Vineyard investing is trendy and what all the cool kids do when they retire or fire corporate employers. We enjoy vino more than most and cite health benefits as the reason for our insatiable thirst. That said – we would think more than twice before plunking down our life savings for a fruit farm.
Vineyards are serious business and growing grapes is a science and lots of work. The number of Washington State wineries has exploded by 400% over the past ten years. This sort of growth has created a two-million dollar a year wine tourism business.
Show me the money.
Sure. Say you land the ultimate vineyard in a mind-blowing, jaw dropping slice of paradise locale. Forget what that cost you and focus on what it might make you.
An acre of top tier terra in Napa Valley could crank out 4 – 5 tons of grapes and gross as much as $20,000 annually. As most vineyards are at least 8-10 acres, we liberally forecast your land and plants to generate a healthy $200,000 per year. If you build a winery to make wine with those grapes, you’ll have to wait two to three years for barrel aging and five to seven years before seeing any revenue from your vineyard investment.
Growing grapes is expensive. Site preparation, irrigation systems, vine and trellis setup, grow tube management, fertilization, herbicides, fungicides, insecticides, cover crops, cultivation, vehicle maintenance, machinery repair, insurance, debt service and interest deteriorate your vineyard profitability in a hurry.
Operating costs conservatively cut your vineyard profit margin in half and average $8,000 to $10,000 per planted acre. And we haven’t even considered the cost to market, compete and grow against your 650 competitors. Yikes.
Experiential tourism is big these days – people vacation to indulge in tasteful hobbies and interests and love to be outside. Weddings, corvette rallies and pairing dinners can all help augment cash per grape, but why settle for activities and special events when you can create an experience?
The average daily rate for a Washington State resort or inn accommodation is $170.98. Say you build 15 vineyard accommodations on an acre of your property unfit for farming. If your lodging is occupied 60% of a season spanning May 1st through October 1st and commanded $225 per occupied night, that empty real estate could crank out $309,825 each year – 55% more than your grapes.
Destination wineries are uber trendy, but a new spin on the bottle can turn a destination into a place to stay. We’d love to tell you more – perhaps over a yummy pinot.
We can help you develop unique lodgings for the savvy sipper.