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So you want to open a winery...

It will be daunting, exciting, expensive, frustrating and much more. But if you speak to any of the current wine producers in Ohio, nearly all will tell you it is rewarding. Most love their business; many are making a good living although admittedly some are struggling. The most successful operations have done lots of homework before the first tank was ordered or shovel of dirt turned.

If you plan to open a winery in the state of Ohio, the following, supplied by our Division of Liquor Control will be an excellent resource (.pdf format): Ohio Winery Basics

These pages of our web site are devoted to a compilation of ideas from successful winemakers and informational articles collected over a number of years.

The Ohio Wine family wishes you well and looks forward to getting to know you! Our office, the OARDC in Wooster, and the OGIP stand ready to provide whatever assistance we can to make your winery a success.

We hope you find these materials helpful. In addition, please reference the following important links.

Bureau of Alcohol, Tobacco & Firearms

Ohio Department of Liquor Control

Ohio Agricultural Research and Development Center

The Grape Web

Donniella Winchell
Executive Director
Ohio Wine Producers Association

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The Dollars and Sense of Starting a Small Winery

By Chris Stamp

The wine business is capital intensive and cash flow has been likened to trying to fill an upside down funnel. While many wine-making operations start on a shoestring, eventually the money will have to be spent if the owner wants the operation to be more than a hobby.

One thing is certain, lack of funds will slow, or even kill tour business, taking a lot of hopes, dreams, sweat and equity with it. When starting a winery it is very important to have an accurate picture of what you will require in the way of assets. Believe me, it is always more than you might "guess".

To get a rough idea what is entailed in winery start-up, we will look at the costs for a hypothetical 5,000 and 15,000 gallon winery using authentic numbers. We will then prepare a monthly cash flow analysis for the first 5 years using the 5,000-gallon winery figures. Because banks are often unwilling to make a loan to cover unanticipated expenses, the importance of being able to anticipate cash requirements cannot be over emphasized. This is where the monthly cash flow analysis is indispensable. The first step in generating this important information is listing all the costs associated with your business. Next, divide all costs into either Capital costs or Operating costs. Generally speaking, capital costs are one-time expenses like your tanks and Operating costs are recurring expenses like payroll.

Capital Costs
5,000 gallon

15,000 gallon

Physical Plant
heating system (gas)
plumbing (2 bathrooms)
well digging
(1800 sq. Ft.) $55,000
(1 system)$6,000
(24,000 sq ft) $88,000
(2 systems)$9,000
Production Equipment
press (Used Wilmes 2700)
destemmer (good used)
(new) $12,000
Must pump (good used)
(new) $8,500
receiving hopper
jacketed tanks
(6-1000 gal @6K ea.)$36,000
(5-1000 gal @6K,6-2,000gal@8K)
refrigeration system
used milk cooler & pump $1,000
(glycol chiller) $11,000
filter (pad) 
(w/extra plates) $7,000
(6—spout gravity) $1,200
(used monobloc) $19,000
(gluer/hand) $600
(hand oper.,floor) $500
(150 ft @ $1.80/ft) $270
(200 ft) $360
pallet jack
hose fittings (6 @ $30)
pump, van—speed
lab equipment (pH meter, ebulliometer, burettes, chemicals)
lawn (landscape/rake/seed)
sidewalk (40 ft.)
parking lot, crushed stone
(10,000 sq. ft $500
(20,000 sq. ft.) $1,000
Tasting Room Equipment
cash register
(auto-cardreader) $2,000
Tasting glasses
(6cs@$42/cs) $250
(lOcs@$42/cs) $420
(commercial) $2,500
(small) $150
(glass-door) $1,300
Fax machine
(desk, chair) $200
(x2) $400
file cabinets
copier $600 $1,200
computer system
air conditioner $400 $500
package design $1,200 $2,200
Fees and Licenses
incorporation fee —optional— $2,000
label approval (5@ $50 ea.) $250 (100 $50 ea.) $500
Total Capital Costs:
  $160,252 $292,110

Operating Costs

Grapes and Bottling Costs
grapes (3l tons @ $600/ton) $l8,600 (92 tons@$600/ton)$55,200
glass(750ml@ $54.85/gross) $9,610 $28,832
corks (26 K @ $115/K) $2,990 (76 K@ $115/K) $8,740
labels (28 K @ $.065 ea.) $1,820 (83 K @ $.055ea.) $4,565
capsules (26K @ $.055ea.) $1,430 (76 K @ $.050ea.) $3,800
labor $12,000 $25,000
cleaning chemicals $250 $400
Utilities/Insurance/Taxes/Annual Fees
electricity (1,100 KWH/MO.@$.16/KWH)$2,112 (1,600 KWH/Mo.) $3,072
gas $900 $1,200
phones $1,450 $1,900
insurance (fire/liability/bond) $2,000 $2,400
special occupational tax $500 $500
state license (farm winery & Dept. Ag.)    
$200 $200
federal license $100 $100
accounting (taxes only) $700 (consultations) $1,500
office supplies $450 $1,000
postage $500 $900
advertising (print, signs, fees, dir.mail)    
$l,500 $4,000
equipment (cork pullers, disposable cups,ice,shirts) $250 $350
tasting wine (7% vol.) (6% vol.)
labor   (2 full@$15,000)
(1.5 full@$6/hr + SS)$29,000 (1@ $20,000 +SS)$66,000
travel reimbursement (2800mi@$.25/mi) $700 (8,800mi@$.25/mi) $2,200
tasting room supplies(soap, paper prod.)  
$200 $400
credit card fees $1,200 $2,200
miscellaneous $500 $1,000
Total Operating Costs: $88,962 $215,459
(First Year)
Total Costs (First Year)
Operating + Capital $249,214 $507,569

If these numbers seem intimidating, don’t worry— they are. A small winery is a miniature manufacturing plant, and manufacturing is very capital intensive. There are a pair of salient points to note. The first is that the total outlays do not determine the success or failure of the business. Large capital expenditures up front can be covered by sales growth in ensuing years. Remember, it is money you are spending to build your cash-making machine. It is more important to keep operating expenses at a minimum.

The second point to note is that your winery will live or die by cash flow. You need to develop a good understanding of your cash inflows and outflows before starting your business. It’s OK to be unprofitable for four to five years in a growing business; if you have correctly priced your product and have structured your debt and equity financing to provide sufficient cash to cover expenses, you will become profitable. Conversely, a business which is profitable and growing rapidly, will be dangerously cash poor if adequate capital structuring is not in place. The expense of obtaining large amounts of short term financing for costly expansions can quickly eat up profits and destroy a business.

In summary, building a small winery is akin to eating an elephant-you do it one bite at a time. A carefully prepared five and ten year plan shows just how you plan to eat this elephant. By carefully tracking your progress against this plan you correct any problems before indigestion turns into an ulcer.


How to Eat The Elephant

For the 5000 gallon winery the total first year expenses (capital + operating) are $249,214.

First one must figure out how best to finance the capital expenses. These are the up front expenses that must be covered to get the winery up and running. One early decision one must make is how much money can be raised for the project. This will determine the debt to equity ratio, or simply the ratio of borrowed money to the money you and your investors supply toward the capital costs.

For this example we will assume a 1:2 debt to equity ratio. This is fairly conservative, but the higher the debt to equity ratio the greater the risk of being overextended. This means we will raise $105,132 and borrow $55,120. Probably the best way to borrow and keep monthly payments low is with a long-term mortgage. Long- term mortgages are usually the most flexible and least expensive as compared to equipment and personal loans. Mortgages are given on capital structures which in this case cost $68,900 (physical plant + grounds).

When taking a long-term mortgage be sure not to borrow more than 80% of the capital structure costs to avoid paying mortgage insurance, which is quite expensive. In other words, we want 20% equity in our capital structure. So we apply $13,780 of our own funds to the building, and finance the remaining $55,120. We now have 20% equity in the capital structure, and have $91,352 of the money we raised to cover the balance of our capital costs and stay within our 1:2 debt to equity ratio.

The monthly payments on a 30-year loan for $55,120 at 10% interest are entered on the cash flow analysis sheet. Next the operating expenses are distributed throughout the year when they will most likely be incurred. This gives the anticipated month to month total cash outflow.


  Jun Jul Aug Sep Oct Nov Dec Jan
Cash Outflows                
Mortgage Payment $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88
Grapes       9,300.00 9,300.00      
Production Labor       1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
Cleaning Chemicals   250.00            
Utilities 372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00
Insurances   500.00     500.00     500.00
Licenses     300.00         300.00
Occupational Tax                
Real Property Tax                
Office Supplies & Postage 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00
Sales Labor               600.00
Travel Reimburse                
Tasting Supplies                
Credit Card Fees                
Misc. 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00
Total Cash Outflows 978.88 1,728.88 1,278.88 11,778.88 12,278.88 2,478.88 2,478.88 3,878.88
Cash Inflows                
Sales $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Net Cash Flow (978.88) (1,728.88) (1,278.88) (11,778.88) (12,278.88) (2,478.88) (2,478.88) (3,878.88)
Short Term Debt Service (4.11) (22.51) (33.31) (131.35) (234.36) (256.88) (279.58) (314.10)
Running Total (978.88) (2,711.86) (4,013.25) (15,825.43) (28,235.66) (30,948.89) (33,684.64) (37,843.10)
Feb Mar April May Jun Jul Aug Sep Oct
$484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88
              9,300.00 9,300.00
7,925.00 7,925.00              
1,500.00 1,500.00 1,500.00         1,500.00 1,500.00
372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00
    500.00     500.00     500.00
80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00
125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00
600.00 600.00 600.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00
  59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00
200.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00
42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00
12,028.88 11,225.88 4,300.88 3,900.88 3,900.88 4,650.88 3,900.88 14,700.88 15,200.88
$2,941.20 $3,921.60 $3,921.60 $4,902.00 $10,147.14 $11,274.60 $13,529.52 $16,911.90 $20,294.28
(9,087.68) (7,304.28 (379.28) 1,001.12 6,246.26 6,623.72 9,628.64 2,211.02 5,093.40
(392.13) (456.01) (462.95) (458.48) (410.44) (358.87) (281.93) (265.92) (225.85)
(47,244.88) (54,941.28) (55,776.57) (55,238.39) (49,450.61) (43,237.32) (33,967.55) (32,038.46) (27,210.97)


Nov Dec Jan Feb Mar April May Jun Jul Aug
$484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88
      7,925.00 7,925.00          
1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00        
372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00
    500.00     500.00     500.00  
80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00
125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00
2,700.00 2,700.00 600.00 600.00 600.00 600.00 2,700.00 2,700.00 2,700.00 2,700.00
59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00
38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00
42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00
5,400.88 5,400.88 4,100.88 11,925.88 11,225.88 4,300.88 3,900.88 3,900.88 4,650.88 3,900.88
$9,019.68 $10,147.14 $3,382.38 $3,382.38 $4,509.84 $4,509.84 $5,637.30 $11,670.68 $12,967.42 $15,560.91
3,618.80 4,746.26 (718.50) (8,543.50) (6,716.04) 208.96 1,736.42 7,769.81 8,316.55 11,660.03
(197.69) (159.94) (167.23) (239.53) (297.26) (297.99) (286.05) (223.94) (156.77) (61.29)
(23,818.02) (19,269.44) (20,147.88) (28,858.60) (35,814.16) (35,902.45) (34,464.02) (26,980.27) (18,887.65) (7,384.39)


Sep Oct Nov Dec Jan Feb Mar April May Jun
$484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88
9,300.00 9,300.00                
          7,925.00 7,925.00      
1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00    
372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00
  500.00     500.00     500.00    
80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00
125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00
2,700.00 2,700.00 2,700.00 2,700.00 600.00 600.00 600.00 600.00 2,700.00 2,700.00
59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00
38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00
42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00
14,700.88 15,200.88 5,400.88 5,400.88 4,100.88 11,925.88 11,225.88 4,300.88 3,900.88 3,900.88
$19,451.14 $23,341.36 $10,373.94 $11,670.68 $3,890.23 $3,890.23 $5,186.97 $5,186.97 $6,483.71 $13,420.70
4,750.26 8,140.49 4,973.06 6,269.81 (210.65) (8,035.65) (6,038.91) 886.09 2,582.84 9,519.82
(2,695.42) 5,422.70 10,395.76 16,665.57 16,454.92 8,419.27 2,380.36 3,266.46 5,849.29 15,369.11


Jul Aug Sep Oct Nov Dec Jan Feb Mar April
$484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88
    9,300.00 9,300.00            
              7,925.00 7,925.00  
    1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00
500.00     500.00     500.00     500.00
80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00
125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00
2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 600.00 600.00 600.00 600.00
59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00
38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00
42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00
4,650.88 3,900.88 14,700.88 15,200.88 5,400.88 5,400.88 4,100.88 11,925.88 11,225.88 4,300.88
$14,911.88 $17,894.26 $22,367.83 $26,841.39 $11,929.51 $13,420.70 $4,473.57 $4,473.57 $5,964.75 $5,964.75
10,261.01 13,993.38 7,666.38 11,640.52 6,528.63 8,019.82 372.69 (7,452.31) (5,261.12) 1,663.88
25,630.12 39,623.50 47,290.45 58,930.97 65,459.60 73,479.42 73,852.11 66,399.80 61,138.68 62,802.56


