Economics of Growing Wine Grapes

Growing wine grapes requires careful consideration of the financial costs as well as potential profits.

A grasp of basic economic factors in growing wine-grapes influences production decisions, budget preparation, viable financing options and determination of potential returns. Because costs vary by region and site-specific circumstances, understanding the local wine-grape industry is critical to successful production and marketing.

Production Costs

Vineyard costs fall into two categories: installation and cultivation. Installation costs involve the vines, their planting, the irrigation system, the stakes and trellis system, and basic land preparation. Power, water storage, wells, harvesting, engineering and specialized drainage or erosion control comprise the costs of farming the vineyard. The first crop comes in the third or fourth year after planting. During these years without a harvest, you will incur costs for watering, weeding, fertilizing, pruning and managing pests.

Budgeting

Draw up financial projections that assess potential risks. The possibility of bad weather and disease is a critical aspect of the risk assessment. Additionally, fluctuating supply and demand factors into pricing and profit projections.

Determining Potential Returns

Evaluating area wineries' demand for grape varietals clarifies the viability of prospective wine-grape varieties. The Texas Winegrape Association recommends approaching existing wineries to discuss varietal demand, volume and pricing, information critical to an accurate market assessment. Conduct a wine-market analysis if your grape production plans contain an onsite winery.

References

• Texas Winegrape Network: Considerations for Starting a Vineyard
• Marie and Peter Young: Financial Considerations of Vineyard Ownership
• University of California Cooperative Extension: Sample Costs to Establish a Vineyard and Produce Winegrapes

Resources

• University of California, Davis: An Economic Survey of the Wine and Winegrape Industry
• Texas Winegrape Network: Vineyard Economics