New winery in KS. Looking for better price structure understanding

[fastline]

We are a farm in central KS, currently growing beer products and privately brewing great beers. We would like to expand commercially but found the volume in beer making to make a dollar may be very tough. We have decided to get involved in the wine business. I realize some may feel this is a daunting task and I invite any opinions. However, we are a family of engineers, chemists, and farmers so some of this just needs a little learning and seems we will have PLENTY of time to do that as we start by selecting our vine varieties and wait for them to mature.

That might bring in our first question. 1) Grapes that we might "want" to grow just may not match our conditions in KS. We will have to decide on what is both desired AND what will work well in KS. Can anyone comment on varieties that perform well here?

2) In trying to run the numbers of economics, between the labors in grapes, to the post processing of fermentation, aging, bottling, etc, we really need to have an idea of what price point we would entertain. Wines vary radically from maybe 8 bucks all the way to thousands/bottle. It is our desire to be somewhere in the middle there. At $8/bottle, we simply could not afford this venture. However, I am trying to learn the price structures of wine FULLY realizing that taste final product have a lot to do with it.

I am trying to learn what barrel aged wines might be worth, which types, etc. It is our main goal to produce a 100% KS grown wine and though we may not be able to grow all our own, we will seek other local fruits for our flavor enhancements such as pears, peaches, etc.

I very much realize this will take many years to perfect and excited about the journey. We will likely start with 2-4 acres of grapes and work forward from there.

 

[wineforfun]

I have very little to add here other than my wife and I have been visiting all the vineyards in Nebraska and the wines they produce normally sell for $15 - $20 per bottle.

 

[fastline]

Would you happen to know if these wineries are "farm wineries" that only direct sell their product from their own facility rather than distribute? The 3 tier sales process of alcoholic beverages in KS is a glitch that is very tough to overcome financially. You will effectively give up about 60% of your margins just so someone else can make a buck and know nothing of your product. For that reason alone, I am mostly targeting to provide only winery sales out of the blocks and see how that develops. I realize though that sales could be very limited due to that course of business.

 

[stutzcattle]

I'm in Nebraska and am researching the same things. We will have 5 acres of our own grapes in next year and are planning on contracting with some local folks. We are planning a 5000 gallon winery and our price structure suggest $15 a bottle is where we'll plan.

 

[DoctorCAD]

Thats what I was going to add, typically local wineries are more expensive than "commercial" wines by 2 or 3 times. Economies of scale come into play.

Oh, you mentioned engineers, chemists and farmers. Farmers are all of that and more, they have to do it all, generally by themselves!

 

[salcoco]

I used to have a commercial winery in Kansas City Kansas. First thing I would do is visit wineries in your area. Talk to the owners about your intentions, they will gladly help. Exactly where are you? Visit the web site for the Kansas Grape Growers Association. they will list wineries and vineyards in Kansas.

Market price for wine can range from $12-16 a bottle. Ports can go for $16 a half bottle. These are prices in the tasting room. fruit wines would be in the lower range. Good reds would be higher.

As a farm winery you can self distribute to local liquor stores. wine prices then become negotiable.

Grapes to grow in Kansas, again it depends where you are and if you can have drip irrigation. Good success with Chardonel, and Seyval Blanc for whites. reds can be St. Vincent, Chambourcin and Norton. Some success with Reisling and Cabernet Franc if winters are not to cold. Chrimson Cabernet is being grown by some vineyards. this is a cross between Norton and Cabernet sauvignon. have to buy minimum amount of 500 plants from Davis Nursery.

Look at Double A Nursery in New York State for variety purchases.

Just before I left the winery I started Edelweiss and another white that I can not recall , that were breed for the Northern climates and thus more resistant to winter temperatures. plus these were varieties no one else was growing. That is another avenue, Marquette is another Northern varietal that would work here.

