Opening a winery and vineyards--lessons learned?

[winemaker81]

I certainly am aware of places like this in the Paso Robles area where I live... They are selling a party experience rather than wine. Nothing wrong with that - it certainly has the green flowing - but it's a very different business model and one that I avoid like the plague. Good news is that there are now 300 wineries here and I can chose from the other 250.

I should probably add that one of the biggest wineries to offer this model has dumped tens of millions into building the facilities and has been sold twice since then for an ever decreasing number. And rumor has them running out of money again as people aren't getting paid. I usually introduce that place as a great example of how to make a small fortune in the wine industry - step one - start with a large one.

There is a difference between the overall business model and how a given business implements it.

In your example of the winery dumping millions into a facility, my first thought is they over-extended themselves. They invested far more into the facility than a good analysis would indicate they could reasonably recoup in a reasonable amount of time. This is among the reasons why 80% of all new businesses fail within 3 years -- overly optimistic or just plain bad planning.

That said, I question how long the "party venue" idea will work. It's in vogue now, but there's no guarantee that will continue. Maintaining a lower cost of investment is wise.

Your comment also made me think about the venues I've been to. All of them have been "rustic" -- nothing fancy, more-or-less just pole barns. Relatively little money invested, so the return on the investment for the level of business I saw was a matter of a year or so, which is WAY ahead of typical for a small business. If the boom lasts another couple of years, the wineries I'm talking about will have already recouped their investment.

The big danger for them is they ramp up wine production to meet demand, then have a crash so they have an overstock. Running one's own business is far riskier than working for someone else ...

 

[Garagista]

This is a great conversation, thought provoking. I think the different perspectives goes back to my original question - are you in it for the money or the fun.

 

[Hokapsig]

I certainly am aware of places like this in the Paso Robles area where I live... They are selling a party experience rather than wine. Nothing wrong with that - it certainly has the green flowing - but it's a very different business model and one that I avoid like the plague. Good news is that there are now 300 wineries here and I can chose from the other 250.

I should probably add that one of the biggest wineries to offer this model has dumped tens of millions into building the facilities and has been sold twice since then for an ever decreasing number. And rumor has them running out of money again as people aren't getting paid. I usually introduce that place as a great example of how to make a small fortune in the wine industry - step one - start with a large one.

edit - turns out there are 230 wineries in Paso Robles AVA. so my numbers above are a little off....

we are really digging the Paso AVA right now, especially the Zin and Zin blends. We just dropped a couple of shiny pennies for 10 cases from 14 wineries. We are already reordering more. What sold the wines were not only the craft of the wine, but also how the sale was made, particularly sitting with the owner/winemaker and hearing about the vineyard/wine making process. A great experience. And tasty wines.

 

[Nebbiolo020]

There is a difference between the overall business model and how a given business implements it.

In your example of the winery dumping millions into a facility, my first thought is they over-extended themselves. They invested far more into the facility than a good analysis would indicate they could reasonably recoup in a reasonable amount of time. This is among the reasons why 80% of all new businesses fail within 3 years -- overly optimistic or just plain bad planning.

That said, I question how long the "party venue" idea will work. It's in vogue now, but there's no guarantee that will continue. Maintaining a lower cost of investment is wise.

Your comment also made me think about the venues I've been to. All of them have been "rustic" -- nothing fancy, more-or-less just pole barns. Relatively little money invested, so the return on the investment for the level of business I saw was a matter of a year or so, which is WAY ahead of typical for a small business. If the boom lasts another couple of years, the wineries I'm talking about will have already recouped their investment.

The big danger for them is they ramp up wine production to meet demand, then have a crash so they have an overstock. Running one's own business is far riskier than working for someone else ...

Start small and make money go big in the industry lose money. Generally speaking this is the case.

We are already expanding because we sold nearly all of our vintage from last year before it even released.

 

[Nebbiolo020]

we are really digging the Paso AVA right now, especially the Zin and Zin blends. We just dropped a couple of shiny pennies for 10 cases from 14 wineries. We are already reordering more. What sold the wines were not only the craft of the wine, but also how the sale was made, particularly sitting with the owner/winemaker and hearing about the vineyard/wine making process. A great experience. And tasty wines.

