How To Start A Wine Business: Complete Guide (2023 Updated)
Last Updated on April 12, 2023 by Lydia Martin
Unlike most businesses, the wine industry had positive growth during the pandemic.
Many people were stuck in their houses, giving them more reason to order wine bottles online.
From learning the terms used by sommeliers, wine cultures, and the winemaking process, many became interested in starting their wine businesses.
So how to start a wine business and turn it into a successful winery in a few years?
10 Easy Steps To Start A Wine Business
1. Choose An Easy-To-Remember Business Name
The name of your winery business should be recognizable by your consumers, suppliers, and distributors.
Picking a wine label and name with a story behind it would appeal more to the public.
“It’s important for us to have an intimate and personalized experience with clients. And we can. It works as a business philosophy.”
– Jeremy Borg, Owner of Painted Wolf Wines
Nevertheless, using an existing brand name leads to a legal dispute and can be confusing for your customers.
Choosing a unique name makes it more convenient to set up a website for selling and do other digital marketing later.
2. Choose A Business Entity
Now that you have the name of your new wine business, it’s time to choose a business entity.
Many options like sole proprietorship, partnership, and corporation are available. But you can also choose a Limited Liability Company (LLC), as many suggest.
At this point, you must consider the type of winery business you will create.
You might consider opening a wine bar or a wine shop or establishing your own winery. Each of these paths will have its pros and cons.
3. Find A Winery Location
Alcohol Laws
Commercially offering your wine would subject you to following the country’s federal and state taxes, bonding mandates, licensing requirements, brand labeling, and grape designations [1].
Climate Needs
The climate is the most critical factor when looking for land. Too much or not enough rain and too high or too low temperatures affect the quality of the wine [2].
Grape Selection
You can either base your location on the grapes you’re going to grow or select the grapes after settling down to one location.
If you choose to grow your grapes, expect a more prolonged process ahead.
Or you can source grapes from local wineries to save the trouble of experimenting for the next three to four years.
Wine Cellar Options
The wine cellar would be more beneficial for expanding your winery business.
Although you don’t have to consider it immediately, preparing a wine storage facility would be better once your production increases.
4. Create A Business Plan
Here is when the real work starts. Creating business plans includes extensive research on the wine industry and competition.
It is your long-term guide document that you will update and change as your wine business grows.
An executive summary, market analysis, marketing plan, details about labor and operations, financial plans, and projections are some factors you will need for a sound business plan.
5. Acquire Necessary Licensing, Permits & Taxes
Like other alcoholic beverages, the wine industry is also heavily regulated, making it hard to comply with all the required licenses and permits.
Fortunately, wine-compliance companies can help you with these documents.
You must apply for permits and documents like tax identification numbers, liability insurance, and a standard business license.
Afterward, you must register with the FDA, comply with local, state, and federal laws, and have the Alcohol and Tobacco Tax approve your wine label design.
6. Purchase Winery Equipment
The size of your winery will determine the equipment you need. But if you use an existing winery, the number of equipment will lessen.
Some winemaking equipment would include:
- Pumps
- Stainless steel tanks
- Aerator equipment
- Winemaking systems
- Wine presses and destemmers
- Heat shrink tunnel
- Tank accessories
Those listed are only for the winemaking process. You would need to spend more to buy other equipment for your winery’s design, tasting room, and other events.
7. Estimate Business Budget & Costs
The long equipment list would cost you a ton of capital, so you should consider a custom crush facility for your winemaking process.
It is complete with equipment and resources for winemaking, lessening the capital needed for your winery business and letting you focus more on how to sell your wine products.
As a customer, you would need to pay the wine producers to craft wine, and they would be entirely responsible for the regulatory requirements and other processing steps [3].
8. Secure Business Funding
Equipment Loan
The equipment would take up most of your starting capital in the winemaking industry.
That’s why startups often look for a loan to help them pay up to 100% of its cost, which they will repay with additional interest over time.
Bank Loan
Like any agricultural business, seasonal changes and natural disasters directly affect the wine trade, making securing a loan for vineyards tough.
