Wednesday, January 2, 2013

The math of wine

A question I always had in my mind was the economics of wine.

So here is more info that may help you also get an idea :
(some of this info comes from  : )

1 acre of vineyar = 2 tons of grapes
1 ton of grapes = 2.5 barrels of wine
1 barrel of wine = 24 cases of 12 bottles each
1 case = 12 bottles of wine of 750ml each

Therefore 1 acre = 5 barrels = 120 cases = 1440 bottles
Which at 10$/bottle assuming one sells all the bottles in 1 year, means a revenue $15,000 / year / acre

So for example if you have 100 acres planted with vineyard you can expect about
$1,500,000 million revenue at 10$/bottle.
(Roughly vineyard sells at $1,000,000 per 10 acres in Napa in prime vineyard area).

Here is an example to buy 60 acres for $6,000,000 :

Per the math above, 60 acres means about $1 million per year at $10/bottle in revenue.
So assuming 20% margin, you'll pay back the 6 million in 6/0.2 = 30 years....
Of course if you can sell your wine at 20$/bottle the math looks much better. And the average retail wine bottles sells more around 25$ I would hope or more then around $10.

Enjoy !

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