How to Start a Wine Business

Maybe you’ve always dreamt of taking a sip of your best pinot noir while overlooking the vineyard at dusk. Or maybe you just know there’s good money in alcohol! 

Either way, the $300 billion global wine industry is starting to emerge from the pandemic and expected to boom in the coming years, which means this could be the perfect time to start a wine business. 

Of course, it won’t be easy. You’ll need to know the risks involved and the key steps to take. Fortunately, you’ve come to the right place, as this step-by-step guide lays out all the information you’ll need to start crushing grapes, bottling wine and riding the vino money train! 

Let’s begin your oenological journey.

Step 1: Decide if the Business Is Right for You

Wine is bouncing back from the pandemic-driven downturn. But it won’t be easy to penetrate a market that relies on brand names, and you’ll need to be patient to recover your initial investment. But there’s real opportunity in wine right now, and it could be the right business for you. 

Let’s start by looking at the pros and cons.

Pros and cons

You’ll have many opportunities with a wine business, but you also need to understand the industry’s unique challenges before you dive in.

Wine industry trends

China is the second-largest market for wine, and with strong growth is projected to overtake the US market by 2027, making it an attractive export destination.

Industry size and growth

• Industry size and past growth – The US is the world’s largest wine market, with revenue estimated at $58 billion.((https://www.statista.com/outlook/cmo/alcoholic-drinks/wine/united-states))  
• Growth forecast – The US wine industry is expected to expand an additional 7% annually through 2025, according to German research firm Statista, while market analyst Grandview Research believes this growth rate will persist until 2030.((https://www.grandviewresearch.com/industry-analysis/us-wine-market))
• Number of businesses – In 2020, there were more than 11,000 wineries in the US, after expanding 50% over the past decade.((https://www.statista.com/statistics/259353/number-of-wineries-in-the-us/)) There are also more than 44,000 beer, wine, and liquor stores across the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/beer-wine-liquor-stores-united-states/))
• Number of people employed – US wineries employ 49,000 people.((https://www.ibisworld.com/industry-statistics/employment/wineries-united-states/))

Trends and challenges

Trends shaping the wine industry include:

• Innovations in flavor, color, and packaging
• Mergers, acquisitions, and consolidation among wineries
• Shift in consumer preference to wine and other mild alcoholic beverages

Challenges in the wine industry include:

• Supply chain disruptions
• Labor shortage
• Environmental impact of wine production

Popular products

The most purchased type of wine in the US are:((https://www.statista.com/statistics/466661/us-consumption-of-wine-by-category/))

1. Table wine (90%)
2. Champagne and sparkling (7%)
3. Dessert and fortified (2%)
4. Vermouth/aperitif (0.4%)
5. Wine coolers (0.01%)

What kind of people work in wine?

• Gender – 82% of wine makers are male, while 18% are female.((https://www.zippia.com/wine-maker-jobs/demographics/#gender-statistics))
• Average level of education – 53% of wine makers hold a bachelor’s degree.((https://www.zippia.com/wine-maker-jobs/demographics/#degree-level-types)) 
• Average age – The average age of a wine maker is 41 years old.((https://www.zippia.com/wine-maker-jobs/demographics/#age-statistics))

How much does it cost to start a wine business?

US wineries are classified based on their yearly volume in 9-liter cases (12 x 750ml bottles). The country has around 9,000 wineries (80%) producing less than 5,000 cases a year, which means they are classified as very small or limited production brands.

You’ll need a handful of items to successfully launch your wine business. Here’s a list to get you started:

• Vineyard equipment such as seed planting, watering and fertilising systems and pest control gear
• Harvesting equipment including tractors and trailers 
• Production equipment such as grape crushers, fermentation vats, and bottling systems 
• Temperature-controlled wine cellar for storage 
• CCTV system for facility monitoring and security
• Office furniture and computer equipment
• Lab and testing equipment for R&D
• Interior decor and fixtures for your tasting room

Setting up a wine business requires a sizable initial investment of around $500,000 to more than $2 million, depending on size and production capacity, according to a Washington State University study.

Start-up Costs	Ballpark Range	Average
Receiving equipment costs	$58,000 - $137,000	$97,500
Cellar equipment costs	$16,000 - $24,000	$20,000
Material handling cost	$49,000 - $50,000	$49,500
Refrigeration system costs	$29,000 - $160,000	$94,500
Fermentation and storage costs	$50,000 - $186,000	$118,000
Cooperage costs	$52,000 - $519,000	$285,500
Tasting room costs	$3,000 - $4,000	$3,500
Plant and office costs	$300,000 - $1,200,000	$750,000
Investment per case	$280 - $117	$198.50
Total	$557,280 - $2,280,117	$1,418,698

How much can you earn from a wine business?

