Crafting Wine and a Business: A Playful Guide for Aspiring Winetrepreneurs
Courtesy of Silvo Martone
Should You Buy a Property with a Vineyard? Key Considerations Before Investing
When we stumbled upon the plot we now call home in Puglia, it was love at first sight. Discovering an ancient vineyard of Primitivo grapes, part of the DOC, felt like uncovering a hidden treasure. My wife and I couldn’t help but dream of the possibilities—what if we could produce our own wine, straight from these historic vines? My wife often deals with prestigious clients, and the idea of creating our own label to gift them only added to the allure, making the dream even more appealing. The thought of one day pouring a glass of wine we nurtured from grape to bottle, sharing it with friends, family, and colleagues, made us feel deeply connected to the land. Our decision was made to buy a property in Italy, home of the primitivo wine in Puglia.
We’re not winemaking experts—far from it. We’re just a couple of enthusiasts who have embarked on this journey with a lot of passion and a bit of curiosity. The idea of creating something tangible from the soil that surrounds us, something that could be enjoyed around our table, is what fuels us. If you’ve ever imagined doing the same, you’re in the right place. We’re here to share what we’ve learned so far, the challenges and joys we’ve encountered, and hopefully, guide you as you consider your own winemaking adventure. Do you want to buy a property with a vineyard in Puglia? Here is a little guide on things to consider before buying a property with a vineyard in this wonderful Puglia region.
Unfortunately this one was sold 2 years ago
Get to know your Puglia grapes - the various indigenous varieties that produce unique wines
Puglia is a region that produces some of the best Italian wine, some of them have been rising considerably in popularity, others are still hidden treasures. Overall it’s fair to say that the region, known for several indigenous grape varieties that produce unique wines, only started to get known in recent years, with a rich history and tradition in viticulture. Let’s start from the basics, here are some of the most prominent wines and grape varieties that are indigenous to Puglia:
Primitivo
Primitivo is perhaps the most famous grape variety from Puglia. It produces rich, full-bodied red wines with flavours of dark fruit, spice, and a hint of earthiness. The wines made from Primitivo are known for their high alcohol content and deep colour.
Primarily grown in the Manduria area, an Italian town famous for wine, but also found throughout the region. One of the reasons Primitivo wine is so highly valued is its proximity to the sea, which imparts a unique minerality and dryness, enhancing its savoury character. We bought our property wanting to be close to the sea and we ended up killing 2 birds with 1 stone.
Negroamaro
Negroamaro is another key red grape variety in Puglia, producing wines with robust tannins, deep colour, and flavours of dark berries, black pepper, and sometimes a touch of tobacco. It is often blended with other varieties, such as Malvasia Nera, but also shines on its own.
Predominantly grown in the Salento area, particularly in Lecce, Brindisi, and Taranto provinces.
Nero di Troia
This is a lesser-known but significant variety in Puglia, producing elegant and aromatic red wines with notes of red fruits, floral undertones, and sometimes a touch of spice. The wines can be medium to full-bodied, depending on the winemaking style.
Primarily grown in the northern part of Puglia, especially in the Castel del Monte area. Widespread in the Salento area.
Verdeca
A white grape variety, Verdeca is known for producing fresh and mineral-driven white wines with citrus, herbal, and sometimes nutty flavours. It is also used in making the traditional Puglian sweet wine, Passito.
Mainly found in the Itria Valley and the provinces of Taranto and Brindisi.
Susumaniello
This red grape variety is experiencing a revival in Puglia. Susumaniello produces medium-bodied wines with good acidity and flavours of red fruits, spices, and sometimes a hint of earthiness.
Primarily found in the Brindisi area.
The Rise in popularity and challenges of the local Wine Business
As we’ve ventured deeper into our winemaking journey, we’ve come to realise that producing wine is as much a business as it is a passion. The rewards of crafting your own wine are immense, but so are the challenges. For those of you considering buying a property in Italy with a vineyard, it’s important to understand the numbers behind the romance. The profitability or affordability of winemaking depends on various factors—from the cost of maintaining the vineyard to the investments needed in equipment and production. We’ve learned that success in this business isn’t just about the love of the land; it’s also about navigating the financial landscape that comes with it. Let us share some of the insights we’ve gathered so far, breaking down the costs, challenges, and potential rewards that come with turning a plot of land into a thriving vineyard.