 

[wineforfun]

Would you happen to know if these wineries are "farm wineries" that only direct sell their product from their own facility rather than distribute? The 3 tier sales process of alcoholic beverages in KS is a glitch that is very tough to overcome financially. You will effectively give up about 60% of your margins just so someone else can make a buck and know nothing of your product. For that reason alone, I am mostly targeting to provide only winery sales out of the blocks and see how that develops. I realize though that sales could be very limited due to that course of business.

No, most of them we have visited, 13 so far, have connections into the local grocery store chains, specialty stores, etc. There was 2-3 that did only sell from their location. 1 was due to keeping it unique and local, the others were due to the volume they were making. They weren't producing enough to keep a store or stores full.

 

[fastline]

I appreciate the responses. Sal, we would certainly be drip irrigating but there is some indication that the plants really need to endure a certain level of stress to reduce grape size and increase the skin ratio for more flavor. All just in some reading so far and I am sure the first few years we would probably target to "push" the plants so their roots will establish. Sounds like crown rot and various other disease is problematic without good drainage. We plan to grow in a sandy loam area of the farm.

Regarding red and whites, it was my understanding that several whites do not age that well? I think above all, we really want to create wines that age well to retain profitability should we have sales issues.

Our weather can get down to -5*F but usually no lower than +10*F. We can also get summer temps of +110*F.

It was my understanding the Seyval Blanc is a great white grape and maybe considered the best for whites but hard to grow here?

Regarding pricing, aging, and scale, what constitutes a wine in the $25-50 range? Are these typically a wine with a better following alone or is there a longer aging process for these? Or should I call this the "primary" aging process in the barrel?

Also, are you saying that your higher end wines totally discard other quality fruit juice tuning? I take it some wineries use this more as a "filler" tactic due to the lower cost and higher juice content? I can see where purists may prefer a pure product though. In beer brewing, crafty additions are just part of the process!

 

[seth8530]

One thing you need to keep in mind is the type of people you will be serving at your winery. Ie, selling bold reds to a client group that likes syrup sweet blackberry wine might not work to well. Also, you must price for your client group.

I think at our family winery we sold wine with a price range from 9 ish to 16ish dollars depending on what type of wine it was.

 

[WI_Wino]

Regarding red and whites, it was my understanding that several whites do not age that well?

Also, are you saying that your higher end wines totally discard other quality fruit juice tuning?

It was my understanding the Seyval Blanc is a great white grape and maybe considered the best for whites but hard to grow here?

With all due respect, asking these types of broad questions is leading me to think you have a lot more basic research to do and need to drink lots more wine. No amount of internet message board discussions will replace hands on time. You are talking about your living...

 

[fastline]

I agree, this is part of my research right now. I won't even set a post for vines until I have some numbers to work with. I am likely to completely forgo the tasting portion of the winery unless I find language that it is required. As a start up, I would highly target sales direct to licensed retailers and forgo the distributors.

I realize, however, that many wine drinkers like to know about their wines, where/how they are made, etc. However, our farm is simply not setup for such public visits and would need some rethought on that. I may reserve online and phone for our only direct sales. I want to clarify that I only recently realized wineries have specific latitude to distribute their own goods.

 

[fastline]

With all due respect, asking these types of broad questions is leading me to think you have a lot more basic research to do and need to drink lots more wine. No amount of internet message board discussions will replace hands on time. You are talking about your living...

I agree and I usually come off as uneducated online so I will walk carefully. I do agree that I am not exactly a wine guru "yet". But I did not know much about beer 5 yrs ago... I am excited to visit some Kansas wineries and do some learning. I am hoping to get some private tours and do some real learning, not just drinking.

Before I get too far though, I really have to have some simple economics at hand. mfg tax, retail tax, processing time and costs, ideal retail prices, target sales, targeted buyers, retail networks, etc.

With all due respect, I think the wine making will be the easy part Or at least the most fun. Our farm is pretty diverse and this is only a small sector but I am hoping to make it one of growth and passion. If I was just looking for the paycheck I would finish my PE license and crunch numbers all day. I am a farmer at heart with a long lineage of such. I can't help but enjoy making things grow!

