is to have a guide that will help you properly implement strategies laid down to effectively run the business. While writing a business plan you should endeavor not to overestimate items and figures as this could come back and cause problems for the business. Ensure you are realistic in your projections when planning the business so you will not be disappointed.
When writing a business plan, the following areas should be covered: the company’s vision and mission statement, location of your company, if there are any plans for franchise or having more branches, products and services, goals and objectives, financial and costing projection, growth strategies, swot analysis, advertising plans and lots more.
13. Prepare a Detailed Cost Analysis
The winery business is a capital intensive venture to start so you should be prepared to incur a lot of expenses when setting it up. Where you decide to locate the business, the equipment as well as structures you will build will take up a major chunk of the money you have put aside to set up the business.
This is why it is very important that you have done your research, analysis, feasibility studies and market survey very well before you make your budget and go ahead to source for funds for the business and make the investment. Here are some of the expenses you will have to incur before you can go ahead and start your winery business:
- Fee for incorporating a business – $750
- Cost for insurance, license and permits- $5,000
- The budget for permits, Insurance and license – $5,000
- The money needed to acquire land that will be suitable for the variety of grapes you will like to plant can cost you between $100,000-300,000 per acre
- Construction of the vineyard facility and tasting rooms and other administrative blocks could cost about $200, 000
- Equipment for the offices such as filing cabinets, safety gadgets, computers, printers, telephones, fax machines, furniture and electronics could cost about $15,000
- Creating and launching an official website could cost about $700
- Other expenses such as signage, business cards, advertisements, publicity and promotions) could cost around $2,500
Setting up a small scale business you will need about $200,000. Setting up a medium scale business you will need about $500,000 – $1,000,000. Setting up a large scale business you will need about $2,000,000 and above.
14. Raise the Needed Startup Capital
Setting up a winery company is an expensive venture to undertake so if you are not able to personally provide the needed funds for the business you have to source for it elsewhere.
Before sourcing for funds you should make sure you written a good business plan as this will improve greatly your chances of getting funds as you can convince people to invest in your business idea. Below is a list of options from where you can seek funding for the business
- Raising funds from selling properties and shares
- Personal savings
- Raising funds from business partners and investors
- Applying for loan from banks and other financial institutions
- Seeking funds from family members and friends
15. Choose a Suitable Location for your Business
Considering that where you site the business is very essential to its success it is vital you consult experts in the industry or people who have ideas of the business before choosing a location. Grape which is a major component of making wines grows under certain climatic conditions and soil types so it is important you choose the land for your vineyard in a region that will be suitable for the grapes to grow well. Getting a good location is important to the success and growth of the business as a bad choice of location will lead to the business failing.
Also ensure your location can be accessed easily by people who will like to market, distribute and sell your product to consumers. The following should be taken into consideration when choosing the location for a winery company:
- Operational style
- Accessibility of the location as well sufficient parking spaces for your clients
- The location’s demography
- Security and traffic
- The local regulations and laws of the community or state
- Closeness to other services and businesses
16. Hire Employees for your Technical and Manpower Needs
After deciding on a location for the business you will have decide on the technical and manpower requirements for the business. For the offices you need phones, computers, fax machines, internet services and furniture for the office to operate effectively.
On the production side of the business, apart from the raw materials you will need to get the necessary equipment that will help in the operation of the business. You will need farming and cultivation equipment to help the grapes grow without problems and keep them in good condition.
You will also need equipment that will help in the production process of making wine like filtration machines, fermentation tanks, bottling machine and a machine to produce labels for your wine bottles.
As for staff members, you do not need to employ a lot of people at the same time. You can employ a competent and qualified wine maker, a manager and about two personals in the tasting room. During the period of harvesting you can employ part time workers to work in the vineyard. You will also need to employ people to market and distribute the product. Your staff strength could be about 10-20 people.
The Service Delivery Process of the Business
The service rendered depends on the type of niche that you specialize in. If you are starting from the scratch it involves you planting the grapes, harvesting them after a few years and going through the production process of using them to make wine. After producing your wine you market and distribute them to customers.
17. Write a Marketing Plan Packed with ideas & Strategies
Before going on and creating brilliant strategies for the business ensure your wine if of high quality that will make store owners want to have them on their shelves and will make people want to have them in their homes.
You can boost your product by organizing an open day where people can come and see your vineyard and have a glass of wine. You can show people how the grapes are properly grown as well as give them a taste of your quality wine which will make them trust your product. You can also create brochures intimating people of your brand and flavor of the wine.
18. Develop Iron-clad Competitive Strategies to Help You Win
Being a start up in the winery industry could be a big challenge. First of all ensure you have a work force that is experienced and qualified to manage and operate the business as well as the necessary equipment for production. This is important as this will help you in producing top quality wines which will enable build a reputable brand giving you an edge over your competitors.
19. Brainstorm Possible Ways to Retain Clients & Customers
Increasing customer retention as well as attracting new customers is possible once you can keep your customers satisfied always. The easiest ways to achieve this is by improving and maintaining the quality of your product as well as your service delivery.
The major reason businesses lose the loyalty of their customers is largely due to the drop in the company’s standard leading to poor quality product and service. Once the quality of your product and service delivery is top notch you will not have a problem retaining your customers.
20. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Getting your brand into the market and making it to be a well-known product is not an easy feat which is why you may have to work with experienced consultants when creating awareness for your product. Whatever promotion and publicity materials produced should be used in a way that people will understand the message you are trying to pass and know what your product is all about.
Here are a few ways you can create awareness for your wine:
- Advertising on radio and television
- Advertising in newspapers and magazines
- Create and distribute flyers and leaflets
- Use social media
- Create a website showcasing all your brands
- Set up a wine club
21. Create a Suppliers / Distribution Network
The winery industry allows for networking as there are various professionals in different niches with a lot of ideas. There are situations where you will need to partner with other companies in the industry to further boost the reputation of your brand.
For instance you could have a client you have been supplying a particular wine for some time but for a particular event your client needs a different type of wine which is not your niche. To keep that particular contract and your client you can network and partner with a company in that niche and supply your client. This helps you keep your client and gives you a chance to explore other niches.
22. Tips for Running a Winery Business Successfully
There are a lot of factors that you will need to get right to ensure the business runs successfully. First of all you have to choose a good location for the business that will be suitable for the growth of the grapes. You can join wine associations in the industry in your region to get more information and assistance on running the business you can also learn from established wineries to make the business to be a successful one.
Importantly, try as much as possible to have an open door policy with your staff as this will make them feel comfortable with you and discuss all problems they have concerning the operation of the company as well as ways of moving the business forward.