May Jun Jul Aug Sep Oct Nov Dec Jan
$484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88 $484.88
        9,300.00 9,300.00      
        1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00 372.00
    500.00     500.00     500.00
80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00
125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00 125.00
2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 600.00
59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00 59.00
38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00 38.00
42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00
3,900.88 3,900.88 4,650.88 3,900.88 14,700.88 15,200.88 5,400.88 5,400.88 4,100.88
$7,455.94 $15,432.48 $17,147.20 $20,576.64 $25,720.79 $30,864.95 $13,717.76 $15,432.48 $5,144.16
3,555.07 11,531.60 12,496.32 16,675.76 11,019.92 15,664.08 8,316.88 10,031.60 1,043.28
66,357.62 77,889.22 90,385.54 107,061.30 118,081.22 133,745.30 142,062.18 152,093.78 153,137.06


Feb Mar April May
484.88 484.88 484.88 484.88
7,925.00 7,925.00    
1,500.00 1,500.00 1,500.00  
372.00 372.00 372.00 372.00
80.00 80.00 80.00 80.00
125.00 125.00 125.00 125.00
600.00 600.00 600.00 2,700.00
59.00 59.00 59.00 59.00
38.00 38.00 38.00 38.00
42.00 42.00 42.00 42.00
11,925.88 11,225.88 4,300.88 3,900.88
$5,144.16 $6,858.88 $6,858.88 $8,573.60
(6,781.72) (4,367.00) 2,558.00 4,672.72
146,355.34 141,988.35 144,546.35 149,219.07


Some assumptions had to be made in order to develop a cash inflow chart. The winery is designed to sell both on premise and off premise and will contain a retail sales room furnished with a tasting bar. The capital costs reflect this design. It is assumed that the average retail cost of wine is $7/bottle. 85% of production is sold at full retail and the balance is sold to a distributor at 50% of retail. This works out to be $32.68/gallon. It was estimated that a volume equal to 7% of that sold was be poured as tasting wine. This is entered into the "Production Schedule". Also entered into the "Production Schedule" and subsequently the cash flow analysis is a conservative annual sales growth rate of 15%.
The years total cash inflows are distributed between the months according to the "Monthly Sales %" to reflect the seasonality of wine sales. It is assumed that the wineries first year sales were at the rate of 3,000 gallons/year but were not available for sale until they were bottled in February. This accounts for the low sales volume recorded for the first year, which begins in June when the first expenses are incurred.
For simplicities sake the winery produces exactly 50 gallons per year and will not increase its production for the duration of our analysis.
Operating costs are covered by a line of credit secured at 10% interest. Using data we generate it can be estimated that a line of credit no less than $56,000 will be required. See "running total" for April of first year.
The good news is that even with these fairly conservative growth figures the winery will show a profit by October of its third year. Sales will be greater than production in year 5. If the proper planning was not made and arrangements to cover cash flow needs were not in place, this potentially profitable enterprise might have failed.

Note: Parentheses indicate negative numbers

        Production Schedule

        Year 1
        Year 2
        Year 3
        Year 4
        Year 5
        Year 6
        Year 7
        Year 8
        Year 9
        Year 10
        Beginning Inventory
        Gals Produced
        Gals Sold
        Gals Tasted
        Gals Remaining
        Total Building Cost $68,900.00
        Less Borrowing $55,120.00
        Mortgage Down Payment $13,780.00
        Mortgage Interest Rate 10%
        Mortage Term (years) 30
        Monthly Mortgage Payment $483.72
        Average Price/Gallon $32.68

Monthly Sales %


MAY 5%
JULY 10%
border.gif (11816 bytes) Thinking About Starting a Small Winery?
Here’s how a startup New England winery was preplanned
By Howard Bursen
In 1992, Steven and Catherine Vollweiler purchased a dream piece of Colonial America property in a little corner of Northwestern Connecticut. It had a history dating back to 1799. The Vollweiler’s ambitious goal was to establish a world-class vineyard and winery on it.
As anyone who has gone through it knows, establishing a vineyard and winery is a complex and lengthy process. Because some points in the process depend on previous stages, it is important to plan out a time line. Here are some of the considerations we went through at Sharpe Hill.
The Vineyard Came First
The plan called for an estate winery and vineyard. In the northeastern U.S., you can harvest a very small crop in the third leaf of the vineyard. That became the first rung of the time line to opening the winery. Smartly, the Vollweilers hired a vineyard consultant, Paul Hennen, former vineyard manager at Stonington’s Crosswoods Vineyards, to guide them through. He was able to supply valuable information on the suitability of Sharpe Hill’s soil and climate for wine-grape growing, and Paul remains a part of the team as vineyard consultant today. The original vineyard of five acres continues to expand, with approximately 45 more available. The varietal mix includes pinot blanc, muscadet (the true melon de bourgogne) and chardonnay. Also vignoles, which has produced an excellent late harvest wine in the Northeast. We have set our sights on cabernet franc for a top quality barrel-aged red. The Northeast is not always a vinous Garden of Eden, so we also arc looking at St. Croix, an excellent quality red hybrid from the Elmer Swenson collection in Wisconsin. It would be made as a nouveau. Several other unusual hybrids will occupy some of the tougher vineyard sites.
In rural Connecticut, to prepare, plant and take care of an acre of vineyard for three years costs about $6,000 per acre minimum. Variables such as unusual land preparation costs, type of trellis set, high planting density and even grape variety will increase this expense. A planting of vigorous hybrids set 8 feet apart in 9 foot rows might run in the neighborhood of $1,200 per acre for the vines, but ultra-dense planting of grafted stock might alone run to $5,000 per acre. Assuming the trellis is established in the first year, then a good two thirds of the cost is incurred during that period.
At Sharpe Hill, our trellis is a simple vertical 3-wire system. Planting densities range from a high of 1100 plants per acre for grafted vinifera, to under 700 plants per acre for vigorous hybrids.
In 1994 a trial harvest convinced the Vollweilers to push ahead with their plan to build a winery.
As a footnote for the neophyte, some wineries are established when the owner of an established vineyard wishes to create a more secure market for a crop. Others start the vineyard and winery together, or only winery, with plans to purchase a crop from another grower. Obviously, It is crucial to your marketing plan to be guaranteed of this supply, and it’s important to know what are your state regulations with respect to vinifying grapes from another in- or out-of-state source. No two states’ regs are exactly the same. Know them before you start.
 The Winery
The sky is the limit when it comes to costing winery buildings. There are, fortunately, plenty of ways to economize. For starters, one of the best is to hire an experienced consultant. A winery-design consultant’s service fees are usually a bargain. He or she can ensure that you don’t pay for a large building when a smaller one will fill the bill. A consultant will help you avoid the purchase of expensive white elephants for your bottling line or press deck, and show you how to plan your development in stages that match your cash flow.
Also, when it is time to build, hiring a general contractor usually turns out to be a good move, as compared to hiring individual contractors yourself. If something goes wrong, It is the general contractor who is responsible for making it right, not you.
Because of the great range of designs and types of building, no single figure can capture the cost of the winery structure, even on a per square foot basis. For simple winery buildings, the costs per square foot can fall into the same range as for residential construction. It is possible—even desirable if you will be retailing from the facility—to spend a great deal more than this. And on the other side, those intrepid spirits who have strong wills, unlimited time and limited budgets, have saved money and done well adapting an existing building, doing as much of the work as possible themselves.
In the Voltweilers case, Reverend Sharpe’s original house was largely intact. Because this is the heart of the property, it was meant that the winery must harmonize with it. With that decision made, the Vollweilers called in architect Robert Burton, of Bronxville, N.Y., who has an extensive knowledge of both colonial and 19th-century architecture.
The winery’s proportions are those of a 19th-century dairy barn—a long rectangle with a steeply pitched roof. The reception/sales room is an attached structure in the colonial style.  Authentic colonial barn beams were rescued from a nearby property, and will be a design element in the reception room. Thus, a visitor to Sharpe Hill will be surrounded by the 18th century while tasting wines made, with the latest techniques, in a 19th-century barn.
Apart from the aesthetics, you have to have plumbing to do all this, not to mention driveways, foundations and electricity. To get all these details nailed down took four months of discussions between the architect, the Vollweilers, and me. At the same time, we made contact with three or four general contractors to give us a price on the project. Our schedule calls for work to begin in March, with the winery ready in September for the crush of ‘96.
The amount you spend on winery equipment will vary proportionately with the gallons to be processed—the larger — the more automated the more expensive net outlay. You’re paying for labor saving convenience. You can’t figure the cost of your equipment intelligently until you determine your size range. Consider: a labeling machine’s cost starts with a glue pot and manual roller for about $50, to a blinding fast automatic labeler costing more than many a small winery. Here is where a consultant will make sure that you don’t undersize or oversize your true needs. Buying used equipment from other wineries or auctions can also help with a budget problem.
Where Will the Money Come from?
It’s a rule of thumb that if you have plenty of money, the bank will be glad to lend you some more. If you really aced money, the bank will be a reluctant suitor. Using collateral in a house is one way to open the discussion. The bank has to be satisfied that, should your business fail, your last nickel will be used to protect the bank, so see Business Plan, below.
In times past, the Farm Credit organization, created to assist farmers in their credit needs, was able and willing to offer more liberal terms than the banks on agricultural matters. Competition among banking institutions has mitigated this to sonic extent. It is worth checking as many banking leads as you can, however, and Farm Credit should be on your list.
Government organizations such as the Farmers Home Administration or the Small Business Administration should also be on your list. Lately the SBA has been making an effort to be more helpful to small businesses with their Guaranteed Loan Program. They also have a program for women and minority-owned businesses.
On a more local scale, state and regional development agencies sometimes make non-secured loans to wineries. Depending on the agency and on your location, you can fit in either under agricultural programs, or tourism. The common thread is usually this: The lending agency wants its loan to create jobs in the community. You will need to convince them that your business will do that. Your best tool is a well thought out business plan, including profit-and-loss and cash flow projections. This demonstrates your ability to plan ahead.
The wild card in winery/vineyard financing is a single investor with a bottomless checkbook, or a large group of subscribers, each of whom has paid a modest sum to receive a small amount of custom-bottled wine each year, and the privilege of getting first crack at new releases or small bottlings. The subscriber group is a laborious way to raise capital. However, it does have the important advantage of creating a base of loyal retail customers, each of whom has a personal and emotional stake in seeing your winery succeed
The Business Plan
This document is, first of all, a guide to strategic planning. In the process of creating it, the entrepreneur is forced to consider what must be done to realize the goal. How much money is needed at what stages? How much wine will have to be sold during the first few years? Where will the grapes come from? Etc., etc., etc. But the business plan is no mere organizational exercise; it is also a key document in obtaining financing. Any financial institution will want to see that the potential loan customer has a grasp on the details of the business. The best way to demonstrate this is to produce a reasonable and convincing business plan, including cash flow and financial projections for the first 3-5 years of operation.
Compliance and Permits:  A Paper Blizzard
All U.S. wineries must obtain a set of permits from the Bureau of Alcohol, Tobacco and Firearms, the BATF. Call or write for the application forms. Chances are you already know someone in the wine business and you can ask them for the right number. (Vineyard & Winery Management’s Desktop Products Guide lists the state and federal offices in your area.) You will receive a little pile of forms, instructions, and regulations. The latest application packet has, by my count, 62 pages. At the bottom of some of them you wilt find the cheery little Paperwork Reduction Act notice.
Each state has its own agency, or agencies, which have regulatory jurisdiction over wine production and sales, also. In my experience, their attitudes vary from genuinely helpful, to downright obstructionist. When we recently requested Connecticut Liquor Control Commission applications for Sharpe Hill, we were amazed to receive an encouraging and welcoming letter from the Commissioner himself. Hallelujah!
Virtually every state has laws regulating discharge of wastes. In Connecticut, a winery is regulated by both the Department of Health, (for toilet septic systems), and the Department of Environmental Protection (for the winery waste). It’s probably similar in your state. If you are in a region where win-cries are stilt unfamiliar to the bureaucracy, it may be helpful to stress that a winery is an agricultural, not a manufacturing enterprise. In Connecticut, if the amount of wastewater is limited to 500 gallons per day, the local Health Department office can handle the application, without review at the state level. In addition, you will probably have to satisfy local zoning, which will have put you in touch with these agencies, and maybe also other land use and wetlands agencies. If you are inside a municipal area, expect to find yet another tier of permit-requiring agencies.
If you are in a new wine-growing area, be prepared for weird things. In 1980, when I filed Hamlet Hilt’s application with the Connecticut DEP, I was told that, since they had had little experience with wineries, they would place a call to California for guidance. A few weeks later, the welt-meaning DEP official informed me that he had consulted with Gallo. We would need a series of aerated waste-water ponds, ~ like the ones at Modesto. The cost for this inappropriate system would have been equal to half the cost of the winery building. We spent some time in negotiation, and together we came up with an inexpensive alternative, which performed flawlessly.
In Connecticut, as in some other states, the first requirement for the state application is to submit a valid federal permit. In other words, the state is relying on the BATF to check you out first. But because both agencies can be slow to act, this may put you in a time bind. In practice, it is a good idea to write to both state and federal agencies at the beginning of the process, informing them of your intention. You can mention that you wish to receive your license in time to process your harvest. In some cases, when the BATF hasn’t acted in a timely manner, people have written a second letter, informing the BATE that they are proceeding with harvest. Try to address the letter to the official in charge of your region, and always keep copies of the correspondence. Registered return receipts are an inexpensive way to prove that you have been acting in good faith. While none of this frees you from the legal requirement of obtaining licenses first, it has sometimes been helpful in the past. Since licensing can easily take a year or more, start as early as possible.
Shortening the Time Line
In some states a winery can sell another winery’s wine. You can get your venture off the ground with wine you didn’t make to get cash flow going. Of course, most of the visitors are interested in tasting your wines, not someone else’s. This suggests that a better option is to set up a temporary winery, make wine for the first year’s sales, and then switch your license from the temporary winery to the permanent one. Garages are popular locations for this kind of activity, if not ideal ones.
Another possibility is to share the premises of an existing winery, if state law allows. A variant of this theme is to have the first harvest processed at a nearby winery. The refrigerated grape juice can be stored for awhile, then transported to the new winery, where it will be made into wine. That may put ot’f the need to purchase a press and crusher until the second year.
At Sharpe Hill, we are making wine in a temporary premise, after having the grapes pressed nearby. When the winery opens, we will have 10,000 bottles of wine in stock. Good Luck with your operation!
    Howard Bursen is a winery and vineyard consultant who makes his home in northeastern Connecticut. He can be reached by phone at (860) 974-3089, and by mail at P.O. Box 98, Abington, CT 06230.