Most zinfandels in Paso are mass market junk the little wineries are making the best stuff.

 

[Hokapsig]

Most zinfandels in Paso are mass market junk the little wineries are making the best stuff.

We focused on the small wineries and the products only available at the winery. We didn't want the wines that we could pick up at home.

 

[ibglowin]

we are really digging the Paso AVA right now, especially the Zin and Zin blends. We just dropped a couple of shiny pennies for 10 cases from 14 wineries. We are already reordering more. What sold the wines were not only the craft of the wine, but also how the sale was made, particularly sitting with the owner/winemaker and hearing about the vineyard/wine making process. A great experience. And tasty wines.

10 cases! We have been going to Paso 2X a year for about the last 5 years. Its a close 3 hour drive from our kids/grandkids in SoCal so we can do a roadtrip visit and head up during the week when its less busy. We avoid the mass market wineries and stick to the smaller 3-5K case wineries for the most part. We have met a few winemakers over the years. Last year we actually had the owner/winemaker for Turtle Rock (Don Burns) sit down and join us at our table with a glass of wine and just shoot the breeze. We actually had to drop one of our favorite wineries this year (Denner) as they got bought out by Gallo and our favorite server said to us "If I quit you know its time for you to quit". She was no longer working there at our last pickup in the Spring.

Which wineries did you visit? What were your favorites?

 

[Garagista]

This is great, thx. Could we start a list of favorite wineries in Paso? This will help future visitors avoid the wine tourist traps.

 

[Nebbiolo020]

10 cases! We have been going to Paso 2X a year for about the last 5 years. Its a close 3 hour drive from our kids/grandkids in SoCal so we can do a roadtrip visit and head up during the week when its less busy. We avoid the mass market wineries and stick to the smaller 3-5K case wineries for the most part. We have met a few winemakers over the years. Last year we actually had the owner/winemaker for Turtle Rock (Don Burns) sit down and join us at our table with a glass of wine and just shoot the breeze. We actually had to drop one of our favorite wineries this year (Denner) as they got bought out by Gallo and our favorite server said to us "If I quit you know its time for you to quit". She was no longer working there at our last pickup in the Spring.

Which wineries did you visit? What were your favorites?

Avoid anything gallo like it has the bubonic plague. They are bad for the industry and for the consumer.

 

[Nebbiolo020]

This is great, thx. Could we start a list of favorite wineries in Paso? This will help future visitors avoid the wine tourist traps.

That would be a great idea, I can contribute to the list. A lot of small wineries that fly under the radar and are not mass market or culty and too expensive.

 

[BarrelMonkey]

We actually had to drop one of our favorite wineries this year (Denner) as they got bought out by Gallo...

That's sad to hear... I was a wine club member there for several years and loved their Rhone varietal blends (Ditch Digger, Dirt Worshipper...)

 

[ibglowin]

That's sad to hear... I was a wine club member there for several years and loved their Rhone varietal blends (Ditch Digger, Dirt Worshipper...)

Those were our favorites as well. The rumblings our server relayed to us was that the new owners already had said they wanted to increase production way, way up. That means your now peddling a mass market wine and you'll be seeing (unsold) bottles in your local grocery or wine stores at some point and at some point you'll be seeing those same bottles on "Last Bottle" more than likely.

 

[GSMChris]

It will be interesting to see if Denner begins making non-estate wines. Virtually all of their grapes to date have been grown there - but you can only get so much out of a given piece of property. I did hear that they stopped selling their Tempranillo grapes and will be using them in house going forward - so that will stretch their production.

 

[tjmeyer]

We went all plastic as stainless tanks had such a long lead time and the prices were mental.

For plastic tanks look at FlexTanks they are the best quality plastic wine tanks on the market.

We ended up going with pro line Blichmann Engineering tanks, which were easy to source but not cheap. We aren't doing quantities larger than 200L per tank. And have more than enough space to run lots of tanks. I didn't like the idea of needing to buy infrastructure just to be able to properly use the massive tank options either.

Congrats! I have what I think is a key question - are you doing this for fun or to make a profit? The advice will change a lot depending on the answer.