 

[JohnT]

If you thought that making beer was a tough way to make a living, making a living in the wine industry is downright impossible!

Keep in mind that you need a rather large investment in equipment, legal advice, and planting stock, and will not see a dime of return for at least 4 years. It will take 3 years to realize your first harvest, and at least another year to process the first grapes into wine. Some folks purchase "outsourced" grapes to get going while the new vines mature, but this will severely cut into your profit margins.

I hate to be a "bubble burster", but I just want to be realistic. If you are aware of all of this, and are in a position to go forward, I might suggest the following outline......


I would have your soil analyzed to find the best possable grape. This would be a rather inexpensive, with the greatest benefit. This would (at minimum) tell if your soil is fit for a vineyard and what would be the best varieties to grow.

Next, I would focus on getting experienced with wine. if you are not a wine-lover, then how could you judge your end product? As others have said, tour some local wineries and also other wineries that might not be so local. Taste as much wine as you can and also talk to them about your plans. You will find that most winemakers are very supportive and helpful of each other.

Take the soil analysis and the tasting knowledge and combine them into a planned wine/varietal. Once you have a plan, go forth and "part the red tape". What I mean is that there are permits and licenses to obtain. It varies state to state, and some states (like my own) even require that the facility be set up and operational BEFORE a license is granted. A good lawyer helps here.

Once all of the legal crap is sorted, you can start off by researching how to situate your vineyard, and select the best cordon system and pruning method for your situation. This takes a little bit of know-how and I would suggest you enlist the help of someone that is very experienced in this area. Ideally, this individual can also oversee the actual planting.

Now that the vineyard is planted, and your have time to kill, you should get educated on winemaking tech. It would be best to enroll in one of the many multi-year enology programs that are offered throughout the country. If this is not practicle, another way to go is to do a "work to learn" at a good winery somewhere. Basically, you work, and get paid in the form of knowledge gained. If even this does not work for you, then focus on hiring someone that already has that level of education and some level of experience.

Prior to the first harvest, and if not already completed, focus on getting your facility in order. Purchase and install tanks, crushpad, bottling line, etc.

Sorry for such a long post, but so many have the dream of owning a winery without knowing the work and MONEY that is involved. It all seems so romantic and glamerous until you actually own one. I hope that you can take some of this and have a very realistic expectation on things to come. I do hope that you move forward and are successful.

 

[salcoco]

John T is pretty realistic in his assessment. any thoughts of a $50 bottle of wine is not realistic. First the customers you have will not know that the wine is worth that much ad second a number of years making wine to gain experience and very, very, very,good grapes will be required to develop a wine of that caliber.
Success in sales in Kansas will require sweet wines.
A facility design will be required to gain federal license, review the ttb.gov web site for requirements. I would suggest a tasting room. wines will not be purchased in liquor store until wines are know by the public.
Drip irrigation will be required to start off your vines, subsequent irrigation may be required if rain is insufficient. As a farmer you recognize that minimum moisture is required to sustain vigor, if not rain no grapes must irrigate.

You are also correct the business side of winery is just as important as the wine making part.

 

[JohnT]

Agree with sal..

Professional wine competitions are around for this very purpose, to gain notoriety and reputation.

Do well in a national competition, and raise your price at least $5 more per bottle. Get a 95 in wine spectator, and raise your price at least $25 more per bottle.

 

[Bartman]

+1 to everything JohnT said. He's right on that many folks see a romantic winery setting in a movie, and think that it would be just like that. Well, it can be if you are wealthy, and don't mind throwing several million away up-front and a million or so very year thereafter. To re-use the old joke: How do you make a small fortune in the winemaking business? Answer: Well, you start with a large fortune...

I have visited and talked with several 'mom-and-pop' operations around north Texas and central Texas, and most of them talk about how much work and how little revenue they see. Sadly, despite their great efforts, their wine typically is not very good, and my wife and I have to figure out which of their over-priced wines is decent enough to actually buy some, out of pity mostly. And then I see a local walk in (fiirst-name basis with owner) and she buys a case of their "sweet red" or some such swill. My wife look at each other and think, "that was the worst one we tasted."