After interviewing numerous local winemakers for this article, we quickly realised that despite a 2021 Italian federation report showing a 26% increase in the sales and production of Primitivo wine, initial enthusiasm has given way to concern. The influx of new investors—both amateurs and professionals—into the Puglia wine industry has led to a surplus of wine in cellars, leaving many winemakers struggling to sell their excess stock.
The wine business is though yet you can succeeded
Gianfranco Fino wine cellar Manduria, Italy
One of the winemakers we had the pleasure of speaking with, Gianfranco Fino, is a true local legend. His wine, “Es” has consistently been voted one of the best Italian wines year after year, cementing his reputation as a superstar in the winemaking community
Fino's approach to winemaking is rooted in a deep respect for the vineyard. His success comes from a meticulous focus on cultivating Primitivo with the care it deserves. Embracing organic farming practices, he carefully tends to about 50 acres of bush vines in the hot, dry plains of Manduria, just 10 miles inland from the Ionian Sea. This commitment to the land and the vine is what sets Fino apart, ensuring that every bottle reflects the true essence of Primitivo.
“I wanted to make a wine that could compete all over the world.”
Another compelling factor to consider is the unique support local Italian winemakers offer, particularly in Puglia. Unlike their French counterparts, many of the skilled winemakers we spoke with are more than willing to assist with the vinification process. If you decide to purchase a property in Italy through us, we can help facilitate this invaluable support, ensuring your winemaking journey is a success from the start.
The wine business can be both rewarding and challenging, with profitability influenced by a variety of factors. Below, I’ll provide insights on profitability, operational costs, challenges, pitfalls, investment needs, and production capacity based on an average plot of land.
The Economics of Wine: Balancing Passion with Profit in The Wine Business
The profitability of a winery can vary widely, but many small to medium-sized wineries typically see profit margins ranging from 10% to 20%. Larger, well-established wineries can achieve higher margins due to economies of scale.
Operational Costs
Vineyard Establishment Costs: Establishing a vineyard can cost between €20,000 to €60,000 per hectare, depending on location, grape variety, and trellising system.
Maintenance Costs: Annual maintenance costs, including labour, fertilisers, pesticides, and irrigation, range from €5,000 to €15,000 per hectare.
Winemaking Costs: This includes barrels, fermentation tanks, bottling, and storage. Winemaking costs can vary, but typically, it can cost between €1.50 to €5.00 per bottle.
Marketing and Distribution: Marketing expenses, including branding, packaging, and promotion, as well as distribution costs (wholesalers, retailers), are significant. These can represent 10% to 30% of the final price of the wine.
Labour Costs: Labor is a major expense, especially during harvest and bottling. Wages, benefits, and seasonal worker costs must be factored in.
Challenges in the Wine Business
The wine industry is fiercely competitive, with countless producers vying for limited shelf space and the attention of discerning consumers. For smaller winemakers, securing distribution channels and retail placements can be particularly challenging, as retailers and distributors often push for lower prices, squeezing already tight margins. On top of this, winemakers must navigate a maze of complex regulations related to production, labelling, and distribution, which vary widely across countries and regions. These challenges underscore the importance of strategic planning and a deep understanding of the market to thrive in the wine business.
Pitfalls to Avoid
Underestimating Costs
Overproduction
Lack of Branding
Investment Needs
Initial Capital: Establishing a small winery of 5 to 10, including vineyard planting and basic winemaking facilities, typically requires an investment of €500,000 to €1 million. This includes land acquisition, vineyard establishment, equipment, and initial working capital. If you want to have an estate villa or masseria you will need to add an average of €200.000 per 100 per sqm.
Working Capital: Additional working capital is needed to cover operating costs until the wine is ready to sell, which can take several years, especially for red wines that require ageing. This can range between €20,000 to €30,000 per hectare.
Production Capacity
Average Plot Size: Assuming an average plot of land is 10 hectares, here’s what you can expect:
Grape Yield: A vineyard typically yields between 5 to 10 tons of grapes per hectare, depending on grape variety and vineyard management practices. This translates to 50 to 100 tons of grapes for a 10-hectare plot.