Your estimated potential earnings from a wine business will vary depending on what kind of business you start. 

Assuming a conservative price of $15 per bottle, the sale price of a case would be $180. A winery spends $115 per case to produce 20,000 cases per year and up to $135 per case to produce only 2,000 cases in a year. This means a profit margin of 25% for an annual output of 2,000 cases and 36% if you produce 20,000 cases.

In your first year or two, you could sell 2,000 cases in a year, bringing in $360,000 in annual revenue. This would mean $90,000 in profit, assuming that 25% margin. As your brand gains recognition and you ramp up production, sales could climb to 20,000 cases a year and your profit margin improves to 36%. If you can sell wine for $20 per bottle, a case would fetch $240. With annual revenue of $4.8 million, you’d make a tidy profit of more than $1.7 million.

What barriers to entry are there?

There are high barriers to entry due to stringent regulations as well as the significant initial investment. The main hurdles are listed below:

• Regulatory compliance; licenses and permits 
• Registration with Food and Drug Authority (FDA)
• Label approval from Tax and Trade Bureau (TTB)
• Large investment due to high cost of land
• Limits on advertising alcohol

Step 2: Hone Your Idea

Now that you’ve determined that this is the market for you, you need to think about the specifics. You’ll need to answer the why, what, and who of your wine business.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

The wine market is growing and projected to continue this trend. Wine is the third most popular alcoholic beverage in the US, behind beer and spirits. It carries a certain romantic notion and appeals to a broad array of market segments spanning various demographics.

It is thus an attractive space that, while crowded, offers opportunity to sharp new entrants. You may want to identify a niche and cater to it, rather than attempting to create a mainstream product with broad appeal that goes head-to-head with established players and their economies of scale. 

Start by identifying where you want to sell and to whom. Research popular wines and wineries in your area, examining their prices and what they do best. Look for an opportunity in your local market. 

What? Determine your products

You’ll need to decide which wines you plan to produce. Relying on one wine is a big risk, as if it is not well-received you’ll have to take a loss. Thus, you should create a product portfolio of three to four wines of different types and characteristics.

By building your own vineyard, your avenues for revenue would be broader. Besides selling directly to consumers, you might want to introduce services like wine tasting sessions, guarded tours of your vineyard to show the process of making wine, B&B stays for small groups, and a restaurant on-site.

You can also create a wine club, export your wine, and distribute to wine stores, restaurants, supermarkets, and retailers 

How much should you charge for wine?

If you start a wine trading business, you will sell wine for $15-$20 per bottle for direct-to-consumer and tasting room sales. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Identifying a target market can be done through market research in the area in which you plan to sell your wine, and consideration of your desired wine profile. You will ideally have three to four wines, and you may target them at different markets. Thus, if one product does not perform as expected, you can adjust your offerings without suffering a significant loss.

You should target consumers and also businesses, specifically the restaurants, bars and hotels frequented by your target market. You could also identify any exporters and wholesale distributors with whom you might work to expand the reach of your products.

Where? Choose your vineyard location

Here are the things to consider when choosing a vineyard location:

1. Soil Composition: The soil’s makeup influences grape characteristics; ensure it’s conducive for the grape varieties you intend to plant.
2. Climate: Different grape varieties thrive in specific climates; choose a location with conditions that match your desired varietals.
3. Topography: Slopes and elevation can affect sun exposure, drainage, and temperature; select terrains that benefit vine health.
4. Water Access: Adequate water supply is crucial for vineyards, but drainage is equally important to prevent root diseases.
5. Sun Exposure: Grapes need ample sunlight for photosynthesis; ensure the site gets consistent and appropriate sun hours.
6. Frost Risk: Some areas are prone to late spring or early autumn frosts which can damage vines; opt for locations with minimal frost threats.
7. Proximity to Markets: Consider ease of access to markets or tourism hubs, as this can influence sales and brand visibility.
8. Local Regulations: Research zoning laws, water rights, and agricultural regulations to avoid legal complications.
9. Pest and Disease History: Some areas may have histories of specific vine pests or diseases; choosing a location with a clean record can reduce challenges.
10. Long-term Vision Compatibility: Your vineyard’s location should align with your future goals, whether it’s expansion, sustainability, or specific wine styles.