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      Economic Considerations for Small-Sized to Medium-Size Wineries
By Carl R. Dillon, Justin R. Morris, Carter Price, David Ward and David Metz
Editors'  Note: Three or the authors are associated with the Department of Agricultural Economics and Rural Sociology at the University or Arkansas: Carl R. Dillon, Assistant Professor; Carter Price, Professor; and David Ward, Research Assistant. They may be contacted at 221 Agriculture Building. Fayetteville, AR. 72701; telephone (501) 575-2256. Justin R. Morris Is University Professor in the Department of Food Science at the University of Arkansas, 272 Young Ave. Fayetteville AR 72703; telephone: (501) 575-4679) David Metz Is Marketing Director for Prospero Equipment Corporation in Pleasantville, New York, and may be reached at 725 Climer St., Muscatine. IA 52761 or by calling (319) 263-1394.
Why are some wineries economically successful and others aren’t? Recent research by the University of Arkansas was undertaken to address this complex question. The study was designed to provide owners and operators of small-sized, to medium-sized wineries with practical economic guidelines. One part of this study was the basis for an article, "Packaging Line Considerations for Small Wineries," by David Metz, which appeared in the 1991 edition of the Wine East Buyers’ Guide.
Discussions with individuals in the industry have pointed to a need for research combining economic and technological considerations. The purpose of this paper is to communicate some of the results of this research, as a continuation of the earlier article in the Wine East Buyers’ Guide and to help in the decision—making process and management of small— to medium-sized wineries.
Research conducted at the University of Arkansas has led to the development of an economic decision-making model for small- to medium-sized wineries. As the name implies, a model simply serves as a starting point for making decisions. The physical and economic circumstances of one winery are different from those of another. Consequently, anyone attempting to apply the data and conclusions of this study needs to consider carefully the differences between their winery and the one modeled here.
When reading this study it is important to remember that all economic considerations provided include actual economic worth of all components with the exception of taxes on income and inventory. Therefore, the economic value of services such as unpaid labor by family members is entered at its normal market value. All facilities are designed to be at the highest professional standard; no used equipment was entered into the model.

Model Description

The economic decision-making model is designed to represent the economic and technological wine making environment facing the manager and operator of a small winery. Mathematical programming techniques are used in a computer model to allow the effects of management decisions to be estimated, reflecting real circumstances as nearly as possible. This will permit the approximation of maximum returns above costs.
The model contains several critical production and marketing decisions and winemaking activities that represent a winemaking business. For example, such decisions include:
  1. What types of wine and what varietals should be made and sold?
  2. How much of each wine type should be produced?
  3. Should grapes be purchased or should the winery engage in grape production?
  4. How large a vineyard will be required?
  5. What percentage of the wine should be white varietals and what percentage should be red varietals?
  6. What size of facilities and equipment should be used, considering investment levels required?
  7. How much labor should be hired in terms of year-round employees and seasonal labor?
  8. How can retail and wholesale markets be used?
  9. What are the greatest net returns the winery can make?
Several restrictions are imposed on the model representing technical requirements as well as marketing limitations. Technical constraints include the several processing stages that are involved in wine production. The model requires that no wine can be sold until these constraining factors have been satisfied and the wine is properly aged. The model reflects this through the sales schedule by varietal as shown in Table 1. This demonstrates that the model is a long—run equilibrium model that attempts to determine the operating plan the winery will be using after six years. In addressing the economically best long-run plan, the first five years are not considered, however, an adequate cash flow during the establishment phase (which can last many years, often ten or more) is imperative to the financial survival of the business. It is crucial to consider the cash flow of the winery. The model recognizes that:
  1. Labor, grapes, necessary equipment, and other supplies must be available when the grapes are ready for processing.
  2. Grape production requires land, labor, and various other inputs.
  3. Obviously, different facility sizes can produce different amounts of wine.
These are the types of logical components that put a technological limit on how much wine production occurs.
In addition to these and other constraints related to the technology, there are limits to what an individual winery can sell resulting from marketing conditions. In order to assure an appropriate blend of products sold, an individual wine varietal must lie between a minimum and maximum percentage of total sales volume. In most cases, an adequate selection of wine types is needed to attract a sufficient number of customers. The location can also affect the mix of wine types sold. Wineries with high tourist traffic and those located on interstate highways report increased demand for sweeter wine; as indicated by conversations with individuals in the wine industry. One Eastern producer of viniferas reported that nearly 30% of sales were in a sweet Niagara. As the winemaker stated, "the Chardonnay makes the prestige, but the Niagara makes the profits. One can conclude that a high—traffic location brings in different categories of retail customers. It is likely that there are higher numbers of "unsophisticated" wine drinkers desiring fruity, sweeter wines of high quality. Since these wines are less expensive to produce, their increased sales boost overall profits of the winery.
These constraints also reflect market saturation points giving an upper limit on the sales of any one type of wine. The amount of retail versus wholesale marketing is also dependent upon the size of the winery.
This study examines the specific cases of six sizes of medium to small wineries in annual fermenting capacities of 100,000; 80,000; 40,000; 20,000; 10,000 and 5,000 gallons. Ample storage capacities were assumed as required. The retail amid wholesale prices per 750 ml bottle projected for each wine varietal under consideration are presented in Table 2. Note that Vidal and Seyval ate presented together here and throughout the study because data were identical for the two varieties.

The retail prices were discounted by 40% in order to reflect wholesale prices. Since total wine production is not sold in the year in which the wine is made, the prices are further discounted using net present value financial techniques to reflect a gradual sale of wine produced according to variety. Most equipment requirements and labor availability’s are taken from Metz (Wine East Buyers’ Guide, 1991 edition). Conversations with individuals within the industry supplemented this data to expand upon capacities and provide further capital requirement and depreciation information. Similarly, data was obtained on:

1. Building and non-vineyard land requirements and costs.
2. Equipment efficiency and processing rates.
3. Winemaking supply costs.
4. Labor costs and requirements
5. Grape requirements.
6. Wine taxes.
7. Marketing percentage limitations.
8. Other related factors.
The resulting maximum and minimum sales of wine varietals as a percentage of total sales volume in gallons are given in Table 3. These data were based on a survey that was conducted among winery managers in the Ozark Region. the maximum retail sales are projected by annual capacity as follows: 100.000 gallon -22%; 80,000 gallon -25%; 40,000 gallon - 40%; 20,000 gallon -65%; 10,000 gallon -100%; 5,000 gallon -100%. Grape production data such as grape prices, grape yields, grape productions costs, harvest costs, anti similar information are obtained from published estimates (Kirchner, Price, arid Morris, Economic Analysis of Wine Grape Production in Arkansas - 1987). Data on general processing plant costs such as repairs and maintenance, insurance, and office expenses percentages were obtained from published sources in related food processing economic analyses (Price et al.). While this provides a general flavor of the data utilized in this model, it is beyond the scope of this paper to discuss in detail the particular aspects used in developing the economic decision-making model. Interested individuals should contact the authors.

Findings of the Study

The model’s projected capital requirements for the alternative winery sizes are provided in Table 4. The estimated gross revenue, costs, and net returns above costs are displayed in Table 5, while the schedule of lull-time employees is shown in Table 6. As the needed investments increased from $163,545 For a 5,000 gallon plant to $2,223,382 for a 100,000 gallon plant, the estimated net returns increased from $1,048 for the 5,000 gallon to a profit of $221,614 (Tables 4 and 5). However, the progression in estimated returns was not smooth as winery plant practices expanded from the 5,000-gallon minimum size. Profits for a 10,000-gallon plant were estimated to be $39,053 annually, but projected operations for a 20,000-gallon plant resulted in slightly lower profits of $30,836. Based on the prices and other data included in the model, wineries of capacities of 40,000 gallons per year or greater were estimated to be increasingly profitable.

The model projected that expansion from the 5,000 gallon size to the 100,000 gallon winery resulted in steadily increasing net returns with the exception of the slight decrease at the 20,000 gallon level corresponding to the greatest capital requirements per square loot (Table 4 and 5).

The additional financial burdens in the model associated with the purchase of automatic bottling equipment coupled with a tripling of receiving and crushing equipment cost and other substantial increases in equipment and labor costs caused the expansion from 10,000 to 20,000 gallons to display a decrease in net returns. Thus, with the exception of the 20,000-gallon capacity winery, net returns were estimated to increase as the size of the winery is expanded from the 5,000-gallon level (Table 5). While net returns for the 5,000-gallon winery show a gain of only $1,048 per year, this in fact is quite favorable. The reasoning behind this is that almost all-conceivable costs are not considered (including a value for personal labor and a return on personal capital invested). About the only costs not considered in the model are taxes on income and inventory.
These results indicate a need to consider the potential wine sales market in contemplating expansion. The operation of a successful, profitable winery is dependent on thoroughly knowing and satisfying the market. Even assuming a decreasing retail sales percentage, increasing the size of the winery beyond the 20,000 gallon capacity results in ever increasing net returns up to the last estimated level of 100,000 gallon capacity. It is at this 100,000 gallon winery level where the greatest net returns are obtained at $221,314 annually. While this represented the greatest net returns, it also represented only the second highest returns to capital above the interest costs. Under these considerations, the 100,000 gallon winery had a 9.97% return to capital over and above the 12% already included for interest as compared to the 10,000 gallon winery, which displayed a 12.39% return on capital over and above interest costs. These results reflect the importance of retail sales in the operation of the small winery as a business. These findings also indicate the desirable nature of both the 10.000 arid the 100,000 gallon winery under different considerations.
Capital requirements for the different sized wineries are broken into various equipment categories in Table 4. In the model estimates, the most dramatic capital requirement increase in receiving and crushing equipment is seen to occur between the 10,000 and 20,000-gallon sizes. Only between these sizes did capital requirements nearly triple for receiving and crushing equipment. The next most sizeable receiving and crushing equipment capital requirement increase is a $50,000 or approximately 8% increase between the 40,000 and 80,000 gallon level. Substantial increases of 564% in estimated capital outlay are also displayed for the 20,000 gallon plant’s bottling equipment where the need for greater technological efficiency and increased capacity becomes necessary due to the expansion from the 10,000 gallon level.
Cellar and fermenting equipment, tanks, and barrels tend to display more even increases relative to the additional capacity achieved (Table 4). However, refrigeration equipment needs did not change for the 20,000 and 40,000-gallon levels nor was there an increase estimated in these costs between the 60,000 and 100,000-gallon capacities.
Capital outlay requirements for all equipment were estimated to range from $89,545 to $1,174,382 respectively for the capacities studied (Table 4). When the additional capital requirements for buildings, customer sales areas, and offices are considered, capital requirements range from $163,545 for the 5,000-gallon winery up to $2,223,382 for the 100,000-gallon winery. The substantial capital requirements for getting into the wine business are well evidenced by these estimates. Naturally, the amounts could differ. Capital outlay would likely decrease with the purchases of used equipment, for instance.

The problem (or many managers of wineries is what wines to produce and in what amount. The question is often answered in one of two ways. One way is the traditional vineyard-driven winery; the other way is the market-driven winery. It is the contention of the authors that the path of ruin frequently begins with the idea that the winery will "make what it grows" and sell the resulting wines. However, the authors believe the more successful concept is to "grow and make what you can sell." This latter situation is one in which wine selection is driven by market conditions rather than by the grapes produced in the vineyard.

