Back to Business Ideas

How to Start a Wine Business

Updated on May 2, 2022

How to Start a Wine Business

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.

Fast Facts

Investment range

$561k to $2.3m

Time to build

1-3 years

Industry trend

Stable

Revenue potential

$360k to $3.6m p.a.

Profit potential

$90k to $1.3m p.a.

Commitment

Full-time

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.

Pros

  • Creativity — Build your own brand
  • Good money — Wineries tend to have good profit margins”> li class=”c5 c18 li-bullet-0″>High demand — The wine industry is huge and growing fast!

Cons

  • Patience — Takes years for vines to bear grapes
  • Regulations — Selling alcohol requires licenses and permits
  • Competition — Must build brand in competitive market

Industry trends

Following a pandemic-driven downturn in 2020, the wine market has begun to recover and expects significant growth in the coming years. The $51 billion US wine industry is the world’s largest and expects strong 9% annual growth through 2025, according to German research firm Statista.[1]https://www.statista.com/outlook/cmo/alcoholic-drinks/wine/united-states

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

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.

A Washington State University study estimated startup costs for a winery producing 2,000, 5,000, 10,000, 15,000 or 20,000 cases a year, which is provided below.

Number of cases produced per annum2,0005,00010,00015,00020,000
Receiving Equipment costs$58,024$91,320$106,932$122,025$136,900
Cellar Equipment costs$16,623$16,828$17,068$23,613$24,118
Material Handling costs$49,520$49,520$49,520$49,520$49,800
Refrigeration System costs$28,919$47,978$80,677$112,100$160,248
Fermentation & Storage costs$49,800$74,776$79,286$97,241$186,874
Cooperage costs$51,944$129,800$259,700$389,400$519,200
Tasting Room costs$3,676$3,844$4,012$4,108$4,204
Plant & Office costs$302,388$396,007$733,501$1,024,420$1,257,764
Investment per Case$280.45$162.01$133.07$121.50$116.96
Total Investment$560,894$810,072$1,330,695$1,822,427$2,339,108

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.

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. Two Shepherds winery owner William Allen found that his 2,000-case business struggled to establish ties with potential distributors due to its limited annual production.

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. Let’s take a look at some sample figures for a wine trading business:

How much should you charge for each unit?

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 Step By Step’s profit margin calculator to project your price points.

What are the possible sales avenues?

By building your own vineyard, your avenues for revenue would be broader and include:

  • Direct sales of wine to consumers
  • Creating a wine club, in which consumers pay a monthly subscription for regular deliveries
  • Wine tasting sessions and sales from the tasting room.
  • Guided tours of your vineyard showing the process of making wine
  • Restaurant sales if you have one on-site
  • B&B stays for small groups if you offer accommodation
  • Exports and distribution to liquor stores, restaurants, supermarkets, and retailers

What is the revenue potential?

Assuming a conservative price of $15 per bottle, the sale price of a case would be $180. The revenue potential of wineries based on an annual production capacity of 2,000, 10,000 and 20,000 cases is given below:

Production CapacityRevenue Potential Per Annum
2,000 p.a.$360,000
10,000 p.a.$1,800,000
20,000 p.a.$3,600,000

What are your expected production and overhead expenses?

When investing in a wine business, you should consider the costs of operation, which range from about $115 to $135 per case, depending on production capacity.

The estimated operating expenses for 2,000-, 10,000-, and 20,000-case wine businesses are outlined below:

Number of cases produced per annum2,00010,00020,000
Grapes cost per case$16.49$16.49$16.49
Cooperage cost per case$18.51$18.51$18.51
Packaging cost per case$24.61$24.61$24.61
Bottling cost per case$4.28$3.98$3.84
Taxes cost per case$5.79$8.51$5.18
Full-time Labor cost per case$16$14.45$18.99
Part-time Labor cost per case$4.68$1.87$1.40
Marketing cost per case$4.55$2.51$1.14
Utilities cost per case$1.35$0.88$0.76
Supplies cost per case$0.37$0.33$0.30
Other cost per case$1.03$0.89$0.64
Insurance cost per case$1.15$0.82$0.64
Maintenance cost per case$0.50$0.47$0.43
Property Tax cost per case$3.55$1.76$1.55
Depreciation cost per case$32.13$23.27$22.45
Total Cost per Case$134.98$119.35$116.93

What is your profit potential?

Annual pre-tax profits will likely range between $90,000 and $1.2 million, based on sales and capacity.

Cases Produced Per AnnumCost Per CaseNet Profit Per CaseAnnual Net Profit
2,000$134.98$45.02$90,040
10000$119.35$60.65$606,500
20000$116.93$63.07$1,261,400

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
Winemaker in wine cellar

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.

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 U.S., 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 or services.

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.

You might also consider creating 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.

