The idea of buying a wine estate is a dream for many people with an interest in the drink.
Owning an idyllic vineyard with beautiful buildings and scenery, producing your own, award-winning wine sounds fabulous.
One could assume it is a dream reserved for business moguls, film stars and lottery-winners but many people of modest means have bought or created wine estates.
A word of warning though. There is a saying that the only way to make a small fortune out of a wine estate is to start with a large one.
Investment vs profit
There are many cases of wealthy people pumping money into wine estates with little return.
One such story is Château de la Jaubertie, bought by an heir of the Ryman stationery chain and told in the book A Vineyard in the Dordogne, which is well worth a read.
While something like Brad Pitt’s Château Miraval estate would cost several millions, vineyards in other regions with more basic accommodation can be found for much less.
The key to finding an affordable wine estate is to focus on less famous regions.
A hectare of vines in Burgundy, Champagne or Saint-Emilion can cost over €1 million whereas the same sized vineyard in the Languedoc can be bought for €10,000.
There are plenty of wine regions in France where estates do not command a premium price.
However, wine from less famous regions doesn’t sell itself. It requires more marketing.
Unless you are wise, or lucky enough to buy into the next trendy region, the land probably won’t go up much in value either. Like all property, location is the most important factor.
The other thing that adds to the price, and upkeep, of an estate is a large and impressive main building.
While it may stroke the ego of the owner, a fancy chateau is going to hurt the pocket without necessarily adding anything.
It certainly won’t improve the quality of the wine.
Machinery costs
A well-designed winery with modern equipment is a much better investment than a musty, crumbling maison de maître.
On the subject of the winery, there are lots of considerations and expert advice should be sought.
The most important factor is space. I would suggest that 80% of wineries are too small to work in.
Next the condition of all the tanks, electrics, drainage and the building itself need checking.
Anyone relatively new to the industry should insist on a transition period where the previous owner helps the buyer understand the workings of the winery.
Winemaking qualifications are of little use in understanding the peculiarities of someone else’s winery, especially those of small, family estates (I know from experience).
What to look for when buying a wine estate
While a lot of the decision-making is likely to be subjective, there are some important things to consider. The first is the size of the estate.
I think many people who come from outside the wine industry are tempted to buy too much land. Partly because it seems like a good investment and partly because it makes them feel good.
Often large estates include a lot of unproductive land as well as vines.
More vineyards means the ability to produce more wine but that wine needs to be sold.
Having larger volumes generally means having to find larger customers, like supermarkets, or employing salesmen.
I know of many estates that have to sell a percentage of their production on the bulk market because their bottle sales are limited.
The bulk prices for wines other than the most prestigious appellations is very low and generally not profitable for small estates.
The other problem with buying too much land is that you need to employ people to manage it.
A rule of thumb is that one person can manage 10 hectares. Any more and you need to hire a worker. But a good vineyard worker is going to cost at least €30,000 a year.
Therefore you need to make sure they are fully occupied and that means having about 30 hectares.
Which brings us back to the problem of having a lot of wine to sell. Balancing the vineyard area and the ability to sell the production is therefore a very important decision.
The second consideration is the type of vines already planted on the estate. What mix of grape varieties are they?
Are they suited to the kind of wines the new owner wants to make? Old vines are said to make better wine but old vineyards come with issues. They may have many missing vines or harbour diseases that will spread.
They may have been planted in narrow rows unsuitable for modern tractors and equipment. On the other hand, young vines tend to be over-productive and make less interesting wine.
Vines on trellis are easier to manage and generally produce more grapes than free-standing vines.
However, trellises need to be maintained and managed. Wine connoisseurs place a lot of importance on terroir, which they equate to the type of soil. While soil type is important in viticulture, it is not the only factor in determining the quality of wine that can be produced.
Without expert knowledge, potential owners are easily fooled about the potential of a vineyard based on what the surface-soil looks like.
Local considerations
Other things to consider are the risks of frost, drought and flooding.
It is also worth considering the ease of access and distance from the winery as well as other practical issues like inclination or trees and hedges that might make vineyard work difficult.
The estate will probably come with a range of vineyard equipment like tractors, sprayers, ploughs and trailers. All in various states of repair.
The advantage of buying existing equipment is that it will be suited to the vineyards and will (hopefully) all work together.
However, if the previous owner has not been maintaining the equipment, it will probably need replacing soon.
Finally, the value of the winemaking facility needs to be assessed. While equipment can be replaced and installations improved, the size and layout of the building may not be easy to change.
It is not worth paying for things that have to be replaced.
Also note that it is not necessary to buy an existing estate to become a wine producer, indeed it is perfectly feasible to buy or rent vineyards, find a suitable winery building, buy some equipment and start your own from scratch.
Jonathan Hesford has a Postgraduate Diploma in Viticulture and Oenology from Lincoln University, New Zealand and is the owner, vigneron and winemaker of Domaine Treloar in the Roussillon.
www.domainetreloar.com
If you have questions on this or other subjects covered in the wine column, email him at info@domainetreloar.com
