How to buy a winery in Australia

Written by Douglas Ross in Buying

A winery with a view of a hill in the distance

Be warned, potential winegrower. It ain’t easy.

The wine industry in Australia is huge, highly competitive and never a sure thing, and it never has been. The first seeds to be sown in 1788 shriveled in the hot sun, while the introduction of phylloxera, a pest originating from North America, nearly destroyed Australia’s budding wine industry in the early 20th century.

Supply also affects returns, as a reoccurring overabundance of grapes in the market has repeatedly caused many to call for a ‘wine pull’ as recently as 2010.

Yet, the industry is a big one and there is money to be made for those willing to put in the effort.

Wine Australia National Vintage Report 2017 estimated the value of ‘crush’, or grapes available for the production of wine, at $1.22 billion, up 13 per cent in a year, with all varieties of red wine experiencing an increase in output and all white wines except chardonnay experiencing some level of output increase over 2017.

Wine Australia also notes that over 2017 the value of Australia’s wine exports grew 15 per cent to $2.56 billion.

But first you need to make one crucial (and hopefully easy) decision: do you want to enter the industry or simply have a hobby winery?

One decision means a lot more work and should be clear to you. Knowing this will dictate the size of property you buy, as well as its location, aspect, soil type etc.

Buying into the wine industry

Buying a winery for the means of major production can go one of two ways: you can either be a producer of grapes, or a producer of wines. The first involves farming grapes to export to wine makers, the other is farming grapes for the production of your own wines.

Producing your own wines means a much higher outlay, as you need to fund the various machinery and post-farm production materials (e.g. that used during fermentation) as well as marketing tools to create a wine label.

Consider the costs of production in your business plan when buying a winery

Consider the costs of production in your business plan when buying a winery

When browsing rural viticulture (vineyard) properties for sale, be aware of a property’s soil type, location, climate, aspect (in which direction fields face), location to water, size, and logistical location. They will all influence the types of grapes you grow. If the property has existing vines, research whether they suit their climate and location as a clue to why the property might be on the market.

The next thing to consider, whether you buy an existing winery or grow new vines, is what sort of wine you want to create:

  1. Natural wines

Natural or ‘raw’ wine is often confused with biodynamic and organic wines, but includes some subtle differences in its production. There are no official rules as to what constitutes a natural wine, but many point to a minimum of organic practices in the growth of vines, and teh prohibition of additives, processing aids or heavy manipulation equipment in the cellar. Sulfites are sometimes used in natural wines but even this can be seen as a compromise. Natural wines are much less consistent then modern wines but the production method results in an entirely different product to more common wine types that attracts a niche interest.

  1. Biodynamic wines

Biodynamic wines stem from the works of Rudolf Steiner and can often include a more spiritual element to the production of wine, with greater attention paid to natural processes, such as lunar patterns. There is a strong emphasis on the use of compost teas, natural minerals and plant-based preparations and acts under the principle of ensuring the longterm health of the soil in which the vines grow, seeing the soil not as something to be used and injected with fertilizers but an ecosystem from which winemakers can interact symbiotically. There are some very famous biodynamic wineries in Australia, such as Stefano Lubiano in Tasmania, that have enjoyed a surge in popularity in recent years as the visible effects of climate change alter attitudes and open up people towards the idea of a more sustainable use of vineyards.

  1. Organic wines

While biodynamic wines are a branch of organice farming, organic wines tend to follow many of the same sorts of principles as biodynamic production but often still includes sulfur dioxide as a preservative to protect the wine from contamination. To be an organic winery you will need to satisfy a number of strict regulations.

  1. Other/modern wine

Typical wine making often involves more interaction with the wine before bottling, filtering the wine and introducing yeast and preservatives (such as sulfuric dioxide) to the mix as well as fertilizers and pest-mitigation/prevention chemicals in the farming of grapes. These methods ensure a much more stable ‘product’ in the end, with less room for contamination and as such have often made more financial sense as wineries have grown larger.

Key things to consider before buying a winery

 

  1. Have the funds to wait out a significant period where you may not see a profit. This is especially the case if you are growing new vines. Wineries can have bad years, or even a series of bad years, with unexpected frosts or far-off fires having a potentially damaging influence on your vines. Ever heard of a chicken and hen in winemaking? This is when unexpected frost causes loose fruits and small fruits to grow side by side, complicating and compromising the harvesting process. There are all sorts of ways a harvest can be compromised, and you have to have the ability to ride out these storms.
  2. For the above reason, consider pooling your resources with other grape growers, or buying a single vineyard with financial partners.
  3. Develop a clear business strategy from the start. There is enough information for new winemakers, developed from over 100 years of winemaking, to help you avoid many common mistakes (such as choosing the wrong type of wine for your soil).
  4. Use consultants in areas you have little knowledge in. They will be able to steer you away from mistakes that could easily cost you your business and home. For instance, a vineyard consultant can warn you about the threat of cutworms, which not many people will no about. Cutworms can destroy your crops, especially in areas with sandy soil, by climbing up and eating the vine leaves at night.
  5. Consider initially selling your grapes to larger winemakers as you establish your vines or repair and improve existing vines.