Observing and analyzing market conditions will allow the winery manager to establish guidelines of an economically viable mix of wine sales in order to address decisions on what wines to produce and in what amounts. The breakdown of the mix of wine sales for the model winery by variety is presented in Table 7. White wine comprised 57.5% of sales with red wine accounting for the 42.5% difference. The heaviest concentration of wine sales was estimated to be in the Vidal and Seyval varieties. Also, other varieties experienced relatively favorable profit margins as indicated by the fact that they are sold at a maximum percentage allowable within the model. As denoted by the "a" in Table 7, these more profitable varieties are the Chardonnay, Vignoles, Cabernet, Cynthiana, and Chambourcin wines. Not surprisingly, these are the higher-priced wines. This demonstrates a need to closely investigate high-priced wines in the sales mix. Costs of production and potential marketability need to be carefully considered as well. Thus, a good indicator of the potential profitability of a given variety is the price of the wine relative to the cost and amount of grapes required. Also, with the exception of the Vidal and Seyval varieties, the other wine varietals were sold at the minimum percentage allowable (denoted by "b" in Table 7). While the amount of wine sales naturally will change from one winery size to another, the percentages as related to capacity remained constant.
When setting retail prices, the manager of the winery must also consider the effect that price has on sales. While one should consider the prices that local competitors charge for similar wines, one must keep in mind that while the competition needs to be considered, they may be charging too much or too little relative to marketing conditions. This study can provide a baseline for determining retail prices. From that baseline, the manager of the winery should experiment to find the best price. It is crucial, however, to consider thoroughly the specific marketing environment involved.
While Concord wine was included in the model, none was ever produced or sold by the model winery since it was unprofitable at $2.50 retail per 750 ml bottle and the model did not require it to be produced. Concord may, of course, be worthwhile, depending on the market, as indicated by the fact that some wineries do produce and sell it.
Given that these results are specific to the data used, it would be useful to calculate the break-even wine prices under which the winery operator will just cover variable or total costs. Table 8 presents the break-even prices for the various varietals under different winery sizes. For the purposes of this table, variable costs are defined to be those costs related to the production of one additional bottle of wine for the various varietals, assuming a winery is already in operation. Therefore, these variable costs include the cost of additional purchase or production and harvest of grapes, necessary utilities, bottles, yeast, wine taxes, and related supplies. Since all labor hired is for full-time, year-round personnel on salary, additional costs attributable to labor are non-existent. Likewise, interest and insurance as well as depreciation and repairs and maintenance on capital equipment are irrelevant to these variable costs.
As Section I of Table 8 demonstrates, the variable costs attributable to producing an additional bottle of wine range from as low as $1.07 for Niagara at (lie 100,000 gallon winery to $1.97 (or producing a bottle of Cabernet at the 5,000 gallon winery. While prices would have to be higher than this by a significant level to make a profit and cover fixed costs and constant labor expenses (salary), It displays the somewhat low prices necessary to justify producing additional wine once the winery is already in operation. These results also indicate the desirability of producing several varietals in a more diverse blend will increase the marketability and desirability of the business in terms of attracting customers. Consequently, the production and sales of some less profitable wines may be justified when considering total operating profits. There is a steady increase in the required break-even price above variable costs as winery size decreases. While the amounts are not substantial, this indicates the increased technological efficiency of larger capacity equipment.
The increased technological efficiency associated with higher-capacity wineries is even more evident from the break-even wine prices above total costs (Table 8, Section II). It should be noted for the purposes of interpreting these projected prices that in order to allocate fixed and constant labor costs, all costs not considered as variable (in Table 8, Section I) were added before dividing by the total amount of production for the winery size in question.

While technological efficiency in terms of mechanization is reflected in the tables, the component of labor presents issues not represented within the break-even prices. The small winery has only limited expert stall. It is critical that those key people have time available for conducting the actual business operations amid management necessary in an economically suitable winery. Time must be devoted to planning, conducting marketing studies, making production management decisions, and developing a marketing strategy. While the physical work involved in making wine is definitely important to the success of the winery business, it is equally vital to devote adequate tissue for conducting business operations.

In the break-even illustration (Table 6, Section II), the required break-even price more than doubles in comparison to the break-even price above variable costs. This demonstrates the relatively large component of fixed and constant labor costs attributable to a winery and indicates the large pot lion of costs attributable to capital equipment (depreciation, insurance, interest, repairs, and maintenance) as well as salaried employees.
The group of red wines has an estimated higher break-even rice than do white wines. Red wine, due to the aging process, requires a longer time before it can be sold. Therefore, the net present value techniques that account for the storage costs and foregone interest that could be earned create a need for higher prices for red wines in general. Niagara displays the lowest break-even price above total costs, with Vidal, Seyval, and Vignoles also displaying favorable break-even price levels. Chardonnay possesses the highest break-even price for a white wine because its aging and sales scenario parallels the red wine conditions described. The 100,000-gallon winery possesses extremely favorable total cost break-even price levels at about $2.50 above the break-even prices for variable costs. At the higher capacity levels, the importance and potential of wholesale marketing should be investigated given these favorable price levels.
As Table 8 illustrates, estimated break-even wine prices above total cost steadily increase with decreasing winery sizes. At the 5,000-gallon winery level, this amounts to approximately five additional dollars per bottle over break-even prices above variable costs for several varietals (Table 8, Section II). Break-even wine prices range between $5.66 and $7.49 for the 5,000 gallon winery and between $4.79 and $6.43 for the 10,000 gallon winery. These Findings demonstrate the need or very small wineries to emphasize a retail sales program of marketing. While this break-even analysis extends the usefulness of the research conducted, it should be noted that the data used would still differ from the particular circumstances of any specific individual winery. They are meant to be used as guidelines in focusing, planning, and stimulating decision-making processes.
This study does not address the production of fruit and dessert wines. While these wines are often given a negative connotation by modern winemakers, they can still be an important source of profit. A good example is given by some of the authors’ observations of Concord which, when produced as a varietal, is sold at a approximately $2.50 per 750 ml bottle on a retail level. However, it is possible to use Concord as a feed stock to produce a light sherry that can sell from $5.00 to $8.00 per 750-ml bottle. While this is only an example, it serves to illustrate the need to be open to alternative products, especially those that may utilize otherwise less than desirable grapes.
Fruit wines can also be a very high-profit item. They often appeal to the entry-level wine drinker and often possess a high profit margin. Opportunities exist for converting low-cost, damaged fruit unsuitable for fresh market consumption and creating a desirable, high-quality fruit wine.


The specific findings of this study will not directly apply to any givers individual situation. Additional factors and components should be considered as they relate to the individual small winery and the goals of the owner and manager. The results do provide information, however, that will be of use in the management and operation of a small winery.
Several economic considerations for small wineries can be raised from the study. Winery location is a component vital to a winery’s economic success or failure as a direct result of the influence of the area on marketability. Location is tightly bound to a winery’s marketing plan and its success. Observations by the authors indicate that this is perhaps the single most critical factor for the winery in the 5,000 to 20,000 gallon size. As this study shows, the bulk of sales should be at retail for the smaller wineries to survive.
Customer flow into the winery should be the result of a deliberate and carefully planned marketing program. Part of the program can be the natural result of consumer traffic being exposed to the winery simply by passing by and being convenient and accessible. Therefore, it is important that a winery be on a relatively major route, not isolated on a side road. There is some evidence that shows that the most successful wineries are those clustered with other wineries. Due to increased tourist traffic, a wine region will support more sales for the individual wineries than the isolated wineries could support for themselves.
Cost of marketing is often directly related to locations. Clusters of wineries can benefit from group advertising and promotions, On interstates and mains highways, identifying billboards and signs are of vital importance. Also, it must be observed that marketing costs are related to profits. It is the authors’ observation that the wineries that are growing are those with the strongest promotion programs, good locations, and good wine quality. Those that are in isolated locations, without a good marketing plan are static in growth and in danger of going out of business.
Crucial considerations in the planning process also include the influences of retail and wholesale levels as well as availability of different varietals desired by the customers. Of the six-winery sizes analyzed, the 100,000 gallons winery provided the greatest net returns at $221,314 annually. However, the 10,000 gallon winery provided the greatest net returns per dollar of capital invested at 12.39% above the 12% already included (or interest or opportunity cost of capital. The 10,000-gallon winery provided this higher rate of return because it assumed that 100% of sales are at the retail level.
While there is a necessity to evaluate the cost associated with obtaining grapes through purchasing or personal production, the risk associated must also be considered. If the required vineyard acreage is under separate management, the operator of a winery has limited control over the purchase price of grapes. This creates one type of distinct risk. However, engaging in production of grapes in ones own vineyard comes with its own set of risks in production and related factors. Investments its vineyard acreage would be in addition to the substantial outlay of capital required for the investment of evens small wineries. The 100,000 gallon winery required both 125 acres and a total capital outlay of $2,223,382 for buildings, non-vineyard and, plant equipment while the 5,000 gallons winery needed 6.25 acres and $163,545 for other capital. Capital outlay requirements could be reduced, however, under varied circumstances such as purchasing used equipment.
Wine production of the model winery tended towards white wine types with 57.5% of the total projection. Not surprisingly, the model projected that higher priced wines were produced at the maximum level allowed. Nonetheless, it is advisable to examine the cost being accrued in the production of all wine varieties and types relative to the price of the wine. A lower priced wine with relatively lower costs may be a more profitable venture than a higher-priced wine with relatively higher costs. Individual circumstances have to prevail in consideration of the value of individual wine varietals.
Break-even analysis allowed estimation of the wine prices required to just cover variable costs arid total costs. Break-even analysis indicated the need to investigate the potential of wholesale markets for the higher capacity wineries. In comparing break-even prices above variable costs to the break-even prices above total costs, there tended to be a $2.50 to $5.00 per 750-ml bottle difference for the different winery sizes. These results indicate the fact that if a winery is already in production, a specific wine varietal may be justifiably produced if it is covering the break-even price above variable costs. This allows consideration of increasing product availability in order to attract customers.
The study results indicate that adequate planning and management is a key component to economic success or failure in the winery business. While there are many reasons to enter into the wine business other than making money, there is a distinct need to address the economic aspects of the wine business. Economically unsuccessful wineries are not managed by individuals who plan to fail, but by managers who often fail to plan. Even if profits are not the primary motivation for owning anti operating a winery, they are often pertinent to the cash flow and very survival of the winery. Detailed attention to production of premium grapes and the making of high quality wine at the sacrifice of developing and following adequate business practices can still result in the winery going out of business. It is the contention of the authors that the transitions from grape-grower to wine marketer can be difficult. The authors believe that the winery owners and operators that make this conceptual transition are the ones that are the most economically successful. Knowing one’s market and operating in such a way as to satisfy that market is essential to operating a successful profitable winery.

Tips on Buying Barrels

Apart from preferences for French or American oak, the major considerations (or buyers In the East who purchase barrels are price and availability. Barrels from France cost several times as much as barrels made in the United States due to currency exchange rates arid, unless a tonnellerie is able to stock and ship barrels from the East. Either a hefty freight charge from California or placing a large minimum order In France may add significantly to the cost.
Accepted standards of excellence in oak barrels wherever they are made include quality wood with uniform grain and without insect damage or other defects. The wood should be hand-split rather than quarter-sawn, air—dried rather than kiln-dried, shaped over a wood fire rather than by the use of steam, and toasted over an oak fire rather than by the use of propane.
Only a limited amount of information can be obtained by examining a barrel before it Is used for wine: uniformity of grain arid color, degree of toast, the smelt of the barrel, and perhaps Its tightness. Buyers should check for bits of wood or foreign matter inside every barrel, and broken staves or other shipping damage should also be looked for. Most barrels come with a one-year warranty, and it is important to make sure that the warranty is effective and that it states what happens if something goes wrong. The reputation of the seller Is important, and it may be wise to get references on both the seller and the barrel manufacturer.
The life of a barrel in terms of getting discernible flavor or complexity from the oak is generally considered to be between four and six years, after which the barrel must be rejuvenated or replaced. Shaving the barrel is one way of extending the life of a barrel for another four to six years, and barrels may be shaved once or twice. A product known as Innerstave, which involves placing pieces of oak in a cylindrical construction inside the barrel, is another way of extending the life of a barrel.
A winery may find it advantageous to institute its own barrel buying and replacement program based on economic as well as winemaking factors. Advance planning ran help determine what percentage of wine is to be kept in new barrels, in barrels three or four years old, and in barrels that have been shaved. Experimenting with different kinds of oak for different kinds of wine, or using different oak flavors in combination, may make economic sense.
At least as much American oak is used for wine in the United States as French oak, and in recent years American coopers have been increasingly making barrels with the wine industry In mind. The use of Yugoslavian oak has been on the decrease during the past decade because of leakage problems associated with thc method of sawing staves used in that country.
Although they are somewhat more expensive, silicone bungs are winning high marks for durability and ease of use. They may be affected by sulfur, and should either be replaced with wooden bungs during sulfuring or protected by wrapping them in a product like Saran Wrap.
(Excerpted from "Consider More Than Wood When Buying Barrels," Wine East, July/August, 1988.)

