There is a popular saying about wine, which I love so much. It simply states “Beer is made by men, Wine is made by God”. This quotes literally means that wine is in a class and league of its own, no wonder you hear many people say that wine is very good for the heart. How else can one then be alive, if they don’t have a heart? This is the singular reason millions of bottles of wines are drank daily all over the world.
In this guide we will be looking at detailed information and processes on how you can start a wine business and profit from it in 2021 and beyond. Wine, which comes as an alcoholic and non-alcoholic beverage is an “essential” that graces many dinner tables, bars, cellars and events all over the world on a daily basis.
Gone are the days when winemaking is the preserve of kings or exclusive to certain countries, as anyone and everyone can go into winemaking without the need for acres of lands and millions of dollars -worth of equipment before you can start and profit from the wine business.
In this guide, we will give you a simplified and informative methods and all you need to get started and the different models you can adopt, without breaking the bank, to quickly and easily profit from wine business.
By deciding to start a wine business, you will be joining millions of businessmen and women, who are already garnishing dinner tables and bars all over the world with assorted and diverse kinds of wine, which are been produced in their winery scattered all over the world. It is very important to note that you can start your wine business as an importer, a merchant, distributor, bar owner or owner of a vineyard and winery.
The market opportunities are as enormous as there are many varieties and bottles of wine out there in the market. For instance, if you decide to become an importer of wine, your activities will revolve around negotiating prices, visiting wine producers if need be, and or working with wholesalers, taking payments and displaying of wines in your outlets.
For the purpose of this guide, we will look at different models of wine business you can start, depending on the resources available to you, and equip you with enough and relevant information, so you will able to make an informed decision, as you position yourself to profit from the wine business.
Model 1: Owning a winery
If you decide to go into wine business by owning a winery, this will however be determined by how much capital is at your disposal, and you must understand that starting your own winery takes time, mastery of your craft and your passion. Every business that will eventually become successful takes time and skills in the building, including your wine business, but if you follow the following steps, you will be reducing the time, it would have taken if you don’t have this knowledge we are providing here.
Step 1: Choose a name for your wine business
Starting a wine business is like starting any other business. And I am sure you will not start want to start a business as a ghost. So it is very important that you get and register a name for your new business, possibly a limited liability company, as it offers certain protections, which sole proprietorship does not offer and also this will make the process of taxation in the future very easy.
In the bid of trying to register your business name, you might need to do a little research to ensure that no other wine company is bearing your name, and also make sure your name is available for registration in the company house.
When coming up with the name for your wine business, be as creative as possible, as your name will serve as a brand name for your wine, so you can use same name for buying a domain for your website, as getting this right will make the process of selling and marketing very easy.
Who wants to buy a wine they cannot pronounce or a name they cannot remember?
Step 2: Write a Business Plan
The place of planning cannot be overemphasized. Who wants to embark on a journey without knowing the direction they are headed. The aim of the business plan is for you to allow it be your roadmap and guide on each step of the journey, letting you know areas you are doing well or aspects of the wine business that needs tweaking.
When writing your business plan you are expected to do a research extensively on the industry, with special focus on the competition of your niche, focusing on market analysis, financial projections, products you will offer, your unique advantage (USP), etc.
There are so many resources online to help you write a comprehensive business plan for your wine business, but if you need help with getting started with writing a business plan, you can reach out to (www.biab.com.ng) they will be able to help. Always bear in mind that your business plan is a not a static document, hence there will be need to always update it as you go along in your business journey.
Step 3: Get necessary Licenses, Permits, and Taxes
Wine business is a heavily regulated business, so licensing and permits, most times can get very complicated. For instance, the EU have strict regulations on wine production, some of which relates to over-production and selling to international markets.
It is advised that you apply for a permit to enable you legally operate your winery, you will also have to register with food and drugs administration authorities, you will also have to apply to Alcohol, Tax and Trade bureau authorities and you will have to also comply with other local and state laws.
It is advisable to consult a lawyer to help you sort out issues as with regards to different custom and excise duties and taxes, if you will be selling your wine across borders.
Step 4: Plan with a Budget
Now that you have your business plan and you have also known all the licenses and permits you will be needing for your wine business, it is now time to look at your budget. For the purposes of creating and working with a budget for your wine business, you have to consider the following costs:
- Land (Vines, fermentation and storage, office, tasting room)
- Machinery (Bottling line, cooperage).
