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Grape Expectations

Are you thinking about getting into the wine business? Here's a taste of what awaits you.

There's nothing like a great bottle of wine-especially if you made it yourself. Winemaking, in fact, is more than a business; it's a lifestyle, say experts. And it's not exactly a bad one to be in. There are riches for entrepreneurs in every facet of the business, from growing a vineyard to owning a winery to publishing wine education products, it's all part and parcel of the growing wine industry.

According to Vic Motto, senior partner with Motto Kryla & Fisher LLP, wine business advisors in St. Helena, California, "Wine is one of the strongest growth industries we have. It has outpaced the economy in growth--even during recessions. It's a business that will be a growth industry for the foreseeable future."

It's also a highly fragmented industry with room for start-ups, say experts. But even with approximately 3,000 wineries in the United States alone, "newcomers can certainly make this industry diverse," says Gladys Horiuchi, communications manager with the Wine Institute, a California wine industry organization in San Francisco. "They bring a lot of new things to the industry-[but] you need to know what your niche will be."

Finding a niche in the world of chardonnays and merlots is just part of the challenge. Aspiring Ernest and Julio Gallos take note: Starting a vineyard is very capital-intensive. What's more, from planting to harvesting to aging the wine, it can take seven to eight years before you sell your first bottle. You could start a winery by purchasing grapes from existing vineyards, but that will still take time, so experts suggest keeping your day job while you wait for your wine to mature.

Don't let the seven-year wait stop you in your tracks, though; you could start a wine periphery business instead. That's how Jennifer Elias and Julie Tucker, founders of SmartsCo in San Francisco, broke into the industry. Their publishing company writes, designs and publishes wine education cards called WineSmarts, which are sold at gift shops, wineries and upscale coffeehouses such as Dean & Deluca's. Colorful and informative, they look like playing cards and target consumers aged 20 and older who are just getting into wine. Elias, 36, and Tucker, 35, who started their business in 2002, project sales of $325,000 for 2003.

That's just one avenue, though. Start-ups might also try designing fashionable wine storage units for the new wine consumer, opening a wine distributorship or creating a wine board game. You could even travel around as a speaker and educator specializing in wine-the possibilities are endless.

Gina Puente-Brancato found her niche in an interesting area--she started her La Bodega Winery in the Dallas/Fort Worth International Airport, of all places. Before jumping into winemaking in 1995, Puente-Brancato already had some entrepreneurial experience with a couple of retail concession stands in the airport concourse. Eventually, she realized that starting a winery would be a great way to bring travelers' attention to Texas-produced wines.

Today, Puente-Brancato not only produces her own wine off-site, but also sells bottles from local vintners. Her passion for promoting her fellow Texas wineries is typical of the wine industry as a whole, says Puente-Brancato, 35: "We're a fraternity of sorts-we try to help each other. There's a lot of camaraderie in the business."

Her winery's unique location allows her to introduce wines to everyone, from amateurs to connoisseurs. Currently, Puente-Brancato grosses about a quarter of a million dollars with her winery, contributing to the $12 million in sales she makes from all her concession businesses combined.

Puente-Brancato shares a common goal with her wine comrades-to introduce new people to wine. While baby boomers continue to be the largest group of wine consumers, experts say that twentysomethings are a growing market, too. And though the oversupply of grapes that yielded the "Two-Buck Chuck" phenomenon (the $1.99 Charles Shaw wines sold at Trader Joe's specialty grocery stores) is cyclical, it helped ignite new interest in wine. "There are several years of [grape] shortages, then a couple of years of oversupply-we see the cycle happening continuously," says Motto.

Bottom line: Whether you're making wine or educating people about it, it's going to be a fun ride. And we can all drink to that.

DRINK UP!
  • In 2002, wine volume in the United States was 595 million gallons of wine, up from 561 million in 2001.
  • Wine sales in the United States reached $21.1 billion in 2002, up from $19.8 billion in 2001. That's a giant leap from $11.4 billion a decade earlier, in 1992.
  • California is the largest producer of wine in the United States, with 90 percent of U.S. production coming out of the Golden State.
  • California shipped 462.8 million gallons of wine to the United States and abroad in 2002.
  • The United States is fourth in world wine production and third in consumption.

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This article was originally published in the October 2003 print edition of Entrepreneur with the headline: Grape Expectations.

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