100% for fun. I am not stressed about turning a dollar on this. The wine we're making out here is to be good wine and hopefully pay for itself. If it makes a large profit I'd be quite surprised.

 

[Nebbiolo020]

We ended up going with pro line Blichmann Engineering tanks, which were easy to source but not cheap. We aren't doing quantities larger than 200L per tank. And have more than enough space to run lots of tanks. I didn't like the idea of needing to buy infrastructure just to be able to properly use the massive tank options either.


100% for fun. I am not stressed about turning a dollar on this. The wine we're making out here is to be good wine and hopefully pay for itself. If it makes a large profit I'd be quite surprised.

We just put our 2023 vintage on sale a week ago. I’m hoping it sells well due to bills and recouping some of our costs to build the winery so we can focus on paying off what we need to and expand the wine list. I have a couple wines I want to produce but am having to hold off till we get some bills paid off.

 

[Hokapsig]

This is great, thx. Could we start a list of favorite wineries in Paso? This will help future visitors avoid the wine tourist traps.

Although we like the J Lohr Pure Paso (nationally distributed), we were able to get some wines available just from the winery. We REALLY like Turley and have re-ordered another 6 bottles already.

 

[ibglowin]

Turley has kind of become the gold standard for Zin over the years in the area. Carlisle as well but saw they are shutting down which is really sad.

Some of our favorites over the years have been:

Adelaida
Austin Hope
Calcareous
Daou (incredible views/winery)
Epoch
Jacob Toft
McPrice Meyers
Tolosa (Edna Valley-SLO) mostly Pinot and Chard
Torrin
Turtle Rock

Been on the waitlist for Saxum for 3 years. Probably only 5 more years to wait.......
Have purchased about a case of different Saxum wines at auction at reasonable prices so have enough on hand now to wait it out. In the meantime we are club members at Turtle Rock which is a close 2nd.

 

[Nebbiolo020]

Turley has kind of become the gold standard for Zin over the years in the area. Carlisle as well but saw they are shutting down which is really sad.

Some of our favorites over the years have been:

Adelaida
Austin Hope
Calcareous
Daou (incredible views/winery)
Epoch
Jacob Toft
McPrice Meyers
Tolosa (Edna Valley-SLO) mostly Pinot and Chard
Torrin
Turtle Rock

Been on the waitlist for Saxum for 3 years. Probably only 5 more years to wait.......
Have purchased about a case of different Saxum wines at auction at reasonable prices so have enough on hand now to wait it out. In the meantime we are club members at Turtle Rock which is a close 2nd.

For me turley doesn’t even make it near my list for zinfandels. I am still upset that Mike didn’t tell me in advance he was closing Carlisle. I’m actually good friends with him.

I hated Daous wines and thought they were low quality and them being bought out likely will actually improve the quality of the products they make. They routinely came to the winery I worked at and picked grapes that were not ripe and didn’t seem to know what they were doing and we tried to help them and tell them and just got ignored then the wines sucked.

Epoch is decent, they do make a few wines I like.

I like tolosas white wines a lot and know the winemaker he’s a nice guy and makes good wines they have a really nice tasting room.

 

[ibglowin]

If you know Paso you know you go to Daou mainly for the winery, the views and the charcuterie board.








Somehow they sell almost 600,000 cases of "low quality" wine a year.

 

[Hokapsig]

Turley has kind of become the gold standard for Zin over the years in the area. Carlisle as well but saw they are shutting down which is really sad.

Some of our favorites over the years have been:

Adelaida
Austin Hope
Calcareous
Daou (incredible views/winery)
Epoch
Jacob Toft
McPrice Meyers
Tolosa (Edna Valley-SLO) mostly Pinot and Chard
Torrin
Turtle Rock

Been on the waitlist for Saxum for 3 years. Probably only 5 more years to wait.......
Have purchased about a case of different Saxum wines at auction at reasonable prices so have enough on hand now to wait it out. In the meantime we are club members at Turtle Rock which is a close 2nd.

Austin Hope is on deck for us to get back to their wine (haven't got to that case yet)., Epoch is already on the rack along with Torrin.