Step 3: Brainstorm a Wine Company Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “wine” or “winery”, boosts SEO
• Choose a name that allows for expansion: “The Wine Merchant” or “The Wine Collective” over “The Merlot Corner”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Winery Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Summarize your winery’s vision to produce distinctive wines, offering wine tasting experiences, and engaging in direct sales and distribution.
• Business Overview: Describe your winery’s focus on crafting quality wines, managing vineyards, and operating a tasting room for visitors.
• Product and Services: Detail the types of wines produced, including reds, whites, and specialty wines, and services like wine tastings, tours, and event hosting.
• Market Analysis: Assess the demand for wine in your target market, identifying trends in consumer preferences and wine consumption patterns.
• Competitive Analysis: Compare your winery to others in the region, highlighting your unique selling points such as wine quality, vineyard location, or visitor experiences.
• Sales and Marketing: Outline your strategy for marketing and selling your wines, including direct-to-consumer sales, distribution to retailers, and online marketing efforts.
• Management Team: Highlight the expertise of your team, especially in viticulture, winemaking, and business management.
• Operations Plan: Describe the operational processes of your winery, from grape cultivation and wine production to bottling and distribution.
• Financial Plan: Provide an overview of financial aspects, including startup costs, pricing strategy, and expected revenue.
• Appendix: Include supplementary documents such as vineyard maps, wine awards, or detailed market research to support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to wineries. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your wine business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a wine business. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Winery Business Licenses and Permits

Starting a wine business requires obtaining a number of licenses and permits from local, state, and federal governments, including FDA registration and a license to sell alcohol. 

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your wine business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur, especially when you sell alcohol. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

Wine and alcohol compliance software, such as Sovos Shipcompliant, will ensure your bottling, packaging and shipping do not run afoul of the authorities.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.

Marketing

Here are some powerful marketing strategies for your future business:

1. Engage in Local Events: Participate in local festivals, farmers’ markets, and community events to showcase your wines, connect with potential customers, and build a strong local presence.
2. Create Unique Tasting Experiences: Differentiate your business by offering unique and memorable wine-tasting experiences, such as themed tastings, food pairings, or exclusive vineyard tours, to attract and retain customers.
3. Leverage Social Media Influencers: Collaborate with influencers in the food and beverage space to promote your wines on social media platforms, generating buzz and reaching a broader audience through authentic recommendations.
4. Implement Loyalty Programs: Encourage repeat business by instituting loyalty programs that reward customers for their ongoing support, such as discounts, exclusive events, or early access to new releases.
5. Educational Content: Create engaging and informative content about wine on your social media channels and blog, establishing your brand as an authority and educating consumers about different varieties, pairings, and the winemaking process.
6. Strategic Partnerships: Forge partnerships with local restaurants, hotels, and event organizers to have your wines featured in their establishments, expanding your reach and gaining credibility through association with established brands.
7. Limited Edition Releases: Generate excitement and a sense of exclusivity by periodically releasing limited edition or seasonal wines, encouraging customers to stay engaged and creating a sense of urgency to make a purchase.
8. Email Marketing Campaigns: Build and nurture a strong email list by offering incentives for sign-ups, then utilize targeted email campaigns to communicate promotions, events, and exclusive offers directly to your audience.
9. Sustainable Practices Promotion: Highlight your commitment to sustainability in winemaking and eco-friendly practices, as the growing interest in environmentally conscious products can attract a niche market segment.
10. Customer Reviews and Testimonials: Encourage satisfied customers to leave positive reviews on online platforms and share their experiences, as positive word-of-mouth can significantly influence potential buyers and build trust in your brand.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your wine meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your winery could be:

• Exclusive deals, events and access with our wine club
• Luxury wines at bargain prices 
• The full vineyard experience: tours, tasting, grape stomping and more 

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a wine business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in wineries for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in wines. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a wine business would include:

• Master Winemaker
• Grounds Workers 
• General Manager
• Marketing Lead
• Sales Executive 

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Winery – Start Making Money!

Starting a smaller winery is less expensive while setting up a winery with a higher production capacity will be more cost-effective. Also, greater production will make you more appealing to distributors. 

One way to ensure a steady stream of revenue and inspire loyalty from customers is to create a wine club, which is a subscription-based service in which members pay a monthly fee and receive a certain number of bottles delivered to their door. Subscribers can also receive additional benefits and exclusives, such as guided tours of the vineyard, wine tastings, and chances to try new wines pre-release. 

You’re now ready to start making wine!