Do you think you have a palate refined enough to craft a bottle of fine wine? Are you looking for a unique alternative investment opportunity to diversify your real estate portfolio? Want to try your hand at something fun, unique and new? You may want to consider the many benefits associated with investing in a vineyard.

Like any parcel of land, buying into a vineyard or winery is foremost an investment in real estate. If you’re also betting on the success of the wine itself, you may have the potential to make a wildly profitable investment!

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It’s important to note, purchasing a vineyard and starting a winery isn’t an easy way to suddenly grow your available assets. It takes a significant amount of time and a fair amount of expertise to make a winery profitable. With the right combination of commitment, care and attention, it’s possible to invest in an asset that will double as a fun, engaging hobby while also generating income.

New opportunities for growth

A recent relaxation of liquor laws in Ontario is making it easier than ever before to start a winery in the province. It’s also possible to open up your own wine-making business in many other parts of Canada. This autumn, grocery stores in Ontario will be allowed to sell beer and wine, marking the first time alcohol stores have been permitted outside of government-run liquor stores and specialty wine retailers in the province.

What to consider when investing in wine

Consider the full scope of what you’re getting into before purchasing your first winery. For instance, it’ll likely be several years before your winery ever turns a profit. You need a lot of liquidity to make a vineyard work.

You’ll have to determine if you want to purchase an established vineyard, which may cost significantly more, or obtain undeveloped land and plant your own grapes. While purchasing an established vineyard will clearly lead you to profitability faster, you may have to work with the grapes already planted on-site. This could limit the amount of creativity you’re able to exercise when brewing your wine.

The size of your vineyard directly correlates with the amount of wine you’ll be able to produce. The average craft vineyard spans about 3 acres, which is capable of producing between 6,000 and 12,000 bottles of wine.

Of course, when you purchase land to convert to a vineyard, the land itself will appreciate—especially if you have wine making and tasting facilities on-site. Once your vineyard is operational, you can use it as a rentable event space, thus generating additional profit.

Getting started with a vineyard

If you’ve considered all the benefits and drawbacks associated with investing in a winery and still believe it represents a sound investment decision for yourself, here are the steps you’ll need to follow to successfully invest:

·        Conduct research: Prior to purchasing a winery, you’ll need to conduct a lot of research. As with any investment, you have to possess a thorough understanding of the land you’re purchasing and the amount of money and time you’ll have to spend before the winery can become profitable.

·        Consider the amount you can invest: Take a hard look at your finances, and determine how much money you’re ultimately willing and able to invest in your winery. While vineyards can become quite profitable over time, they require a significant amount of investment at the outset. Prepare for this accordingly.

·        Calculate expenses: Once you’ve determined your budget, try to work out how much money you’ll spend initially, then year-over-year, until your winery reaches profitability. You’ll have to invest in equipment, hire staff to help brew the wine and potentially develop tasting spaces and winemaking facilities on your site.

·        Hire an expert: While you should plan to play a significant role in developing the flavor and characteristics of the wine you brew, ultimately, it’s best to hire a professional wine maker to help you out at your site. Without proper, professional care, wine can ferment incorrectly, leading to lost product and delayed profitability.

Vineyard Investing

Succeeding in wine

If you’re in the process of perusing potential vineyard investments, there are a few things you can do early on to help you ensure your investment begins to generate income in a relatively short period of time. Here are just some of the steps necessary to succeed in the craft wine business:

·        Understand regulations: One key to success in the wine industry is understanding the complex regulatory patchwork dictating the development and sale of alcoholic beverages. You need to have a complete and thorough understanding of how these regulations impact your own wine making business, especially if you plan to also open an on-site tasting room.

·        Wait for profitability: It will take a significant amount of time for your vineyard to achieve profitability. You need to be prepared to wait – even if it takes one or two years longer than initially expected. Make sure you have the liquidity necessary to continue supporting your investment, or you may end up in serious trouble.

·        Buy the right equipment: There are few things more important to successful wine making than investing in the right equipment. While it may be tempting to skimp on the level of winemaking equipment you purchase, opt for the industry recommended gear.

·        Consider investment alternatives: Owning a full-blown winery isn’t right for every investor. If you like the idea of investing in wine, however, consider alternative investment options. Some wineries, for instance, may allow investors the opportunity to create branded partnerships. Alternatively, you might consider purchasing investment-quality wine to store in your wine cellar.

Growing grapes to grow your portfolio

While investing in a vineyard isn’t right for every investor, it can be a creative way for those with a refined palate and a sense of adventure to diversify their portfolio. If you’re looking for a unique way to generate income and pursue a lifelong dream, consider taking advantage of Ontario’s looser liquor laws and reaping the many benefits associated with investing in a winery.