Buying Membrane Cartridge Filters

Membrane filters permit a sterile filtration to be carried out just prior to bottling. Apart from choosing the pore size of the filter to meet winemaking needs, most buying decisions are based on factors related to the maintaining of sterile conditions, the rate of flow, and the total amount of wine that can be put through the cartridge before it is replaced.
The two elements of the membrane filtration system are the filter cartridge arid the housing In which it Is contained, with most manufacturers making both. Housings may be made of several different materials. Stainless steel is most frequently recommended, with both, #316 or #304 being available. Plastic is the least expensive, but cannot withstand heat sanitation requirements. "O rings are considered to be a preferable way of sealing the cartridge in the housing. Sanitation is Important, and all fluid contact points should be highly polished. The easier-to-clean gasket and clamp connections are preferable to threaded connections. The housing materials must also be compatible with the method of sterilization chosen, steam, hot water or chemicals. Steam requires a stainless steel housing. Chemicals may be used with any type of housing, but must be used with plastic housings. Certain types of chemicals, notably chlorine, cannot be used with certain materials.
Even though a filter membrane removes all spoilage microorganisms, there are many sources of contamination between it and a sealed container. Equal attention must be paid to sanitizing the filler, containers, closures and closure equipment.
Just as the filtration system must he sterilized before it is used, it must be possible to test the system periodically to make certain it is working correctly and that there are no leaks. This process Is called integrity testing, and one factor in using a membrane filtration system is to determine which integrity testing system is easiest to use.
Cartridges come in lengths of 10, 20 and 30 inches. Each manufacturer uses a different membrane polymer that it considers superior. Some of the polymers are inert, some have a positive or negative charge; some are more fragile than others, some are reinforced. One of the biggest differences is that some polymers have more holes per square centimeter than other. All manufacturers sell filters in different pore sizes that are in common use slip yeast. For bacteria, a 0.45 micron pore size is required.
Each cartridge length has its optimal rate of flow and Is available in a different price range. Buying properly sized equipment is important, for it is estimated that half of the industry is guilty of the practice of speeding up the rate of flow by increasing the pressure through the filter. Increasing the rate of flow decreases the life of the filter, and a winery that increases the pressure may have to buy three to five times as many filters per year than those using the correct flow. A winery that envisions future expansion can save the cost of replacing one housing by initially buying a housing to accommodate a 20" or 30" cartridge and then using a 10" cartridge until the need arises for a longer cartridge.
Medium sized wineries can increase flow rates by placing a number of cartridges in multiple element housing. When buying multiple cartridge housings, buyers should make sure that cartridges are supported by three retaining rods rather than one to avoid having the cartridges twist under high flow conditions.
(Excerpted from "Basic Considerations in buying Membrane Cartridge Filters." Wine East Buyers Guide, 1988, and revised in 1991)

The Better Business Bureau

One source of information that is frequently overlooked is the Better Business Bureau, of which there are nearly 200 local offices in the United Stales and Canada. While they are often thought of as a way of getting a complaint resolved the majority of contacts they have fall into the category of inquiries, and they prefer it that way. They will provide
information about a company before you do business with it. They also have a wide variety of publications and consumer information for distribution.
Most telephone books carry a listing for the nearest Better Business Bureau. The location of the closest office to you may also be obtained from the Council of Better Business Bureaus, 1515 Wilson Boulevard, Arlington, VA 22209, or telephone (703) 276-0100.
Tips on Buying Filters
In filtration science, the terms "absolute" and "nominal" are used to distinguish between the 100% removal of particles and the less than 100% removal of particles. It is common in winemaking to refer to absolute filters and depth filters. Membrane cartridge filters, are in the category of absolute filters and remove 100% of the particles above a certain size. For a discussion of these filters, see "Buying Membrane Cartridge Filters."
Depth filters are up to 99% effective and do an excellent job of clarifying wine. Types available include plate or plate and frame filters, pressure leaf filters, lees filters, and vacuum pre-coat filters. Serviceable filters, such as those using a 10 inch microfine cartridge, are available for the amateur winemaker and may be used by small commercial wineries producing 2,000, 3,000, or perhaps up to 4,000 gallons of wine.
The plate filter, or plate and frame filter, is the most economical and most versatile first unit for the small winery to consider buying and is used in very large wineries to make smaller batches of wine. "Plate" and ‘plate frame" filters are often used interchangeably, and it may be helpful to think of these units in terms of their filtering media. The plates may support filler pads or sheets, on the plates may be placed in frames to permit diatomaceous earth filtering.
A small winery processing a few thousand gallons will find a 6-plate or 9-plate filter adequate, each plate being 40 x 40 cm in size. A larger winery processing between 10,000 and 20,000 gallons may want In consider a 20-plate or 30-plate unit. While more plates can be added, moving In 60x60 cm plates is recommended somewhere between 30 and 50 plates. If a new winery believes that it’s five-year growth will take it to between 10,000 and 20,000 gallons in size, money may be saved by initially buying at least a 20-plate unit. When, buying a 20- plate unit, purchase one with a double outlet manifold, because it affords better distribution of the wine into the unit. A pressure gauge is important to help monitor filtration and should be purchased. Stainless steel housings are preferable to painted steel housings, stainless steel plates, however, are expensive, and it is often recommended that plates such as Noryl plates made of a food grade plastic be used instead. Plate filters can be used as diatomaceous earth filters. To do this, it is necessary to have at least 10 plates with, D.F. frames, and a winery planning ahead for future growth could consider an eventual 60 frames.
Two kinds of filters are made for specifically for diatomaceous earth filtration: vacuum pre-coat filters and pressure leaf filters. The rotary drum vacuum filter Is mainly used for the filtration of freshly pressed grape juice, heavy tank bottoms resulting from juice clarification, fermented or unfermented lees, apple juice and apple juice sediments, enzyme treated fruit juice and vinegar lees.
A new disc version of vacuum filter is fairly economical amid wineries with a production of 20-30,000 gallons may want to consider purchasing this unit, the drum vacuum filter, more expensive and definitely more bulky, is used by wineries with capacities of 250,000 gallons and over.
Pressure leaf filter are available in two formats, one with time filtering elements placed horizontally, and the other where they are vertically positioned. One advantage of the horizontal unit is that if filtration must be stopped for any reason, there is no chance of having the filtration cake fall down from the screen as is the case with, the vertical unit. On the other hand, only one side of the screen can be used on the horizontal unit, as opposed to using both sides of the screen on the vertical unit. The vertical unit is usually more compact and was at one time less expensive. Today the filters with the horizontal screens are comparable in cost and have overtaken the vertical units in popularity. Other major buying considerations include the ease with which the unit can be operated and cleaned. The method of cake removal is also a consideration, the dry cake discharge being preferable to wet simply on the basis of waste disposal. Units are available in stainless steel or stainless steel alloys. Where bronze is used, there is the possible problem of the bronze oxidizing and turning green.
There are a number of factors involved in making a decision as to whether to convert a plate filter into a diatomaceous earth filter or buy a pressure leaf filter. There can be substantial savings of time in the speed of operation and in cleaning and pre-coating by using a pressure leaf. The drawbacks of a pressure leaf filter for some users could be that it is more difficult to operate, that the minimum production lot size should be 250-300 gallons, and that the hose should not be moved from, one small container to another during filtering.
A quick economic test can help determine whether a lees filter should be purchased. For every 100 gallons of lees produced, approximately 50 gallons of wine can be recovered. At $3.00 a gallon, $150 could be saved for each 100 gallons of lees. With the selling price of a small lees filter at about $10,000, it would be necessary to save about $2,000 a year before considering the purchase of a lees filter. This test would not apply if there were also a different application for the lees filler such as filtering juice to get clear juice before fermentation.
Filters are sometimes designed to do more than one job. A lees filter, for example, can be bought that can be used both as a lees filter and as a filter for finished wine by acquiring two types of plates and a special type of pump. The reverse is not true: a plate fitter cannot be used as a lees filler because of the high pressures at which lees must be filtered.
Buying a filter for dual purposes is a controversial subject. There are those who believe, that optimal results come from using equipment designed for a specific purpose. Others believe that combination units make sense in terms of economics. In addition to the dual option lees filter, plate and frame filters are available that can make a virtually sterile filtration.
If there is any one piece of advice consistently given by those who make and sell filtration equipment, it is to emphasize the willingness of those who serve the industry to work with whenever they need help. Almost without exception, the suppliers of filter equipment and media would prefer to work with new customers right from the start and thus minimize the number of problems.
(Excerpted from" What to Look for When Buying Filters," Wine East Buyers’ Guide, 1988, and revised in 1991)
Tips on Buying Stainless Steel Tanks
When locating tanks, leave at least a four-loot alleyway between the bases of tanks for pumps and hoses, six to eight feet if a forklift will be used In the tank area. Head room should be allowed for, a minimum of 2-1/2 to 3 feet from the top of time tank and the ceiling. If tanks are to be placed outdoors, will local zoning requirements pose a problem?
Tanks of 250 gallons or less are usually put on a cradle, and tanks of 20,000 gallons or more on concrete foundations. Other tanks may be put on a concrete foundation, a mild steel base, or mounted on legs (avoid wooden platforms because of the difficulty in cleaning underneath). Mounting on legs may be more practical for the smaller winery because a small press can be moved right under time tank.
Methods of proper temperature control must be considered, and can range from placing tanks in a cold room to the use of heat exchangers or internal coils. Jacketing requirements can be calculated from a number of variables, and a decision on refrigerants is usually made prior to ordering the insulation jackets. Depending on the size of tank arid the supplier, it may be prohibitively expensive to add jackets to tanks at a later date, or it may be possible to do so at a reasonable cost.
Ordering several tanks at one time, or combining an order for tanks with another winery may lower the per-unit manufacturing cost and save on shipping charges. It is most economical to ship a full truck load. Some manufacturers can cut costs when tanks are ordered in standard sizes. Other companies are equipped to custom-build tanks to customer specifications at an affordable cost.
The gauge of steel used in constructing a tank is generally dictated by the size of the tank. Type 304 stainless steel is the least expensive; type 316 with nickel added is more corrosion resistant and its use may be advisable depending on the amount of exposure to SO2 and high acid wines. A mill 2B finish is usually   adequate. The size and type of drain fittings must be compatible with other equipment. A variety of diameters and types are available. A common mistake made by newer wineries is to use a pump that is too small, and a size with a diameter of at least 1-1/2 inches should be used from the start.
Get more than one estimate. The size and capabilities of a manufacturer may make prices more competitive for one size tank than another. Make sure that the estimates are based on the same specifications, particularly in terms of the weld and how it is finished out.
The proper cleaning and sanitizing of tanks is a point most manufacturers stress. Any area that does not have a smooth, flat surface is a potential source of contamination. Special attention should be paid to weld areas, behind doors and under the gasket.
(Excerpted from "Buying Stainless Steel Tanks: A Primer." Wine East, November-December 1986)
Tips on Buying a Wind Machine
While wind machines have traditionally been used to help safeguard against late spring frosts, recent research at Kent State University indicates, that in the East a wind machine may also be used effectively in mid-winter during periods of severe cold to keep temperatures in the vineyard above the critical level that would cause extensive damage to vines. On nights when there is a temperature inversion, the temperature near the base of a vine can be as much as 4C lower than at the top of the vine and 6C colder than 15 meters above the ground. A wind machine can mix the colder air on the ground with the warmer air above to raise the temperature at ground level.
The decision to buy a wind machine may depend in large part on the uses to which the wind machine is to be put. If the wind machine would be intended for use only to protect against spring frosts, comparative costs can be calculated for a wind machine with and without heaters versus the rental costs of a helicopter.
Minimum standards for wind machines have been developed by Dr. James K Ballard of Washington State University. According to him. the tower should hold a propeller 32 to 41 feet off the ground, the motor should strong enough to propel the air 300 to 400 feet, with 10 horsepower per acre being supplied at the propeller. The propeller should be a 6 angle from the vertical, revolve at approximately 590 revolutions per minute and make a 360-degree horizontal rotation every 4-1/2 minutes. In a recent development, fiberglass blades are replacing aluminum blades because of their resistance to corrosion

(Excerpted from "Should You Consider Buying a Wind Machine?". Wine East Buyers’ Guide." 1990.)

