The state of California is the world's 4th leading wine producer, trailing only behind the nations of Italy, France, and Spain. While the winery industry in California's statewide impact has grown 17% in the last 7 years and has remained resilient through the Great Recession, there are multiple risk factors that potential buyers must consider before purchasing a California winery. Three factors to consider when doing your due diligence include examining the high costs of buying and operating a winery, the time it takes to produce the product, and the competition you will be facing in the market of Wineries in California, alone.
In most cases, money doesn't grow on trees. But, fortunately for winery owners, it grows on vines. In the current market for California wineries, a buyer can expect to spend at least $1 million to purchase their own winery, to inherit the operation that is already underway. On the other hand, if a wine connoisseur would like to build their wine business from the ground up, $2-5 million in capital would be required to open the doors and run basic operations.
The key to making a profit in the wine-making industry is producing a high volume of wine. In order for a small winery to be profitable, your production should be in excess of 5,000 cases, or 60,000 bottles, annually.
When operating a winery, it is important to understand the amount of time it can take you to turn a profit. A small winery can take upwards of 7 years to turn a profit on their original investment. It is also important to keep in excess of 5,000 cases on hand, and in storage, because the process of producing the product, from the growing of the grapes, to selling the product to customers, can take 1-5 years. Another factor involved in the growth and profit on a California winery is the climate of the area you are trying to operate in. Operating profit will likely be low and operations as a whole could be very difficult due to the uncharacteristically low levels of rainfall, seen in all parts of California.
Lastly, there is a lot of competition to consider in the California wine-making industry. There are over 4,600 bonded wineries in California, up 102% since 2005, and early all of them are family owned businesses, producing 229 million cases in 2015. When opening or taking over operations as an owner and manager of a California winery, it is important to understand that the industry requires a lot of patience to maintain slow, but steady profits.
About The Author: Peter Siegel, MBA is the Founder And Administrator of BizBen.com (established over 25 years now!). He consults daily with California business buyers, owner/sellers, business brokers, and agents regarding buying and selling California small businesses. Call him today regarding advice on finding, buying, selling, financing a business purchase/getting pre-qualified (ask about the BizBen ProBuy and ProSell Programs for business buyers and owner/sellers, and brokers). Peter Can be reached direct at 866-270-6278 (if you get voicemail please leave some good times to reach you and a detailed message - thanks).
|Helpful Resources To Assist In Selling And Buying California Businesses|
|William Park, Business Broker - Southern California
Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.
|Christina Lazuric, CBI, Business Broker - Orange County
California's Premier Brokerage for Selling Orange County Service Based Businesses since 2005! C.B.B. provides a step by step approach to Business Brokerage, Mergers & Acquisitions, Business Consulting and Valuations. We work on creating the best possible presentation for your business!
|Rick Carlson, Business Broker - Southern California
You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.
|Bob Baumgarten, Business Broker: Orange, LA Counties
National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-588-8727.
|George Lanza, Business Broker, At Plethora Business Sales
Plethora Businesses, a division of A Premier In Services, Inc., is a Business Intermediary Consulting Firm headquartered in Orange, California. Plethora specializes in the listing and sale of small and medium sized private businesses.
|Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses
Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.
|Timothy Cunha, JD - Business Broker, SF Bay Area
I am an experienced entrepreneur, attorney, & business professor. I & my EvergreenGold® team offer business owners sound advice & expertise to build business value & achieve profitable sales. Call me today for a FREE business evaluation & SWOT analysis for your business anywhere in the USA.
|Joe Sandbank, Esq. - Legal Services
I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.
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