- Equipment (refrigerator, cellar, winery building, trucks, receiving equipment).
Step 5: How to Get Funding for your Wine Business
Wine business like any other start-up will face challenges in trying to secure loan to start the business. So your initial start- up cost might come from your savings, friends and family. But in situations, where the funds are not available, the natural route to go will be that of loans. The good news however, is that most wine businesses are eligible for traditional small business loans.
We have listed the types of loans you can access to get started with your wine business.
- Bank Loan
You will be eligible for a bank loan to start your wine business, if you are able to meet the requirement of making a down payment of 50% of the loan amount. The best option in securing a bank loan for your wine business is through community banks or credit unions, but they however charge high interest rates, and they might also carry out an inspection of your vineyard.
As part of the process of approving your loan, because of the industry risk, the banks will look at your personal salary and credit score, as criteria for loan approval.
But things seems to be changing for the better with regards to loan for wine business owners. “According to the Wall Street Journal, due to the increasing popularity of individually owned wineries, some banks have actually established loan programs geared specifically toward vineyards”
Live Oak Bank and Exchange Bank in America, are examples of banks that offers loans to wine business owners.
- Equipment Loan
With an equipment loan, you can easily start your wine business, as equipment is one of the major costs in getting started. If you get approved for the equipment loan, you will not have to make a down payment, as the total cost for the equipment will be provided, which you will have to repay with interest over an agreed period of time.
The advantage of an equipment loan over bank loan, is that the equipment serves as collateral.
- Business Line of Credit
Wine business is an agricultural business, hence it is natural to experience seasonal peaks and lows. So a business line of credit will be the buffer you will need to pull you through the low moments. With a business line of credit, you will only have to pay interest on the funds you use.
- Business Credit Card
As a wine business owner, you might tend to pay for expenses using business credit cards. It is good to choose a credit card with 0% APR introductory period as this will allow you carry an interest-free balance for the introductory period for your wine business.
For instance, America Express Blue Business Plus has a 12-month interest free introductory period with no annual fees. So you can check them out, as the APR set up is dependent on your creditworthiness.
You must bear in mind that, regardless of which type of loan you apply for, you will have the best chances of approval with a high personal credit score, profitability, time in business, and strong cash flow, so the best time to apply for a loan will most likely be after your busy season.
Wine Business Model 2
- Become a virtual winemaker
You may not have all the needed huge capital to start a wine business, but that should not stop you from profiting from wine business. You can simply assume a hands-on role by becoming a virtual winemaker for instance.
As a virtual winemaker, you can have vineyard owners harvest their grapes, and you can then make the wine in rented equipment. You can have your storage and barrels, and if you don’t have, you can pay for storage to ferment the grapes, and use a facility where you pay per case of wine produced.
- Buying or investing in a Winery
If you don’t have all it takes to start your own wine business from the scratch, you may decide to buy an existing one or invest in a thriving one. The big advantage of this is that most of the work like purchasing and installing equipment, hiring and preparing the land, marketing and branding has already been done. The disadvantage of this model is that the taste of the wine and company culture has already been established, but if you don’t have all the funds to start your own wine business, you can simply go with the flow of the existing business.
- Opening a Wine Shop/Bar
You may decide to get a franchise of an existing winemaker if you cannot start your own winery or invest in an existing one. The franchise would have achieved branding and name recognition and an existing market. The downside of this model is that while you might get a say in what to stock and when the franchise might dictate everything from prices to branding and even opening hours.
Regardless of your wine business model, know that your business success ultimately depends upon catering to your customer, which may require you to have requisite and up to date knowledge of their changing tastes, spending habits, and the industry at large. This is one of the keys on how to start and run a successful winery business.
Starting a wine business requires money, sweat, equity, and teamwork and it is not a get rich quick scheme as it will take time before you start seeing returns on your investment. Wine business is also niche-based and time-intensive and requires some specialized skills.
So whether you are an amateur or professional winemaker will require that you follow through all the way and the wine business requires teamwork.
Action is however what is cure, you can read millions of guides like this, but until you are willing to take action, nothing will change.
Let us know your thoughts about this guide on starting a wine business or if you have any business idea you want us to write about in the comment section.