NEW YORK (TheStreet) -- We've all been there. After a great bottle of wine or delightful day spent visiting a vineyard, we've all thought, "I could do this." At one time or another, many of us have taken the next step and checked out owning our own winery or vineyard.
It is happening as the number of wineries in the USA is soaring, along with consumption around the world. I know I have: I went so far as to start my own blog about wineries. For those thinking about investing in a winery, here are three critical considerations to keep in mind.
1. There are great wines everywhere.
Talking only about wines from France is a clear indication of how little a person knows. Every state in America now produces wine. That means there are great wines everywhere.
I just had a fine Viognier at a winery outside of Greenville, South Carolina. Upstate New York around the Finger Lakes is producing outstanding Rieslings. If you are a red wine fan, go to Montelle Winery in Augusta, Missouri for the Chambourcin.
This also means you do not have to pay a premium to buy a winery or a vineyard in Napa. At present, there are 22 wine properties for sale on winebusiness.com. Most are in California, but there are others in Canada, Oregon, Michigan, and New York. More wineries can be found for sale across the United States with very little research.
2. No matter where you're located, it's all about the tasting room.
There is no substitute for an appealing tasting room. As a general rule, more than 90% of the revenue will come through the tasting room. Of that, the bulk will be booked on Saturday and Sunday from noon-6 p.m. from May to October with visitors, weddings, birthdays, wine dinners and other events. Chandler Hill Vineyards in Augusta, Mo. has one of the nicest tasting rooms to be found: that is why over 80 weddings a year are held on the grounds. You can have great wine, but if you do not have a good tasting room you will never achieve full potential.
3. There is no such thing as a destination vineyard.
This means you better be established on a wine trail as microeconomic factors result in either flourishing or failing as a business. Far from avoiding competition, you need to make it work for you.
Since the bulk of revenue comes from those visiting the tasting room, the goal for guests is to hit as many wineries as possible in one day. If your winery is not on a trail or is set off in a remote location, it will be very difficult to prosper. On the other hand, if you're close to other wineries so that visitors can work yours in with the others for that day's trip, your chances of success are greatly improved. If you choose an appealing spot with easy, logical access for the wine consumer, the business will be better for the owner.
Owning a winery is truly a labor of love, but it entails a great deal of work. It can be an outstanding investment, too. The land value alone can make it profitable. But understanding how the business of a winery operates is going to make it much more rewarding. There are always good buys in established wineries on the market as many of the sellers purchased without focusing on how the business model operates. A great tasting room with good wines in a nice location should make for a fine investment.