Why invest in a vineyard in 2019?
Do you hesitate to buy a vineyard? Barnes enlightens you by presenting you with 4 good reasons to invest in a wine estate!
The dynamism of the wine-growing transactions market remains topical. The buyers, often in love with the vine and wine, wish to realize a dream while hoping for the economic success of their project. The complexity of such an acquisition deserves to start with a thorough examination of your reasons for investing.
To take advantage of the favorable economic context
There are many wineries offered for sale, in particular because of the cessation of activity by owners of the baby boomer generation who have no known successors or buyers.
However, it should not be forgotten that the vineyard is first and foremost a long-term investment, a heritage investment that most wealthy owners prefer to pass on to their heirs.
In addition, the current economic context increases the attractiveness of investing in a vineyard. Interest rates are very low today and the profitability of many traditional investments is only declining. It may therefore seem more profitable to invest in random assets that are likely to generate better returns.
The choice to invest in a wine estate should not be limited to the desire to appease a passion, nor to the sale price. All the areas offered are not good to take on this market, regardless of the quality of their production.
This type of investment induces human factors linked to the operation of the estate and the expenses necessary for its operation. It would be risky to ignore it and embark on the adventure alone.
To find a place in the world of viticulture
Many people dream of being part of the very closed world of winegrowers. Accessing it is not so easy, let alone making room for it.
In this rather discreet universe, the sale of a property is very often entrusted to a single agent and the domain name remains secret so as not to alert partners and customers.
It is therefore useful to have recourse to expert intermediaries already well established in this market.
As the winemaker patiently lets his wine mature, it will take time to gain their trust.
Then comes the time to choose a vineyard without limiting itself to the sale price alone. Success will depend on the consistency between the specifics of the selected property and the buyer’s project.
He must know precisely how he intends to develop this wine business, at what pace and estimate his capacity for long-term investment.
On this market, we distinguish the land from the wine activity. Land includes land and therefore property rights.
The viticultural activity includes the exploitation of land, vineyards and the commercial brand. Everyone is free to carry out the activity directly or through a company. Tax systems and social forms of exploitation differ markedly depending on the structure chosen. These choices will have a direct impact on the performance objectives and the transmission prospects. It is therefore essential to think about this before investing with the help of tax experts.
For the passion for wine ... and for entrepreneurship
There is a long way to go before a wine can be sold. Even passionate and knowledgeable, the buyer must surround himself with experts in vineyard management, winemaking, distribution and the legal framework.
It will be necessary to work with them before the acquisition, in particular to carry out the most complete audit possible of the property (grape varieties, wine locker, production authorization, conformity of materials and buildings, compliance with environmental standards, the law of the work, etc.)
A review of local development projects, the Local Urban Plan and possible commitments made to a cooperative is essential. Preliminary actions that will help the entrepreneur to develop a fair plan of actions and investments.
To invest for the long term
Nature follows long cycles and the vine is no exception to the rule!
5 to 7 years are often necessary before a first production and even the simple improvement of the wines produced can take several years. Significant investments will probably be necessary over several vintages before reaching the expected profitability.
Investing in a vineyard is often the project of a lifetime, a great adventure that deserves to be well prepared and well supported. For professional advice, do not hesitate to contact Barnes Vineyard Investments.