What do you know about the winery business?

[Thinktank]

I have som equesions:

How is the winery business doing in the Okanagan right now?

Is it true grape growrs of certain varieties are getting paid HALF of what they got before 2008?

If a winery can produce 5,000 cases of wine, does that mean it earns $1 million dollars gross income per year?

Or what? What do you know about this business?

http://www.bcbusinessonline.ca/2011/04/ ... e-industry
(good article about it)

[steven lloyd]

What do you know about the winery business?

:129: They make wine ?

[Bagotricks]

How is the winery business doing in the Okanagan right now?

Is it true grape growers of certain varieties are getting paid HALF of what they got before 2008?

Family owned a Orchard in the South OK valley way before the "wine" craze took over.

"Wine" is just like "Gala Apples" and "High density planting". Flavor of the month.

If everyone is growing the same thing, the price is low. Once something new comes around those who have the special varieties or new agricultural direction get paid more. This is why lots of perfectly viable food-producing land in the south OK valley was sold very quickly for huge profits when the wine craze took over. Planting booze producing grapes instead of growing local food. One of the best cherry Orchards in the valley was uprooted outside Osoyoos in order to try and turn a buck growing booze, and the trees still had another 10 years on them before even being considered to be too old. We truck our food in now, no need to grow our own food. Lots of farming families cashed out, moved to Surrey and now their teenagers are hooked on crystal meth instead of growing up on a farm.

So if they are being paid half for their grapes now, that's twice as bad and not surprising. Seen it happen before with other "flavors of the month". Once again greed even outweighs the basic needs of a species to cultivate food. We can just pay Mexicans to grow our food and burn more gas to bring it here. There is was money in farming a vineyard.

[The Green Barbarian]

well, after reading Bago's rant, it sure makes you feel positive about the wine industry doesn't it? :dyinglaughing: Wow - I'll have to warn people not to grow grapes, or sell their farms, as apparently this results in a 100% chance their kids will become crystal meth addicts.

I had some experience a few years ago in the Okanagan wine industry. What I learned was that if you sell your wine via the liquor store, you aren't going to make much money. After the liquor taxes, VQA fees etc. it's a tough go. With the price of BC wine, I'm not sure how it competes with Argentina, Chilean and South African wine, which is mostly cheaper, and some of those Argentinian malbecs are sublime! The wineries that make any money at all, are the ones with a good walk-up customer base. Burrowing Owl is a good example - you never see their wine in the liquor store, as it gets sold out mostly at the winery, or directly to restaurants, so no inventory is left to unload to the masses via traditional retail outlets. And it is really good stuff!

As for the growers - any body will tell you - supply and demand rule the agricultural world. So - the more grapes being grown, the lower the price people are going to get. Such is life. I don't blame people for changing over to grape growing (or booze growing as some would call it) from other fruits. Farming has to turn a profit - or you go out of business. If you can't make money growing cherries, apples etc you have to turn to other crops. I'm not sure what Bago's solution is if he's not in agreement with moving to "booze growing" to survive as a farming business - just run up giant piles of debt and then ask the government to bail you out every couple of years? I guess that way your kids won't become meth heads...

[Static]

I know many people in the business. Green is 100% correct. The successful has a strong walk-up business. The truth about the Okanagan industry is less than 5% make money. Our prices are not competitive with South America, South Africa, and Australia. My father spends his winters in the South Pacific. This trip he visited the Borassa Valley in Australia. They have grown so many vines that they aren't even picking them because the supply has pushed the price so low.

Okanagan prices must adjust to compete. Let's be honest. I would love to only support BC wines, but when I can save 50% on equal quality I will.

[The Green Barbarian]

.

Okanagan prices must adjust to compete. Let's be honest. I would love to only support BC wines, but when I can save 50% on equal quality I will.

They'll only be able to compete if there is a level playing field on the tax side. Are the foreign producers subjected to a 50% liquor tax at the liquor store level? Not sure. I just know that it is kind of silly that I can buy BC wine in almost every other province in Canada cheaper (some provinces much cheaper) than in a liquor store two miles from the winery where it is produced.

[Static]

I am certain imported wines pay the same tax too.

Edit to add: I realize what your saying. I agree. It would be interesting to see what taxes they do pay.

[The Green Barbarian]

I am certain imported wines pay the same tax too.

OK fair enough.

[Static]

http://www.freethewine.ca would imports be under the same laws?

Edit to add: The same laws do apply but imports are purchased at a lower price. Our wines price point are simply uncompetitive in the global market.

[dinosaur]

Wines in other provinces are half the price, foreign wines are taxed heavily in BC to protect our producers. None the less, the wine industry is a tough game; you must compete with people who are willing to loose a lot of money. Don't bother with international markets either, there is a major overproduction around the world, only in BC is there still some sense of a wine boom. I think it is true about the orchards; some orchards do better than wineries, but because wineries are driving up the cost of land orchards are becoming a thing of the past. Its a shame politicians like Ron Cannan and Fitzpatrick wont work to extend the same protection to the local tree-fruit industry, but I'm not surprised given their backgrounds in the wine industry. RIP apples.

If you want to make money with a vineyard and winery take a winemaking course where you will learn to grow grapes at the same time. An owner-operator who can do this can save two high salaries, and grapes grow much like weeds anyway, you barely have to water them, and if you drive over a few with your tractor they ususally grow back. The industry could be a victim of its own success soon though. As it grows it attracts more attention from competing nations who have already been raising objections; if tax protection goes, which it easily could at the next major trade negociation, you will need to be a very efficient operator. Finaly be prepared to do everything you can yourself or get taken for a ride by salesman, contractors and consultants who will want to charge grapies twice as much as they can get from others.

[rekabis]

Most of the wineries in the Okanagan exist because the owners love making wines, and not because they are good at the business. Many wineries don’t even know how much it costs them to make a bottle of wine (down to the last cent, that is), as they don’t make use of what is known as cost accounting. As such, they price it at what they think it might cost, instead of what it actually does cost.

One winery in particular dropped nearly half their wines once a colleague of mine did a proper cost accounting analysis and discovered that at least a third of their wines were outright losers (the break-even point was much greater than their market affordability price) and another third were only occasionally breaking even. They kept their profitable wines and the popular half of the ones that tended to break even, and their overall business profitability soared.

Problem is, these guys were the exception, not the rule.

[dinosaur]

Running a business like a winery/vineyard requires wearing a lot of hats so I am not surprised if not all of them are good accountants. Better to be a good wine-maker and viticulturalist first and I would still put accountant further down the list after labour-manager and mechanic.

they don’t make use of what is known as cost accounting. As such, they price it at what they think it might cost, instead of what it actually does cost.

No new product will meet this standard as there is no market for it yet, and there is too much inconsistency in agriculture (the crop) and the market to apply a formula like this too seriously. You cannot ignore the market and set your prices wherever you want unless you have very deep pockets and a lot of storage. If you have a good product keep it...at least if you go out of business this way you can drown your sorrows. If you want to take a business-school approach to vineyards or orchards nothing would ever get done, inspite of breaking all the business-school rules of thumb some vineyards and orchards do make money.