Wine Production: On average, 1 ton of grapes produces about 700 litres of wine, or approximately 933 bottles (750ml each). Therefore, a 10-hectare vineyard could produce between 35,000 to 70,000 litres of wine annually, or 46,650 to 93,300 bottles.
Revenue: Assuming an average bottle price of €5 to €10 (depending on the quality and market positioning), the revenue could range from €233,250 to €933,000 annually.
Break-Even and Profitability Timeline
Break-Even Point: It typically takes 5 to 7 years to reach the break-even point, as vines take a few years to mature and begin producing commercially viable yields. Additionally, wine needs time to age before it can be sold.
Long-Term Profitability: Once established, vineyards can be highly profitable, with a long-term return on investment, especially as vines mature and produce better-quality grapes.
Diving into the wine business is no small feat—it demands a significant investment of time, money, and above all, patience. Yet, for those who approach it with care and determination, the rewards can be extraordinary. It’s crucial to have a firm grasp of the costs, challenges, and potential pitfalls that come with the territory. With thoughtful planning, a keen eye on the market, and a strong brand identity, you can navigate the complexities of winemaking and build a venture that stands the test of time.
But beyond the business, there’s a deeper allure. Imagine creating a place where you and your loved ones can retreat, surrounded by the beauty of your own vineyard, sipping the wine you’ve crafted with your own hands. It’s not just about the profit—it’s about creating a legacy, a story that begins with each bottle you share. And what a story it will be—a true conversation starter, born from passion and dedication.
Contact us if you are interested in having your own vineyard.
Frequently Asked Questions:
1. How do I start a vineyard in Puglia?
To start a vineyard in Puglia, begin by selecting a suitable location with the right soil and climate for grape growing.
After securing the land, choose indigenous grape varieties like Primitivo or Negroamaro, plan your vineyard layout, and prepare for the initial investment needed to establish and maintain the vineyard until the first harvest. Understanding the region's DOC regulations can also be crucial for producing quality wine.
2. How long does it take for a vineyard to become profitable?
A vineyard typically takes 5 to 7 years to become profitable. This timeline accounts for the time needed for vines to mature and produce commercially viable yields. During this period, you must manage operational costs, including vineyard maintenance, winemaking, and marketing, before your wine is ready for sale. There are many vineyards already grown for sale and some that needs some proper care and bringing back to life which might provide some particularly good opportunities.
3. What are the biggest challenges in the wine business?
The biggest challenges in the wine business include managing the impact of unpredictable weather on grape yields, navigating strict wine production regulations, and securing distribution channels. Additionally, the wine market is highly competitive, so building a strong brand and effective marketing strategy is essential to stand out and achieve profitability.
4. What are the costs involved in starting a winery?
Starting a winery involves several costs, including vineyard establishment (€20,000 to €60,000 per hectare), annual maintenance (€5,000 to €15,000 per hectare), winemaking equipment, and operational expenses. Initial capital investment typically ranges from €500,000 to €1 million, depending on the scale and location of your vineyard and winery.
5. How much wine can a 10-hectare vineyard produce?
A 10-hectare vineyard can produce between 35,000 to 70,000 litres of wine annually, depending on grape variety and vineyard management practices. This translates to approximately 46,650 to 93,300 bottles of wine per year. The actual production may vary based on factors like vine age, climate, and the quality of vineyard care.
6. What are the best grape varieties to grow in Puglia?
Puglia is renowned for several indigenous grape varieties that thrive in its climate. The best grape varieties to grow in Puglia include Primitivo, Negroamaro, Nero di Troia, and Malvasia Nera. These varieties are well-suited to the region's terroir and are known for producing rich, full-bodied wines that are popular both locally and internationally.
7. How can I make my winery stand out in a competitive market?
To make your winery stand out in a competitive market, focus on building a strong brand identity that reflects the unique qualities of your wine and vineyard. Invest in quality packaging, develop a compelling story behind your wine, and engage with customers through direct-to-consumer sales channels like wine clubs and online stores. Additionally, offering wine tourism experiences, such as tastings and vineyard tours, can enhance your brand’s appeal and create lasting customer relationships.
