Turns out owning a vineyard is far more complicated than one would think. Sure, they are beautiful, have an air of romance about them, and can produce wine that may sometimes be profitable, but what are they worth? Vineyard owners — even the most savvy — struggle to say.
“I’m a pretty sophisticated financial analyst,” Bill Price, a founder of TPG, one of the world’s largest private equity firms and the owner of six vineyards and five wineries, explains to the New York Times, “But I still struggle with how you value a vineyard.”
Price, although key, isn’t the only factor to consider. Bill Harlen, the owner of the Harlan Estate, a noteworthy producer of wines, explains that determining one’s purpose in owning a vineyard will determine what type of land is going to be purchased, and more importantly, what that land will cost. The “why” of owning a vineyard is probably the most important question to be answered by prospective vintners.
“You could have a nice home and vineyards around it that are more for aesthetics, and someone else could take care of the wine and sell it,” Harlan explains. “Some people may say, ‘I just want to share some wine with friends.’ Some see it as prestige. Some think they can make money. Some want to do something to sell.”
Often land commanding a pretty penny is too risky for those hoping to purchase a vineyard strictly to turn a profit selling vino. Those wanting to go all-in on owning a vineyard need to realize it could be 10 to 15 years before they can reap any reward.
So, often those simply wanting to live the vineyard lifestyle — without needing the investment to pan out quickly — are willing to pay more. “These high-end, high-quality pieces are in great demand,” said Sean Maher, managing director and founder of Aspect Consumer Partners, a vineyard brokerage firm.“Everyone wants this land, including the wine industry guy. But it’s the lifestyle guy who is sometimes willing to pay more. The industry folks don’t want a $3 million home on it.”
Harlen owns an 80-acre parcel which allows aspiring vintners to dip their toe into wine mix,. The 600 members of this Napa Valley Reserve get to try out winemaking more for sport than serious profit. They get to produce their own blend from grapes on the property or create a master blend with their own label.
Still, this trial doesn’t come cheap and is best reserved for those whose cups runneth over: membership is $155,000 plus annual fees of $3,000. [NYT]