The wine club concept ensures a steady stream of revenue and a captive audience of loyal customers. A customer’s wine affinity can last years or even decades, so this is a great way to build loyalty from the start. The trick is signing up those first few subscribers.

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.

Should you start a wine business?

Step 3: Brainstorm a Business 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: “Jim’s Bakery” over “Jim’s Cookies”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step business name generator

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 at a web cataloging site such as NameChk. 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. And if you’ve exhausted all your creative juices but still don’t have a business name, don’t stress! Instead, check out our business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips. 

Step 4: Create a 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: Brief overview of the entire business plan; should be written after the plan is complete.
  • Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
  • Product and Services: Describe your offerings in detail.
  • Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
  • Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
  • Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
  • Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
  • Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
  • Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
  • Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer on Fiverr to create a professional business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running. 

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 four 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. 
  • Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the pre-tax profits and are liable for losses.
  • Corporation – 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.
  • 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.

We recommend that most new business owners form an LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can quickly and cheaply form an LLC using ZenBusiness’s online LLC formation service (it can take as little as 5 minutes). They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you have about the company formation process.

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.

The IRS website also offers a tax-payers checklist, and taxes can be filed online. It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Business structure comparison infographic

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.
  • Crowdfunding: Websites like Kickstarter and GoFundMe offer an increasingly popular low-risk option, in which donors fund an entrepreneur’s vision.
  • Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.

Step 8: Apply for Licenses/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, health license and permit 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 licenses 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. 

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties. 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.

For peace of mind and to save time, 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 you to make sure you’re fully compliant.

Man looking at financial reports

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. 

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. 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. 

You can create your own website using services like WordPress, Webflow, 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.

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.

Marketing

Some of your business will come from the casual passerby or online visitors, but still you should invest in marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

  • Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
  • Instagram: Same benefits as Facebook but with different target audiences.
  • Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

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.

Equipment

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

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.

Man ordering wine online

Step 13: Start Making Money!

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
USP venn diagram

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include: 

  • Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as first month’s wine club membership is free!
  • Optimize calls to action – Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
  • Signage – Put up eye-catching signage at your store and website 
  • Flyering – Distribute flyers in your neighborhood and at industry events 
  • In-Person Sales – Offer your products/services at local markets, trade shows 

Build Affiliate Relationships

Affiliate marketing is advertising in which you compensate third parties (i.e. your affiliates) in order to generate traffic to your website. You can develop long-term relationships with these affiliates and generate traffic for each other on an ongoing basis.

You’re now ready to start making wine! But you might want to bookmark this page, just in case.

Wine Business FAQs

How do I start a wine factory?

To start a wine factory, you shall take the following steps:

  • Firstly, identify where you’d like to set it up, the scale, and whether you wish to grow grapes or buy them from a third-party.
  • Understand the winemaking process. Study how other winemakers do it, seek advice from professionals and hire a Master Winemaker to oversee your process.
  • Recruit a wine compliance agency to help with legal matters.
  • Identify what attributes your wine should have, whom you target it to, and what kind of personality you want it to embody.
Is a wine business profitable?

Wine businesses struggle in the early stage of development, and those who survive the crunch time will eventually become profitable. You need to understand that a wine business is not a get-rich-quick scheme.

How many cases of wine can I expect per acre?

It depends upon several factors. For example, the average grape yield per acre is between 6-9 tons per acre in California and 3-6 tons per acre in other states. A ton of grapes may be processed into around 63 cases of wine on average.

These numbers indicate that you should expect to produce anything between 180-570 cases per planted acre. But, aside from the location, there are some other factors that may impact your cases of wine per acre.

For example, wines are typically sold as 12 bottles of 750ml per case. You may decide to venture into other capacities such as 1L bottles or even large 5L decanters for parties (as some vintners tend to do when their wine is positioned for a social setting). This means that you will get a different case per acre figure.

Is it hard to start a winery?

It is not extremely difficult, but requires a lot of learning and significant financial investment. It is not ideal as a first-time business for some looking to start their own business unless they have other sources of income. The area where you can fall foul of the law is in the myriad of legal regulations, permits and compliance, so a wine compliance agency is your best avenue.

How can I get people to like my wine?

You can get people to like your wine if you work on the following areas:

  • Asking yourself who is your target market? What are their attributes, tastes and preferences? What brands and varieties of wine do they already enjoy?
  • Do you want your wine to project a particular persona? Is it a lively, youthful wine, or a mellow, relaxed one, for example?
  • Create a few different preparations and offer them to sample groups of your target segment for their input. This is the best way to gauge potential  customer reaction before a wider rollout.
  • Seek the advice of Master Winemakers and Wine Critics – they will know a lot more than you and will objectively critique your wine – just be prepared to take objective criticism and challen it productively.
  • Do not base your feedback purely  on those from friends and family – as it can be subjective and biased.