Growing and Financing Your Wine Business

Financing a vineyard or a winery is typically high risk. Risk for the business owner. Risk for the bank. Risk with the weather. And risks with the market. The variables are numerous.

Vineyard financing is typically dependent on vineyard management ability, parcel size, land prices, site, variety, financial position, earnings history of the owner, as well as the balance sheets of other entities involved. Winery financing typically centers around operating, real estate and construction loans to finance the winemaker brick and mortar, and to cover the production cycle.

On top of this, financing estate vineyards and small wineries can provide additional challenges because they are not only a diverse group, they often have a unique perspective on business growth and marketing.

Market thoughts for new and experienced winegrape growers and winemakers

In all cases, capital needs are intensive because the variables are so interdependent. Investors and entrepreneurs who are relatively new to the wine industry need to know and understand what those business risks are, what the financing needs might be, and most importantly the time that’s needed to ensure success over the lifecycle of the wine business. Often it takes at least two or three years before new or dormant vines really start producing.Map of California winegrape production
Map illustrating acreage plantings for winegrapes in California. (Courtesy of Gannett Publishing, Reno Gazette-Journal, January 2014.)

Crafting a Successful Wine Business

California produces 90% of American wine and grows nearly 400 agricultural products. Within this industry, the North Bay is the state’s top winegrape producing region. As more and more vineyards are planted in the area, there are myriad considerations that should be assessed in order to make the business successful and allow it to thrive.

First, a good business plan must include a balance of capital, proven production ability in the vineyard/winery industry, and strong market knowledge. At the same time, be cautious about growth expectations. Other considerations include the following.

Do your market research

  • Today’s Millennial crowd is adventurous and open to trying new California wines not typically found in their parents’ cellars. They’re also looking at issues around sustainability and tasting the local region’s unique wines.
  • Not long ago, Cabernet and Chardonnay were the biggest sellers. According to recently released data, sparkling wine has shown nearly 9% growth over last year, with imports up in the double digits.
  • What grapes are most successful in your selected region, and how are those existing businesses in the area maximizing that potential?

Learn from the mistakes/success of others

  • What percentage of expected annual sales can support a healthy operating loan? And why? (50% is considered maximum.)
  • Are there organizations that can provide resources for you, such as the Wine Institute?
  • How are wine industry peers in your area managing their risk and business partnerships?

Research the right lender

  • Does the lender understand what you need as an agricultural business?
  • Who offers the best options for financing for your real estate, leasing for your equipment, and crop insurance for your grapes?
  • Does the lender offer adjustable or fixed rates, with annual or quarterly payments based on your receivable cash flow?

Published research can aid in understanding the industry and how it relates to your business. These include the recently-released Winery & Grower Benchmarking Report (2015), compiled by Farm Credit, Turrentine Brokerage, and Moss+Adams. In addition, the California Sustainable Winegrowing Alliance (CSWA) program has become a global model for sustainability, and covers 227 best management practices for sustainable winegrowing and winemaking.

Financing your wine business with the right lender is an important step. Partnering with the right people will determine your success.

Wine Regions of California

The wine regions of California are often divided into four main regions:

  • North Coast: Includes most of North Coast, California, north of San Francisco Bay. The large North Coast AVA covers most of the region. Notable wine regions include Napa Valley, Sonoma County, Mendocino, and Lake County.
  • Central Coast: Includes most of the Central Coast of California and the area south of San Francisco down to Santa Barbara County. The large Central Coast AVA covers the region. Notable wine regions in this area include Santa Clara Valley, Santa Cruz Mountains, San Lucas, Paso Robles, Santa Maria Valley, Santa Ynez Valley, and Livermore Valley.
  • South Coast: Includes portions of Southern California, namely the coastal regions south of Los Angeles down to the border with Mexico. Notable wine regions in this area include Temecula Valley, Antelope Valley/Leona Valley, San Pasqual Valley, and Ramona Valley.
  • Central Valley: Includes California’s Central Valley and the Sierra Foothills. Notable wine regions in this area include the Lodi AVA.

Ed. note: This article was written for the Lake County Winegrape Commission by American AgCredit.
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About American AgCredit

Celebrating 100 years, American AgCredit was founded in 1916 and is a member of the Farm Credit System. As the sixth largest lending cooperative in the U.S. with lending assets in excess of $7.7 billion, American AgCredit specializes in providing financial services to farmers and ranchers throughout California, Nevada, Kansas, Oklahoma, Colorado, and Northern New Mexico – as well as to capital markets and agribusiness operators across the country. Financial services include production and mortgage financing, equipment and vehicle leasing, crop and life insurance, and lines of credit. Specialized programs include AgLife (focusing on young, beginning, and small farmers) and AgConnect, which offers financing to new and emerging markets. Learn more at


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