The bank might require a sizable down payment and inquire about your financial capacity to repay the loan even if the business fails.
However, the growing industry of business wineries led some banks to establish loan programs for this industry.
Business Credit Card
Most small wine business owners use their business credit cards for smaller expenses.
A credit card with a long intro APR (annual percentage rate) period of 0% would be helpful when starting.
It would let you have an interest-free balance for a particular time.
Business Line Of Credit
A business line of credit would be helpful once your wine business experience troughs.
It works like a credit card, and you only need to pay the interest on borrowed money.
And in case you only grow some of your grapes in your vineyard, you can also use this one to buy grapes.
9. Choose Bottle Designs, Sizes, & Labels
The intense preparations and plannings for starting your wine business will leave you exhausted.
But preparing your wine bottles will help distract you from all the pressure.
Making wine labels is also a critical part, and it would help you envision the final product of your wine business.
However, you may also choose to bottle your wine with stationary or mobile bottling lines, as many winemakers decide not to bottle their own wines.
10. Identify Distribution & Marketing Plans
Figuring out your distribution plan will be essential to your business.
It will be crucial if you’re planning mass production of your wine products and getting the bottles in large shops.
But locally, selling your own wine in small batches would be much simpler.
A marketing plan is vital to any business, covering everything from advertising to promoting wine products.
You may consider showcasing your wine at different wine-tasting events and letting potential customers taste it before buying.
Is A Wine Business Profitable?
Yes, a wine business is profitable, but it takes time and money before you start earning from it.
The CEO of the wine company, who is also a winemaker, enjoy a compensation of more than $300,000 per year, while their vice presidents can earn more than $200,000 [4].
“If you want to build a winery, it’s not for everyone. It’s a beautiful world, an amazing world, but there is a lot of sacrifice.”
– Miriam Cvetic Masciarelli, Brand Ambassador and Winemaker
A regular winemaker can earn an average of $60,000.
How Much Does It Typically Cost To Start A Wine Business?
Starting your own wine business typically costs around $600,000 up to a few million.
Of course, you don’t have to shoulder this hefty amount of money alone. You will have to look for investors and other sources of business funding.
That’s when your business plans come in handy.
Prepare it from an investor’s point of view, and include all the details you would look for if you were investing in a business.
FAQs
Are wine businesses good investments?
Yes, a wine business is generally a good long-term investment.
Wine is a famous alcoholic beverage for many special occasions, and it would be worth waiting for this kind of business to grow.
How much do wine owners make?
Wine owners with CEO positions in wine companies can make around $300,000 to 500,000 annually.
This amount depends heavily on the production and sales of the winery. Many wine companies sell more wine than others, generating more income.
Is it hard to start a wine business?
Yes, starting a wine business is hard and complicated.
Not only do you have to consider many factors and secure enough business funds, but you would also have to wait a long time before you start earning from the business.
Can a small winery be profitable?
Yes, a small winery can still be profitable. You can sell your wines with your friends, relatives, or neighbors.
You would still have to follow the rules and regulations regarding alcoholic drinks distribution.
Is making wine cheaper than buying it?
No, making wine is not always cheaper than just buying it. It would be cheaper if you already have the equipment and the ingredients.
But if you’re making wine from scratch, it would be better to buy commercially made ones.
Final Say
Getting into the business side of winemaking is hard, and it would cost you so much money and make you wait a few years before the business starts earning.
You must start with an easy-to-remember brand name, an approved wine label, a sound business plan, and a strategic marketing design.
All of these steps are only the beginning of your winery.
Over time, you will have to adjust and change your business plans and strategies to cope with the development and challenges of the wine industry.
References:
- https://www.nolo.com/legal-encyclopedia/how-start-home-vintner-business.html
- https://www.reuters.com/business/sustainable-business/hard-hit-by-climate-change-winemakers-turn-sustainability-ride-storms-2022-09-14/
- https://www.ttb.gov/images/industry_circulars/archives/2008/08-04.html
- https://work.chron.com/average-salary-wine-maker-4960.html
