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    Friday, March 27, 2009

    Things people in the wine business say that annoy me

    These are two things I hear people working in wineries saying that annoy me and I feel just aren't true.

    1. "If you start a winery to make money your crazy." This is typically followed by talk about how much start up capital is needed or how high the over head is and then talking about how wineries make great tax right offs and that is why you should start one. Sure, wineries can make great tax rights offs, heck they can be a veritable money incinerator if you want them to be, but that is just one model. There are people making money in wine, and this should be the goal of any winery. If you start a winery to be a tax right off you are just setting yourself up for a life of mediocrity. The goal of any business should be to reach profitability as quickly as possible because it is easier to grow profitable businesses then non-profitable businesses. I think a lot of wineries are experiencing this right now as the economy pulls back the outside sources of cash keeping the winery afloat begin to dry up and you don't need that huge tax credit anymore, wouldn't it be nice if instead of a money sink that winery have turned profitable and could see you through these turbulent times? So yes, I will start a winery to make money, and yes it can be done, it just requires a lot of hard work and smart business decisions instead of throwing money at problems until they go away.

    2. "It takes money to make money in wine." This has been around a long time, and there is a point to this saying, but people preach it way to much. To a certain extent it takes money to make money at anything, the online space being a unique exception where with little more then A LOT of sweat equity you can build a nice business. Wine is also unique in that you have to do upfront production before sales due to the nature of the production of wine, no one will buy a wine they have never heard of that isn't made yet, and you can't make 15 bottles to see if people will buy it then a month later make the same wine again, it just doesn't work like that. So for these reasons it does take SOME money to make money in wine, but it's not like you have to be a millionaire to do it. I have worked out a business plan using around $500,000 that will produce a good quality wine at an affordable price point in a large enough quantity to be feasible, sure it would work better with more money but it can be done with that. In the world of start ups that can either seem like a ton of money or not very much depending on what your looking at, but the point is you can make wine and be profitable in the wine business without spending millions.

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