What we on this forum think of as 'great wine' or 'proper winemaking' is frequently not what makes up the bulk of small winery sales - it's 'buying local', wine tourists, 'fun' labels and 'wine coolers' that are the small wineries "bread and butter". Not tannin levels, careful selections of oak and yeast, bench trials of varietal blending, organic growing practices, acid testing or filtering techniques. And that's why the wine purists don't own high-volume commercial business operations - the general public won't appreciate or pay for making wine 'the right way', because it just doesn't matter to them.

So back to the OP - I would say either grow grapes to sell to wineries (farming, essentially) or open a winery in-town, buy California grapes in bulk, ferment, bottle and sell it at that location. Attempting to both grow the grapes (a unique farming operation unto itself) and make, bottle and sell the finished wine are two very different business models and very few have the time, expertise or ability to do both successfully, without giving one or the other over to someone else to handle the operations of. If you're family is big enough that one portion can handle the farming and the other is handling the winemaking and selling, then that's fine, but they must be operated as two separate businesses.

 

[hvac36]

Once all research is done the most important step is getting TTB to approve your license and state... Without these nothing else matters..

 

[JohnT]

Bartman

I think we will have to disagree only on one point (sort of).

As stated by Seth, you need to know your clients, and produce for them. I know of literally HUNDREDS of wineries within a radius of 50 miles of my location that make FANTASTIC wines that command between $25 and $40 per bottle.

A case study should be made of the Unionville winery. They have a UC davis educated professional on staff and overlooking all aspects of the operation. The wines they produce (small scale) are outstanding and have won countless awards in some very prestigious competitions. Not bad for a mom and pop operation in new jersey.

What we disagree on is this.. You can do both! You just need to have the commitment.

Additionally, purchasing california grapes is not an option for most people. The laws set up for allowing winery operations are typically in place to bolster local farming. Most states will only allow a minor percentage of non-local grapes.

 

[hvac36]

JohnT a lot of states have abolished that law I know here in pa I can now import 100% of my juice.

 

[fastline]

Great points guys. I want to try to explain my business goals here so maybe we can all entertain some ideas. The primary goal is direct farm to consumer products. We are in some other markets but looking to diversify. I do indeed understand that wining is NOT easy and I certainly have not committed anything towards to cause. However, equipment facility, land, very cheap for me. I design automated equipment. I am looking at wines basically because I need to stay within the "farm winery" confines in KS which dictates fermented fruits and "ag products" (need clarification here). This allows self distribution and operating from a farm facility. I have zero desire to be one of those people who owns a winery just to say "I got one of these".... I do not plan to produce grapes for resale. Just does not make financial sense.

I will make a couple things clear. I am building a business plan #1. I never let my passions guide me to failure. If I can't make the numbers work, I reserve it as a "hobby" only. Buying store bought produce for this venture defeats the purpose of the venture. Kansas requires 30% native product in any wine product sold. I am confident I can get a license as a farm winery basically because the laws are rather lax in this area of KS law thus the reason for wanting to venture into it.

That being said, if someone told me there was a good market for sweetened up cheap wine for 20/bottle, I would get on it. However, I found that making quality fine wine in KS might be a complete flop because the prised vinifera varieties just cannot do well with the cold snaps and high heat and humidity in KS. I have not confirmed that yet though. It does seem like an uphill battle though. If you don't have the climate, you don't have the climate. And it does indeed seem that certain wines are the only ones of any value.

I am also looking a bit at ciders but I have experience with apple trees and I just cringe thinking about the coming nightmares of disease and pests. Blackberries kick butt here but I have not seen a long line for BB wines. I have no idea how that market looks.

To be straight, I am looking at my land use and value as the primary. KS winter wheat just does not cut it and I have great sand loam soils holding a PH of 5.6-6.2 with good drainage. I could expand on my hops growing but the idea is to diversify!