“Premium” Winery

March 1, 2011

I’ve started writing up a business plan to start my winery. There are a lot of books out there to help, both free and not so free. A lot of it was published between 2002 and 2008, before the economic downturn. As a result, the word “premium” seems to pop up quite a bit. For example, Cornell University published Writing a Business Plan: An Example for a Small Premium Winery in 2002.  The first goal of the document is, “To develop a strategy for successfully marketing ultra premium wines from New York State priced at higher price points (i. e. $20 per bottle) than most wineries are now attaining.” Well, with the economic down turn, people discovered there are a lot of good wines out there around $15, and I think gone are the days of paying much more than $20 a bottle.

I have another document from the Washington State University titled Small Winery Investment and Operating Costs. In it, it states that you need half a million dollars to buy all the equipment needed to operate at 2,000 cases a a year. I have a few other documents, including one out of Illinois and another from Arkansas, that say you can pay less than $100,000 to get all the equipment you need to operate a 5,000 gallon winery (by my calculations, 5,000 gallons is about 2,000 cases).

I’m starting to equate this word “premium” with “gluttony.” Like, only the biggest and the best, and probably the shiniest, equipment will do. With so many wineries starting up in the last decade, which are now going under, it’s not hard to see why if they spent $500,000 on equipment when $100,000 was really all they needed. And to think that is a university paper! I think the mass rise of wineries has also created a bit of backlash, which is quite visible here:

And I’ve got to take this to heart. While I can argue that I’m becoming a licensed winery in order to produce cider and the occasional fruit wines, the sudden increase in cideries could be exactly like the sudden increase in wineries. Then again, I might survive because I don’t plan on spending half a million dollars just on equipment!

This morning, I read a blog by The Grumpy Winemaker about how the days of premium are over, and it was informative that Gallo could make premium wine, but there is no profit in it if they did. I like his sense of humor.

 

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