Weekly Query

[JimCook]

Last week's question seemed a bit too deep and potentially required too much research to answer, so I'm thinning it out this week.


You have a backer that will be able to cover up to $2 million in real estate investment for the vineyard that you plan to build into a winery over the next two or more decades. You can purchase land anywhere in the world, but can only choose one location (investment tax considerations for your limited partner, you know). Which location (in the entire world) would you pick to dedicate the next 20+ years of your life based on what you believe to be the answer for both you and your investor, providing what you believe to be the highest possibility of success? Please be as specific as possible.


Nota bene: up to $2 mil will purchase varying sizes of estates depending on the prime rule of real estate - location. Your decision should take into account the fact that higher profile current areas may mean a smaller estate, but should nonetheless be counted as your ticket to ride. Will you go expansive in a lesser known area and hope to increase the respect level of those wines or perhaps get a little slice of some of the most sought after wine land in the world or somewhere in between?


- Jim

 

[Bartman]

Now you've really given us a lot to chew on. This is not a simple question, the way you have put it, from a business perspective. My investor will expect a return on the investment, and I would like to make a living and eat something other than grapes, grape juice, and wine - as good as they might be. So the first problem would be a tough nut to crac on its own: where would the investment pay the greatest return - small boutique winery, with low sales volume but high prices or medium quality but high volume? Which approach is the "right" one?

If investment returns are not the issue (we are hobbyists, here), then maybe you really meant where in the world would we like to live/work, if money is (almost) no object? That's easier - your dream vineyard/winery in your dream location is more fun anyway.

Piedmont region of Italy - and I would grow Nebbiolo and Sangiovese grosso grapes, with some other mixed in for variety. Probably wouldn't be able to buy much, if any, land there since the property has probably passed through family lines for many generations, and isn't "for sale" at any price, but I can still dream, right?

 

[skinnydipper]

Virginia.

 

[JimCook]

Bart,


There needs to be some return on investment for the backer, but you don't have to worry about the specific internal rates of return or anything like that. Your answer great - figure a spot where you believe the raw materials would provide you with the best opportunity to have a successful winery for the next twoplus decades.


Assume that the $2 mil is only for the purchase of land - don't worry about equipment funds, salaries, etc.


- Jim

 

[nhdennis]

Unfortunalty 2 mill wont buy a cart path up in the Rockpile AVA in upper Somoma County. I think that ther are still parts of lake county or over in Paso Robles that might lend itself to growing good fruit consistanly and great fruit on occasion. I then to be drawn to the Rhone blend grapes (Zin, Malbec, Petit Syrah, some cabs) and a Russian River chard. So Setting up a small (40 acre) winery is quite doable in the Paso area from root stock and working capital for 4 yrs.

 

[JimCook]

Dennis,


What about sourcing fruit, then? In lieu of an actual land purchase, let's modify the query to assume the $2 mil covers raw materials, be it the actual land or a contract for fruit.


Would you stick with Rockpile?


- Jim

 

[Waldo]

I'll take me $2 mil of ole man Isons Muscadines..Thanky very much !!!

 

[JimCook]

I've debated this in my head for a little bit and here's what I've come up with. If I wanted tried and true, I'd head for Bordeaux, Ribera del Duero, or Napa. However, I'm thinking that areas like the Barossa Valley in Australia, California's Central Coast, and Mendoza Argentina are more 'up and coming.' Given the fact that I'd need to live in one of these areas for the next two decades or more, I'd probably put Mendoza, Argentina at the top of my list. Plus, they've got some of the best beef in the world down there. I'm also perfectly fine *not* having a white Christmas as well.


- Jim

 

[RJMehr]

You have a backer that will be able to cover up to $2 million in real estate investment for the vineyard that you plan to build into a winery over the next two or more decades. You can purchase land anywhere in the world, but can only choose one location (investment tax considerations for your limited partner, you know).

Jim,

Your questions reminds me of a wine insiders joke: What is the best way to make $1 million dollars in the wine industry. Answer: start with $10 million

It is very hard to make a lot of money making wine today. Just too much competition in today's world. It is amazing where commercial wine is being made. Do you know that all 50 states have wineries.

Robert

 

[cbw]

The canton of Vaud, Switzerland ... because there is nothing in the world that compares to Swiss White wine.

Probably only get a hectare or two ... but hey, gotta start somewhere.

Be good for my investor because Swiss banks are notoriously mum to US tax entities ... although that too is changing.

And if the grape harvest fails, I can always go skiing.

 

[JimCook]

I do, in fact, Robert. And the question that stands is what area would you specifically pick if you were going to go with what you believe to be the best raw materials?
CBWatts - can you give me some examples of your favorite Swiss whites?


- Jim

 

[cbw]

Almost any Swiss white wine made from the Chasselas grape is tremendous. Most often sold as Fendant.

Unfortunately, since production is so low, less than 2% of Swiss wine is exported ... that's the bad news. The good news is you can start drinking it as soon as you board any SwissAire flight. We've been fortunate to have friends stationed in Geneva so we've been able to visit a number of times.

Switzerland has the "highest" vines in Europe ... the unusual terroir results is spectacular wines from grapes which produce so-so wines in other parts of the world.

I'd love to find a wine kit based on any swiss-grown grape. But I don't think such a kit exists.
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[JimCook]

And this was exactly what I was hoping for when introducing this question - find some new area to try wine from.


Thanks, CB.

- Jim