Tips on Buying Vineyard Equipment and Supplies

Large pieces of equipment such as tractors and mechanical harvesters are frequently bought from dealers handling a particular manufacturer’s brand, while commonly used items such as pruning shears are widely available as garden centers or other stores. In vineyard country a wider selection may be carried at the local branch of a chain such as Agway.
Businesses that specialize in selling vineyard equipment and supplies may do up to 90% of their business by mail or telephone. Their catalogs generally list items in greatest demand as well as newer products that are considered to offer good value. The expertise offered by a specialty business should include a working knowledge of the kinds of equipment or supplies required to do a particular job or quantities that would be needed, for example, to plant four or five acres of grapes. Don’t expect specific advice on how to care for a vineyard, however, because there are too many variables from one site to another.
If you are a newcomer to the vineyard, it should be noted that for your own benefit as well as the suppliers, it is helpful to plan ahead. By forecasting the scale of your operation before you plant, for instance, you can buy the correct size tractor, one that is neither too big nor too small.
Arrangements may sometimes be made for heavy or bulky items to be shipped directly to the customer from a nearby manufacturer. If machinery with moving parts is ordered, the question of servicing should be discussed, Parts should be available for shipping within 24 hours. Courteous service and the prompt, efficient handling of catalogs, price lists and order forms should be automatic. It is always best to know the principals in the business and be able to trust their opinions. In no way is it unusual for an out-of-state customer to visit a supplier, but it is wise to call ahead and say you are coming.
(Excerpted from "Buying Vineyard Equipment and Supplies." Wine East Buyers’ Guide.1989, and revised in 1991)
Tips on Being a Good Customer
Suppliers appreciate courtesies extended to them by customers. Should you have to cancel an appointment with a supplier, call in advance to arrange a new time. Don’t take up a lot of a supplier’s time if you know you will be buying the items elsewhere. If you need to delay payment of a bill, call, don’t simply play hard to find. The relationship of trust between a buyer and a seller is a valuable and mutual asset.
Tips on Buying and Handling Yeasts
In a very real sense, the key to buying arid handling yeasts is directly related to the realization that a winemaker has much more control over the fermentation process than he or she may have thought possible. The starting point is for the winemaker to decide on the particular style of wine to be made. Most of the reputable yeast manufacturers give very good descriptions of what their yeast should do and what its’ characteristics are. Once the winemaker is aware of the characteristics of each strain, a determination can be made whether they are of significance for the particular wine being made.
Enological considerations include:
  • Alcohol tolerance: How well the yeast resists alcohol, especially towards the end of fermentation.
  • Sugar to alcohol yield: Nearly all yeasts today have excellent conversion of sugar to alcohol, fermentation speed, and whether the yeast works better at higher or lower temperatures.
  • Tendency to foam.
  • Tendency to produce a fruity character in the wine.
  • Level of S02, H2S and volatile acid production.
  • Level of glycerol production.
  • Ability of yeast to consume malic acid.
  • Relationship to the killer factor
Once the selections of yeast is made, it then becomes important how the winemaker handles the yeast to get the best performance from it. Storage conditions, rehydration and nutrition are all important. Very often, a manufacturer’s representative will be of substantial help after the yeast has been selected. If there is a single most important recommendation, it is: Read what the manufacturer says. Listen to the representative’s advice.

(Excerpted from "Evaluating the Role of Yeasts in Winemaking: An Interview with Clayton Cone," Wine East Buyers’ Guide, 1989)

Tips on Buying a Tractor

Adequate horsepower is an essential consideration for a tractor used in the vineyard. Two kinds of horsepower are frequently referred to: the rated power take-off horse-power, often called PTO horsepower; and drawbar horsepower, the amount of power available at the drawbar for towing. Drawbar horsepower is typically 91-92% of PTO horsepower. Both types of horsepower must be considered in the operation of a sprayer. PTO horsepower is generally what is referred to in tractor advertising and if a sprayer requires 45 horsepower, 45 PTO horsepower is usually what is meant. Metric measurement in kilowatts is sometimes given, however, and one kilowatt equals approximately three-quarters of one horsepower.
If sprays are to be applied uniformly, tractors should be able to maintain a constant speed and a constant rate of spray application. For a fan to operate at rated capacity, adequate horsepower is required to power the sprayer at a rated speed of PTO rpms. The tractor must also have adequate power to maintain ground speeds on upgrades, and ground speed involves drawbar horsepower.
Since the throttle setting on the tractor is dictated by the rated PTO speed, the ground speed must be controlled by gear selection rather than adjusting the throttle. It is important to make sure than the tractor you are considering has the selection of gears you will need.
Information on tractor weighting, tire selection and fuel economy may available at extension offices. They may also have the unbiased test results for various tractors from the Nebraska Tractor Test Laboratory.
Other factors to consider are whether the tractor will be intended for in wide or narrow rows, equipment options and, not least, the availability of parts and service.
(Excerpted from "Buying a Tractor: Some Considerations." Wine East Buyers’ Guide.1987.)
Tips on Mail Orders
If you order by mail, your purchase must be shipped or a notice of delayed shipment with an option to cancel must be sent within 30 days after the company receives your completed order. While you have more legal protection under federal law if you order by mail, rather than by telephone, you should still take the time to check out any company you are in doubt about, and to keep a complete record of the order including name and address of the company, date of order, and method of payment.
(Excerpted from "Careful Buying Saves, Time and Money," Wine East Buyers’ Guide 1987.)
Tips on Buying Labels
The choice of paper used for labels depends in part on the type of equipment used for labeling. For manual labeling, a heavier paper is preferred, usually an 80 lb. stock. A lighter 60 lb. stock is better for automatic equipment. The type of paper is also important. A 70 lb. smooth paper works well on an automatic labeler; a 60 lb. weight is essential for a linen finish because of tile grooves.
Paper, like wood, has a grain, and the grain determines which way the paper curls. Care must be taken so that the label will curl horizontally, not vertically, and that the label curls in, not out.
Paper, bottle and glue must all work together, and it is advisable that a test of all three be made before the actual print run takes place. In addition to finding compatible glue, some bottles may have chemical residues on them that will affect the final choice of glue. Since paper is an unstable product that can be affected by humidity, temperature and the nature of the paper itself, proper storage of labels is important. Labels should be properly wrapped and kept in a dry place. Uncoated labels should be placed in the bottling area at least 24 hours before they will be used.
A variety of coatings are available to help protect the label against scuffing. The labels on larger bottles are more susceptible to damage when shipped for a long distance by rail or truck. Except for some’ labels printed on text paper, most labels should probably be varnished.
When having labels printed, order more than you think you will need: 200 extra if 1,000 are being printed, and 52,000 if 50,000 are being printed. To avoid wasting good printed labels, ask the printer for blank labels for use when starting up the labeling equipment.
Standardizing on one size and shape of label may result in a saving on printing costs. Having two or more labels printed at one time can also mean worthwhile savings. Using a printer with experience in printing labels is a good idea, no matter how knowledgeable you are. A good printer will be aware of the need for government approvals, the compatibility of glue, and paper grains. Above all, the printer is a good double check, it can be dangerous to make decisions oneself.
Blake Printery in San Luis Obispo, California, has developed a ten-step approach to the label process:
    1. Decide on marketing and distribution.
    2. Choose a designer.
    3. Select a label design and get printing estimates.
    4. Select your label printer.
    5. Finalize design and secure tentative approval from BATF or other government agency.
    6. Test run your label paper, glue and bottles.
    7. Check all specifications with winery personnel and the printer.
    8. Get final approval from applicable government regulatory agency.
    9. Proofread the label again and check UPC codes if used.
    10. Store labels properly prior to bottling.

(Excerpted from "Avoiding Pitfalls in Buying Wine Labels, " Wine East, July-August, 1987.)

Tips on Guarantees and Warranties
A guarantee or warranty is a statement by a manufacturer or vendor to the effect that the company or individual involved is standing behind the product or service and will make good if the product or service does not live up to the claims made for it. The reliability of the person or company behind the guarantee is important.
The time to check a warranty or guarantee is at the time when a purchase is being considered, and shopping for a warranty or guarantee should be part of the buying process. Waiting until something is found to be defective or needs repaired is not the time to find out how good the warranty is. Here are some things to be considered, according to the Council of Better Business Bureaus:
  • What is covered? The entire product? Only certain parts? Is labor included?
  • Who do you call when you need repairs that are covered by the warranty? The manufacturer? The dealer? A service agency?
  • Must repairs be done by a "factory" or "authorized dealer" service to keep the warranty in effect? If yes, is such a dealer located within a convenient distance of you?
  • Who pays for parts, for labor, for shipping charges?
  • How long does the warranty last on the entire product? On parts and assemblies?
  • If pro-rata reimbursement is provided, what is the basis for it? Length of ownership? Usage? Original cost?
  • If the warranty provides reimbursement, is it in cash or credit towards a replacement?
  • Will a substitute product be provided while yours is being repaired?
Check on limitations and conditions, what the warranty covers and what it doesn't. Most of the so-called unconditional guarantees are in fact subject to some conditions. Needless to say, oral promises are not as binding as written promises.
Once the purchase has been made, keep the warranty and sales receipt in a safe place, noting the date of purchase and the date of installation. If you are required to register your purchase by returning the warranty card, be sure to do it. Before using the product, read the owner’s manual or instruction sheet. Follow the proper care and use instructions and be certain that any specific routine maintenance or service suggested or required by the warranty is preformed. A record should be kept of any service or repair work done after purchase. If trouble develops, report the problem as soon as possible, trying to fix the product yourself may void the warranty. Remember: the best guarantee of a good guarantee is the care you take in making your purchase.
(Excerpted from, "Careful Buying Saves Time and Money." Wine East Buyers’ Guide, 1987.)


Sales Schedule of Wine Production By Wine Varietal and Year

Years Where Year 1 is Production

Varietal Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Sales in Percentage (%)
Chardonnay 0 0 50 25 25 NA*
Vignoles 0 50 25 25 NA* NA*
Vidal & Seyval 0 50 25 25 NA* NA*
Riesling 0 50 25 25 NA* NA*
Niagara 0 50 25 25 NA* NA*
Cabernet 0 0 0 50 25 25
Cynthiana 0 0 0 50 25 25
Chambourcin 0 0 50 25 25 NA*
Chancellor 0 0 50 25 25 NA*
*NA means not applicable.  In this model, wines are sold on either a four, five or six year cycle. For example, Vignolees, Vidal, Seyval, Riesling and Niagara are sold on a four year cycle with 50% sold in year2, 25% in year 3 and the remaining 25% sold in year 4. Sales begin in either the second, third or fourth season after the grapes are prodcued, harvested, crushed and the winemaking process is initiated.


Retail and Wholesale Wine Prices per 750 ml Bottle by Wine Varietal

Varietal Retail/750 ml Wholesale/750 ml

Dollars ($)



Vignoles 7.00 4.20
Vidal & Seyval 5.00 1.00
Riesling 4.00 2.40
Niagara 4.00 2.40

Average White

5.70 3.42
Cabernet 8.00 4.80
Cynthiana 6.50 3.90
Chambourcin 6.00 3.60
Chancellor 5.00 3.00

Average Red

6.38 3.83

Average Wine

6.00 3.60
Note: Wine prices were determined from a survey of Ozark Region winery managers.


Maximum and Minimum Sales of Wine Varietals as a percentage of Total Sales Volume in Gallons

Varietal Minimum Maximum

Percentage (%)

Percentage (%)

Chardonnay 2.5 10.0
Vignoles 10.0 20.0
Vidal & Seyval 7.5 60.0
Riesling 2.5 10.0
Niagara 2.5 10.0
Cabernet 2.5 10.0
Cynthiana 2.5 10.0
Chambourcin 5.0 20.0
Chancellor 2.5 10.0
Note: Marketing percentages were determined from a survey of ozark Region winery managers. Different marketing conditions will prevail dependent on individual circumstances.

Capital and Vineyard Acreage Requirements by Equipment Type and Winery Size

Item 100 80 40 20 10 5
EQUIPMENT* Dollars ($)
Receiving & Crushing 124,335.00 123,995.00 73,995.00 65,990.00 22,455.00 14,920.00
Cellar 116,205.00 116,205.00 64,265.00 36,100.00 31,510.00 6,010.00
Bottling 160,100.00 160,100.00 127,070.00 199,695.00 18,015.00 6,715.00
Tanks 227,670.00 209,860.00 118,570.00 84,500.00 50,180.00 37,600.00
Refrigeration 55,000.00 55,000.00 40,000.00 40,000.00 20,000.00 0.00
Barrels 491,072.00 392,858.00 196,429.00 98,820.00 48,927.00 24,300.00
TOTAL EQUIPMENT 1,174,382.00 1,058,018.00 620,329.00 445,105.00 191,087.00 89,545.00
Buildings & Non-vineyard land 1,049,000.00 784,000.00 434,000.00 224,000.00 124,000.00 74,000.00
TOTAL  (EQUIPMENT & BUILDINGS) 2,223,382.00 1,842,018.00 1,054,329.00 669,105.00 315,087.00 163,545.00

Square Feet of Buildings and Sales Area

Square Ft. 40,000 29,400 15,400 8,400 4,400 2,400
Dollars ($)
Capital per Sq. Ft. 55.58 62.65 68.46 79.66 71.61 68.14
Acres (total vineyard) 125.00 100.00 50.00 25.0 12.50 6.25
*Equipment capital requirements are taken from David Ward, Planning Guidelines for Small and medium Sized Wineries/Juice Plants in Arkansas. (Unpublished MS Thesis).

Estimated Annual Revenues, Costs and Net Returns by Winery Size

Winery Size (Annual Capacity in Thousand Gallons)

Item 100 80 40 20 10 5


Gross Revenue 1,747,408.70 1,422,211.23 772,111.81 436,849.43 253,984.15 126,992.08
Total Costs (Variable & Fixed) 1,526,094.25 1,279,116.14 688,651.53 406,013.87 214,930.83 125,943.68
Net Returns 221,614.45 143,195.09 83,460.28 30,835.28 39,053.32 1,048.40
Percent (%)
Returns to Capital over Interest Expense 9.97 7.77 7.92 4.61 12.39 0.64
Note: Gross revenue less total costs reflect all costs including a 12% interest rate (or rate of return on personal investment) and a salary for the owner but excluding taxes on income and inventory.


