You’ve made a pile on the stock exchange, robbed Lloyd Williams blind at Crown Casino or gotten bored by the idea of looking at people’s choppers all day. You’ve money burning a hole in your pocket and you like wine. But, instead of doing the sensible thing and allocating around 15% of what you earn to what you drink, you’ve been bitten by the grape-growing bug, and badly. For reasons that would escape even the most stringent psychological examination, you want to grow and make wine. Dare I say it again, you want to become a winemaker! There are people you can see for this sort of condition and Gary Baldwin is one of them. As a partner in Wine Network Australia, one of the country’s leading winemaking consultancies, Baldwin is regularly flooded with enquiries just like yours. And he knows how to treat them. A typical conversation with a sufferer might go like this: Multi-millionaire: I want to grow and make wine. Gary Baldwin: You’re crazy. But before you spend a cent, talk to several experts first. Then put your money on the stock exchange. MM: But people are making a fortune making wine; just look at the overseas sales of the stuff! GB: Returns from wine are far lower than you’d expect and much later than you would imagine. A profit is almost impossible. MM: Who cares? It’s the lifestyle I’m after! GB: Growing grapes is an agricultural enterprise with all the inherent risks. El Nino is just one of them. Making wine is a logical, scientific process, requiring attention to detail. It’s no picnic. MM: I’ll pay people to do that. But my wife has this amazing label design she adapted from a tapestry pattern. It’ll sell like hotcakes! GB: Actually, selling wine is the hardest part of the game! But still you’re convinced. Anything your opthamologist can do, you can do better! Not even Henry Kissinger couldn’t dissuade you! Baldwin’s first advice is to get your priorities in order? Is it business or lifestyle? How much can you afford to throw away? Not much? Better go back to square one. Most of the time lifestyle’s the answer, says Baldwin, followed by the business answer as well. Most who start have the idea they will make small volumes of premium wine. That means it will be expensive to buy. ‘It’s impossible for these guys to compete with the large producers at the mid or low price end, so the wine must have a strong element of individuality. This means it has to come from a unique area, like Chateau Hornsby at Alice Springs, from a prestigious area like the Yarra Valley or Hunter Valley, or must be made into a unique product, such as Kathleen Quealy’s Mornington Pinot Grigio or Garry Crittenden’s Sangiovese’, he says. Which combination of region, vineyard site and variety is going to work? Plenty of people have put expensive vineyards on bad sites with the wrong grapes, even where grapes should not really grow. Trouble is, they don’t find out until their investment owes them several hundred thousand dollars! Nice game! To plant you need water: at least a megalitre per acre, according to Baldwin. You need big bucks, about $20,000 per acre over four years to set up, 75% of which will be spent in year one. Therefore, for a 20 acre vineyard, you need a lazy $400,000, $300,000 of which you spend up-front! And that’s not even including the cost of the land, which can be another $15,000 per acre in a premium site! Add on a winery capable of 100 tonnes, 3 phase power, an effective effluent system, crusher, press, red wine fermenters, barrels, operating space, bottling equipment, more barrels and storage space, plus the money to fund the stock you will be holding prior to sale (which is regarded by the Australian Taxation Office as taxable assets), you’ll be up for another $600,000! If you want to expand to 300 tonnes (to make around 20,000 cases of wine), get ready for another $400,000. So, if you stay at 100 tonnes, you’re spending $1.4 million plus land and by year five (if all goes perfectly according to plan, without plague, pestilence, drought or flood) you will make 6,500 cases and get around $100 per case, equating to a gross income of $650,000 that year. Baldwin’s view is that it will cost around $60 per case to make, leaving a real gross profit around $390,000. Then deduct the cost of goods sold of around $10 per case, covering such things as marketing and promotion, and your gross profit drops to $335,000. So, provided you don’t pay yourself and all the others who have helped you make the wine, you can make around $300,000 per annum. But you’ll have a fabulous view, so who cares? Gary Baldwin may be contacted at Wine Network Australia, ph 61 3 9819 6544.