Full-Time Employees by Position and Winery Size
Winery Size (Annual Capacity in Thousand Gallons)
Item 100 80 40 20 10 5
Winemaker 1 1 1 1 1 1
Retailer 2 2 1 1 0 0
Cellar Worker 2 2 1 1 0 0
Marketing & Delivery 1 1 1 0 0 0
Laborer 2 2 2 1 2 1
Total Employee Positions 8 8 6 4 3 2
Note: Labor needs are taken from David Ward, Planning Guidelines for Small and medium Sized Wineries/Juice Plants in Arkansas. (Unpublished MS Thesis)



Wine Sales in Volume in Gallons by Wine Varietal and Winery Size

Winery Size (Annaul Capacity in Thousand Gallons)
Varietal 100 80 40 20 10 5
Chardonnaya 10,000 8,000 4,000 2,000 1,000 500
Vignolesa 20,000 16,000 8,000 4,000 2,000 1,000
Vidal & Seyval 22,500 18,000 9,000 4,500 2,250 1,125
Rieslingb 2,500 2,000 1,000 500 250 125
Niagarab 2,500* 2,000* 1,000* 500* 250* 125*
Total White 57,500 46,000 23,000 11,500 5,750 2,875
Caberneta 10,000 8,000 4,000 2,000 1,000 500
Cynthianaa 10,000 8,000 4,000 2,000 1,000 500
Chambourcina 20,000 16,000 8,000 4,000 2,000 1,000
Chancellorb 2,500* 2,000* 1,000* 500* 250* 125*
Total Red 42,500 34,000 17,000 8,500 4,250 2,125
Total Wine 100,000 80,000 40,000 20,000 10,000 5,000
Note: Sales represent total volume that occurs annually during and after the sixth year of production allowing for all cycles to be completed as described in Table 1 within the text.
* - Indicates grapes for making this wine type were purchased rather than raised in the winery's own vineyard because it was more economical.
a - Indicates that the wine is sold at the maximum percentage allowed.
b - Indicates that the wine is sold at the minimum percentage allowed.


TABLE 8. Break-even Wine Price per 750 ml Bottle above Variable and Total Costs by Wine Varietal and Winery Size
Section I. Break-even above Variable Costs

Winery Size (Annual Capacity in Thousand Gallons)

Varietal 100 80 40 20 10 5
Chardonnay 1.72 1.72 1.73 1.73 1.76 1.76
Vignoles 1.34 1.34 1.34 1.35 1.37 1.38
Vidal & Seyval 1.26 1.26 1.26 1.26 1.29 1.29
Riesling 1.50 1.50 1.50 1.51 1.53 1.54
Niagara 1.07 1.07 1.07 1.07 1.10 1.10
Cabernet 1.93 1.93 1.93 1.94 1.97 1.97
Cynthiana 1.66 1.66 1.67 1.67 1.70 1.71
Chambourcin 1.33 1.33 1.33 1.34 1.36 1.37
Chancellor 1.34 1.34 1.34 1.35 1.37 1.38
Section II. Break-even above Total Costs
Varietal 100 80 40 20 10 5
Chardonnay 4.20 4.39 4.71 5.51 5.82 6.78
Vignoles 3.59 3.77 4.05 4.78 5.06 5.93
Vidal & Seyval 3.51 3.68 3.97 4.70 4.98 5.85
Riesling 3.75 3.93 4.22 4.94 5.22 6.09
Niagara 3.32 3.49 3.78 4.51 4.79 5.66
Cabernet 4.66 4.87 5.22 6.09 6.43 7.49
Cynthiana 4.39 4.60 4.95 5.83 6.17 7.22
Chambourcin 3.81 4.00 4.32 5.11 5.42 6.38
Chancellor 3.82 4.01 4.33 5.12 5.43 6.39
Note: For the purpose of this table, variable costs include cost of grapes (the lesser of production costs or purchase price), federal and state wine taxes, glass, labels, corks, yeast and utility expenses.


The authors wish to thank the numerous winemakers who have contributed to this study. Special Thanks are due to Andrew Post of Post Winery in Altus, Arkansas, who contributed significantly in establishing processing cost.


Metz, 0. "Packaging Line Considerations for Small Wineries." Wine East Buyers’ Guide. 1991 edition. P. 10-25.

Kirchner, D. A., C. Price. and J. R. Morris.

    Economic Analysis of Wine Grape Production in Arkansas -1987.
    Agricultural Experiment Stations Special
    Report 130. March 1988.

Price, L., et al. Planning Data for Marketing

Selected Fruits and Vegetables in the South; Part 1-Canning handbook. Southern Cooperative Series Bulletin 146. June 1968.

Ward. D. Planning Guidelines for Small and Medium Sized Wineries/Juice Plants in Arkansas. Unpublished Masters Thesis. 1991

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What I Would Do Differently:

A "What If" Game

"What if" games are usually fun and quite often instructive. The idea of asking winemakers what they would do differently if they could start their winery operations all over again was the result of a visit with Alan Wolf of Conneaut Cellars in Conneaut Lake, Pennsylvania. As we walked through the winery, we talked about his need for more room. "If I were doing it over," Alan. said, "I would have built the ceilings at least 12 feet high. They’re only eight feet high because I wanted it to have the appearance of a wine cave or a wine cellar. Then, to save floor space, I would have bought different tanks that would go all the way up to the ceiling.

"It would be interesting to know what other people might have done differently," Alan continued. "For example, I would have bought a D.E. filter right off the bat rather than fool around with a cartridge. I would have made sure that my crusher was made entirely of stainless steel and that nothing was coated. Then, again, I would have thought about making the tasting room larger. I didn’t know about bus tours in those days."

Alan’s idea seemed worth pursuing, and we began asking other winemakers what they would change if they had the opportunity to start over. Angelo Pavan of Cave Spring Cellars in Jordan,Ontario also talked about tanks: "We used concrete when we installed our first tanks," he said, "and we can’t rearrange them. If we were doing it over, we would put the tanks on legs." Along the same lines, Archie Smith Ill, of Meredyth Vineyards in Middleburg, Virginia, warned against using wooden platforms for tanks because of the difficulty in keeping them clean.

Rob Harper of Naked Mountain Vineyard in Markham, Virginia, responded by saying that he would have built a winery building from scratch rather than try to convert an existing building. The cost of ripping out walls, electrical work and other costs of conversion exceeded the cost of a metal building he built more recently. If he had to do it over, he would put up a 40 x 40 foot metal building with an attractive facade.

Arnie Esterer of Markko Vineyard in Conneaut. Ohio, built his winery himself, and he admits that a little more professionalism in the construction would have been helpful. "I planned to do more than I should have," he says. One of the projects that was never completed involved placing wood siding on the concrete walls of the winery building and adding more insulation.

A common regret expressed by a number of winemakers was that they should have made allowance for increased storage space during the planning stage. Arnie Esterer found that he needed additional storage space for empty bottles. Doug Moorhead of Presque Isle Wine Cellars in North East, Pennsylvania, said that his biggest error was not allowing enough bin and bottle space.

Financing was another topic that frequently came up. Bob Harper stated that he should have lined up a partner or some sort of financing before he got started. Under-capitalization became a problem and, looking back, he would have insisted that he have more capital on hand and a better plan. Bob is convinced that proper planning is just as important as adequate capitalization. Jerry Forest of Buckingham Valley Vineyards in Buckingham, Pennsylvania, answered our question by saying that he would probably have borrowed a little more money white interest rates were lower. Bob Mazza of Mazza Vineyards in North East, Pennsylvania, would have taken a much more conservative approach towards spending. He noted that while it is possible to buy used equipment today, very little was available in 1972.

Art Hunt of Hunt Country Vineyards in Branchport, New York, actually did start over after his original winery, Finger Lakes Wine Cellars, was merged with Glenora Wine Cellars in Dundee, New York. In terms of advice he says flatly that many winery operators need to spend more time evaluating sales and cash flow and comparing them to projections. Unless these statistics are tracked month by month, the winery is continually flying by the seat of its pants.

Jim Gifford of Fox Run Vineyard in Penn Yan, New York, astutely observed that starting a winery is a long learning curve that can’t be speeded up. A slightly different perspective was offered by Whitie Hubert of Tarara in Leesburg, Virginia, who is convinced that he did a lot of things right at one time when he hired people who had experience in Virginia.

Turning to the subject of what is planted in the vineyard, Dick Naylor of Naylor Wine Cellars in Stewartstown, Pennsylvania, who markets 30 wines, says that when he was getting started he felt that it was necessary to plant many different varieties in order to determine what grows best in his area. Today, he would plant far fewer varieties. Archie Smith III, also pointed out that not much was known in 1970 about the varieties that should be planted or about site selection. If he could do it over, lhe would change the varietal mix in the vineyard and plant some varieties in other locations.

Bob Wollersheim of The Wollersheim Winery in Prairie du Sac, Wisconsin. said that he probably wouldn’t have done that much differently in the vineyard or winery, but he would have developed a stronger marketing plan. Archie Smith added that a more professional job of marketing should have been done by Meredyth Vineyards early on.

Doug Welsch of Fenn Valley Vineyards in Fennville, Michigan, would not change the original selection of vinifera and hybrid varieties planted in the vineyard, but he would change the way in which the wines made from them were marketed. A lot of effort in the 1970s went into promoting "Seyval" as a varietal name primarily because that was what was being done in New York State. Today he would build market recognition on the basis of well-known vinifera varieties. Wines made from the hybrids would be sold under proprietary names.

Richard Caplan of Twin Brook Winery in Gap, Pennsylvania, started with the premise that a winery should be guided by what the public wants to buy rather than making a product selection in advance. His winery started with ten different wines, moved up to 18, and is now scaling back to ten basic wines plus a seasonal wine or two.

Dirgham Salahi of Oasis Vineyard in Hume, Virginia, listened to the question, tossed his head, laughed, and said, "l’d invest my money somewhere else!"

Tips on Buying Packaging Equipment

One of the biggest decisions a winery can make occurs at the time when a switch is made from simple hand machines to automatic ones for bottling, corking, capsuling, labeling and casing. Capital and limited time are the two main factors in making the decision. In general, hand machines predominate in wineries producing less than 10,000 gallons and some kind of automatic line is purchased when production exceeds 20,000 gallons. When making the decision, it usually pays to estimate the cost of automating and financing over at least a five-year period as opposed to continuing hand operations.

Bottle Cleaning and Sparging

Blowing and rinsing are the two methods of bottle cleaning. Blowing is less popular in the East than in the West because higher humidity and long glass storage time make it difficult to maintain sterile conditions until the filling operation starts. Hand spargers built locally are often used by smaller wineries bottling less than 25 bottles per minute. In choosing a blower, the bottle should either be inverted when being blown or there should be a system for Suction removal of air and particles. Sterile water can be used for rinsing as long as the glass is sterile. If it is not, a recirculating pump enables reuse of a solution of 20,000 PPM of SO2. Rinses should be made entirely of stainless steel and must be large enough to allow time for the rinse material to spray into the bottle and to drain out again. Some rinsers come with a calibration chart that can be used to determine rinser performance through the correct sizing of the machines. A rinser will always have more spouts than the filter it precedes.

Filling and Corking

Straight gravity is the simplest and best system for filling. Low depression is used only for hard-to-fill wines (such as those that are high in residual sugar). Vacuum filling is becoming obsolete because of the greater oxidation of the wine and the difficulty in maintaining sterile filling. Simple filters that can fill up to 800 bottles an hour cannot break or wear out, but they cannot be supplied from a pressurized filter system and are therefore not adaptable to true sterile filling. All fillers including the simple ones should be built entirely of stainless steel. Wineries producing less than 10,000 gallons can be comfortable with a Six-spout gravity filler and hand operated "floor corker."

Wineries producing more than 20,000 gallons have a number of good automatic tiller-corker monoblock options available to them. The following features should be looked for when considering the purchase of any monoblock filler-corker:

    • All stainless steel construction (including the frame under the skin) for permanence and sanitation.

    • Capability for "clean in place"(C.I.P.) by means of steam.

    • Safety system to shut off drive instantly in case of bottle jam.

    • Bottom filling of filler bowl to reduce wine aeration.

    • Automatic flow control of wine into filler bowl.

    • Spouts that can be disassembled for cleaning without tools in seconds.

    • Removable cork jaws that can be quickly cleaned and sanitized.


The alternatives to the traditional tin/lead capsules are pure tin, plastic "push-ons," plastic heat shrink, and aluminum/aluminum composites. With the cost of pure tin capsules

much higher than tin/lead, the search for a metal substitute is intensifying. One product under development is a new type of extremely ductile aluminum capsule that can be rolled on like tin/lead. Currently available are plastic heat shrinks that have an ultra-thin layer of real metal "flashed" over the surface of the polyester. The appearance of these "metalized" capsules is extremely good, and they have the advantage of being economical to custom imprint. For small wineries, the plastic "push-ons" are still the simplest possible capsule to apply.

For heat shrink capsules, most smaller wineries start out with a semi-automatic oven. On automatic lines a heat tunnel is used. Small motorized hand spinners used on metal foil capsules can also be mounted on automatic machines. Larger wineries requiring higher production speeds without serious wrinkling will need to use multiple heads on the spinner. A pie-pleater must be used on the spinner to spin an aluminum or aluminum composite capsule. Sometimes an automatic spinner station can be mounted on a labeling machine. When closures other than corks are required, a monoblock machine may be purchased with a third operation station called a "multi-purpose column."


Labeling by hand is practical for wineries producing less than 5.000 gallons a year. Wineries estimate that hand labeling costs between 50 cents and $1.00 a case, a figure which includes the extra cost incurred because hand labeling does not take place at the same time as bottling. The decision on whether to buy a labeling machine begins with a consideration of the value of the people that are doing the labeling. If enough can be saved on labor to buy a machine in two years. the machine will be more cost effective.

Once the decision has been made to automate labeling, the label design becomes an important consideration. Picker machines which are very cost effective for smaller wineries, can only apply a front label panel, and that label must be one-half inch narrower than one-half the circumference of the bottle. A relatively new technology for the wine industry is the pressure sensitive machine that permits application of a back label and places no limit on the size or shape of the label used. Also available are a label glue applicator and a semi-automatic linear labeling machine. Wineries with production of more than 20.000 gallons are likely to want machines with a speed of 2,000 to 3.000 bottles an hour.

A packaging line is a major investment that a winery will have to live with for a long time. Careful investigation and looking before you buy are most important.

(Excerpted from "Packaging Line Considerations for Small Wineries."  Wine East Buyers’ Guide. 1991, and revised in 1992)

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Key to Success - General Concepts
I. Advance Planning
        A. Write a detailed business plan
            1. Pick the brains of friends / family / professionals
            Understand your accounting, legal, winemaking, marketing issues
            2. Select a business organization that makes sense to you
            (corporation vs. partnership vs. LLC)
            3. Identify your product personality; identify your brand personality
            4. Identify a market niche; know your competition
            5. Identify key management and their roles
            6. Develop detailed marketing strategies
                    a. Who is your customer?
                    b. How will you get product to customers?
                    c. How will you build your brand?
            7. Develop detailed and accurate projections
                    a. 5 year vs. 20 year projections
                    b. How will you become profitable? Stay profitable?
                    c. Know where and when to spend the money (know what is worth
                    the extra buck)
        B. Protect your investment
            1. Trademark
            2. Insurance
            3. Contracts, partnership agreements
II. Tricks, smart business
        A. Be creative
        Use what has been done as a tool to determine how to be different
        B. Be flexible
            1. Look back / look forward
            2. Learn from your mistakes
            3. Be open to new ideas
        C. Prioritize your time
            1. Winemaking
            2. The business
            3. Sales & marketing
        D. Love your job! Do what you do best and hire out the rest
        E. Anticipate the unexpected, i.e. have a contingency plan
            1. Trademark challenge
            2. Tainted wines
            3. Poor set in the vineyard
            4. Warehouse disaster
        F. Stay connected with the industry, with the competition, with related professionals

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The following excerpt of information has been provided to us by the Department of the Treasury Bureau of Alcohol, Tobacco and Firearms.  It is taken from The Beverage Alcohol Manual (BAM) - A Practical Guide - Basic Mandatory Labeling Information for Wine.  This information covers mandatory label information, type size and legibility requirements, health warning statement, geographic brand names, class and type designation, standards of fill and cellar treatment.  If you wish to receive a copy of the The Beverage Alcohol Manual (BAM), please contact the Ohio Wine Producers Association at 800-227-6972 or visit the BATF website at:





Usually the most prominent piece of information on the label
Name under which a wine or line of wines is marketed
NOTE: If the wine is not sold under a brand name, the name of the bottler, packer or importer [shown on the front of the container]  becomes the brand name
A name that describes the age (see “Exceptions relating to age” below), origin, identity or other characteristics of the wine is prohibited UNLESS the name, whether standing alone or in combination with other printed or graphic material:
Accurately describes the wine AND
Conveys no erroneous impression about the wine
ls qualified with the word “BRAND”
NOTE: Qualification with the word “BRAND” is not an option in the case of a geographic brand name. (See CHAPTER 4, GEOGRAPHIC BRAND NAMES)
Exceptions relating to age
No statement of age or representation relating to age may appear in or as part of the brand name EXCEPT:
For vintage wine
References relating to methods of wine production involving storage or aging

                            Example: “AGED (or MATURED) 6 MONTHS IN OAK CASKS”

 Use of the word “OLD” as part of a brand name


 The chart below provides examples of acceptable and unacceptable brand names





Cuvee Mature
Dessert Wine


It implies age

Old Veil White Wine

It includes the word "OLD"


Japan Gold Sake

1)    Not less than 75% of the volume of the wine is derived from rice grown in Japan AND

2)    The wine conforms to the laws and regulations of Japan

3)    “JAPAN GOLD’ is qualified with the word


Simple Red Table Wine

1)    The wine is red wine

2)    “Simple Red” is qualified with the word “BRAND”




 A brand name that includes a vineyard, orchard, farm or ranch name is acceptable:

 Provided not less than 95% of the volume of the wine is derived from the commodity used to make the wine grown in the vineyard, orchard, farm or ranch named in the brand name


Without qualification if the company name or trade name shown in the mandatory name and address statement on the label is identical to the brand name that includes a vineyard, orchard, farm or ranch name


Without qualification if the brand name is qualified with the word “BRAND”

NOTE: If a brand name including a vineyard, orchard, farm or ranch name has viticultural significance (Example: “TEMECULA VINEYARD”), it is considered a geographic brand name and subject to the requirements for use of a geographic brand name (see CHAPTER 4, GEOGRAPHIC BRAND NAMES)

Minimum 2 mm for containers larger than 187 ml
Minimum 1 mm for containers of 187 ml or less
Must be readily legible
Must appear on a contrasting background
Must appear separate and apart from or be substantially more conspicuous than descriptive or explanatory information
Must appear on the FRONT of the container
The specific identity of the wine
Minimum 2 mm for containers larger than 187 ml
Minimum 1 mm for containers of 187 ml or less
Must be readily legible
Must appear on a contrasting background
Must appear separate and apart from or be substantially more conspicuous than descriptive or explanatory information
Must appear on the FRONT of the container
TABLE WINE” or “LIGHT WINE” may be used as the alcohol content statement IF the wine contains 7%-14% alcohol by volume
NOTE:         If table wine or light wine is made from any commodity other than grapes, “TABLE WINE” or “LIGHT WINE” must be qualified with the specific or general class of the commodity from which the wine was made. (See CLASSES AND TYPES chart in CHAPTER 5, CLASS AND TYPE DESIGNATION)
Alcohol content may be stated as a specific percentage with a tolerance of:
Plus or minus 1% for wines containing over 14% alcohol by volume
Example:          A wine is labeled with the alcohol content statement “16% ALC BY VOL.” Provided the actual alcohol content does not exceed 17% or fall below 15%, the label alcohol content statement “16% ALC BY VOL” is permissible
Plus or minus 1.5% for wines containing 7%-14% alcohol by volume
Example:          A wine is labeled with the alcohol content statement “12% ALC BY VOL.” Provided the actual alcohol content does not exceed 13.5% or fall below 10.5%, the label alcohol content statement “12% ALC BY VOL” is permissible
Alcohol content may be stated as a range. The range may not exceed:
2% for wines containing over 14% alcohol by volume

        Example: “15%-17% ALC BY VOL”

3% for wines containing 7%-14% alcohol by volume

Example:          “9%-12% ALC BY VOL”

 NOTE:            Regardless of the prescribed tolerances, the label alcohol content statement may not cross tax categories (7%-14% alcohol by volume; over 14%-21% alcohol by volume; over 21%-24% alcohol by volume)

 Example:              A wine is labeled with the alcohol content statement “13.5% ALC BY VOL.” Provided the actual alcohol content does not exceed 14% or fall below 12%, the label alcohol content statement “13.5% ALC BY VOL” is permissible


 For statements of the specific percentage of alcohol:



 For alcohol content statements shown in a range:

 “____% TO___% ALCOHOL (ALC) BY VOLUME (VOL)” or



 For containers of 5 liters or less:

Minimum 1 mm

Maximum 3 mm

Must be readily legible
Must appear on a contrasting background
May not be set off with a border or otherwise accentuated


Must appear on the FRONT of the container


A statement of the percentage and origin of foreign wine (Example: “30%
GRAPE WINE FROM ITALY”) is required on blends of American and foreign wines if any reference to the presence of foreign wine is made on the label
Minimum 2 mm for containers larger than 187 ml
Minimum 1 mm for containers of 187 ml or less
Must be readily legible
Must appear on a contrasting background
Must appear separate and apart from or be substantially more conspicuous than descriptive or explanatory information
Must appear on the FRONT of the container
For American wine
The name and address of the bottler or packer must appear on the label
For imported wine
The name and address of the importer must appear on the label AND
If the wine is bottled or packed after importation:
The name and address of the bottler or packer must also appear on the
label OR
Other indication of bottling or packing in the U.S. must appear on the label
The name and address of the blender or bottler or packer for wine blended or bottled or packed outside the country of origin and labeled with a reference to the country of origin
The name and address statement must be preceded by an explanatory phrase (see PRECEDING EXPLANATORY PHRASE section of CHAPTER 6, NAME AND ADDRESS (OPTIONAL STATEMENTS AND PRECEDING EXPLANATORY PHRASES)
The company or corporate name or trade name identical to that shown on the basic permit
The city and state of the named winery identical to that shown on the basic permit
NOTE:          Other geographic references, e.g., county names, may be
included in the address ONLY IF the geographic reference appears on the basic permit as part of the permit address
The city and state of the importer’s principle place of business identical to
that shown on the basic permit
Bottled By (or For)
This phrase is required for wine bottled in containers of 4 liters or less
Packed By (or For)
This phrase is required for wine packed in containers of over 4 liters
Minimum 2 mm for containers larger than 187 ml
Minimum 1 mm for containers of 187 ml or less
Must be readily legible
Must appear on a contrasting background
Must appear separate and apart from or be substantially more conspicuous than descriptive or explanatory information
May appear on the FRONT, BACK or SIDE of the container
Wine must be bottled or packed in a metric standard of fill
Minimum 2 mm for containers larger than 187 ml
Minimum 1 mm for containers of 187 ml or less
Must be readily legible
Must appear on a contrasting background
Must appear separate and apart from or be substantially more conspicuous than descriptive or explanatory information
Net contents may be blown or branded into the bottle in lieu of or in addition to stating net contents on the label EXCEPT THAT if the net contents are not shown on the label of foreign bottled wine, a sample of the container must be submitted with the application for certificate of label approval (COLA)
May appear on the FRONT, BACK or SIDE of the container
“CONTAINS FD&C YELLOW #5” must appear on the label of any wine
containing FD&C Yellow #5
Minimum 2 mm for containers larger than 187 ml
Minimum 1 mm for containers of 187 ml or less’
Must be readily legible
Must appear on a contrasting background
Must appear separate and apart from or be substantially more conspicuous than descriptive or explanatory information
May appear on the FRONT, BACK or SIDE of the container
Minimum 2 mm for containers larger than 187 ml
Minimum 1 mm for containers of 187 ml or less
Must be readily legible
Must appear on a contrasting background
Must appear separate and apart from all other label information
May appear on the FRONT, BACK or SIDE of the container
For wine containing 10 or more parts per million (ppm) of sulfur dioxide — the statement “CONTAINS SULFITES” or “CONTAINS (A) SULFITING AGENT(S)” or identification of the specific sulfiting agent(s) is required
For a wine not labeled with a sulfite declaration - sample analysis by ATF or an ATF certified laboratory is required to verify that the wine contains less than 10 ppm sulfur dioxide. Evidence of analysis must be submitted with the application for certificate of label approval (COLA)
Minimum 2 mm for containers larger than 187 ml
Minimum 1 mm for containers of 187 ml or less
Must be readily legible
Must appear on a contrasting background
Must appear separate and apart from or be substantially more conspicuous than descriptive or explanatory information
May appear on the FRONT, BACK or SIDE of the container
The statement below must appear on all alcohol beverages for sale or distribution in the U.S. containing not less than 0.5% alcohol by volume, intended for human consumption and bottled on or after November 18, 1989:
GOVERNMENT WARNING: (1) According to the Surgeon General, women should not drink alcoholic beverages during pregnancy because of the risk of birth defects. (2) Consumption of alcoholic beverages impairs your ability to drive a car or operate machinery, and may cause health problems.
The words “GOVERNMENT WARNING” must appear in capital letters and in bold type
The remainder of the statement may not appear in bold type
The statement must appear as a continuous paragraph
Minimum 3 mm for containers larger than 3 liters (101 fI. oz.)
Minimum 2 mm for containers larger than 237 ml (8 fI. oz.) to 3 liters (101 fI. oz.)
Minimum 1 mm for containers of 237 ml (8 fI. oz.) or less
Must be readily legible under ordinary conditions and appear on a contrasting background
Must appear separate and apart from all other label information

May not exceed maximum number of characters per inch:

             Minimum Type             Maximum Characters
             Size Requirement          Per Inch

                   1mm                      40

                   2mm                               25

                   3mm                       12

May appear on the FRONT, BACK or SIDE of the container


Required under U.S. Customs Service regulations for any imported wine
(Fill in blank with name of country in which wine was produced)
(Fill in blank with name of country in which wine was produced or produced and bottled or packed)
(Fill in blank with name of producer or producer and bottler or packer and address [country or city and country] in which wine was produced or produced and bottled or packed)
     There are no specific type size requirements
     There are no specific requirements
     May appear on the FRONT, BACK or SIDE of the container

You can view the entire Beverage Alcohol Manual and all Federal regulations for wine onsite at:

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