How do you negotiate the purchase of a vineyard or winery? What intangibles do you need to consider? According to James Cluer, vineyards hold different values to different people depending on different things. What makes James qualified to address this unique subject?
James has been in the wine industry for 30+ years in multiple countries with multiple vineyards. He runs “Fine Vintage” with 20 wine schools across North America. He also runs a wine tourism business, taking people on trips around the world. James has earned the “Master of Wine” designation, achieving the highest standard of professional knowledge in the world.
James has also been involved in numerous vineyards, wineries, and brand acquisitions. He shares his expertise on buying a vineyard in this episode of Negotiations Ninja!
Outline of This Episode
- [1:46] Learn more about James Cluer
- [3:53] Why do you want to buy a winery?
- [6:40] Buying a winery: Negotiating the intangibles
- [11:46] Why finding the right site is important
- [18:45] Buy a winery or start from scratch?
- [21:10] Due diligence in the wine industry
- [25:30] Why you should plan before buying
Why does someone want to purchase a vineyard?
A vineyard or winery is more difficult than other businesses or products to place a value on. You can argue that it’s an art form. The value is different for everyone, depending on what they’re looking to get from it. What might be those situations?
- Someone may want a vineyard for a real estate investment.
- Some people may be looking to acquire it to use the grapes to produce a particular wine of any quality level.
- Some buyers want the personal satisfaction or notoriety of owning a vineyard.
You’ll also get different opinions on the state of the vineyard. What’s good and bad about it? It can become complex and confusing quite quickly.
Things to consider when buying a vineyard
When you enter the agriculture business, you’re becoming a farmer. You have to decide how you feel about that. If you choose the right vineyard, you can mitigate agricultural problems that may arise (frost, irrigation, etc.).
In the Okanagan, you have a limited geographic area to work with. You can’t go south because you’ll be in the United States. If you move north, it’ll be too cold. If you move West, you’ll move into the mountains where it’s too wet and rainy. If you move East, you’ll lose tourism.
In 1990, one of the pioneers of the wine industry paid $2,000 an acre for a parcel on the Black Sage Bench. When James moved to Vancouver in 2002, an acre cost $40,000–$45,000. In 2016, James helped a customer purchase 250 acres at $150,000 per acre. That was a good deal.
In 2023, those same vineyards are selling for over $350,000 per acre. That’s only a span of 33 years.
Why finding the right site is important
Different parcels of land produce different qualities and types of wine. Cabernet Sauvignon grape varieties need a certain amount of heat to ripen. One site—with the right soil and climate—can produce spectacular quality wine. A nearby site may produce mediocre wine. The soil, subsoil, and climate/microclimate play a role.
A site with a line of trees that protects it from the wind may create a different microclimate. Another site may have a steeper slope with less frost risk. Another site may be closer to water for easier irrigation access and a milder temperature. The careful analysis of a vineyard site—in particular, one that’s never been planted—is imperative.
You have to determine if you’ll spend millions of dollars. What grape variety will you plant? What type of wine will you make? What’s the potential of the site? Those are complex questions, especially for someone outside of the industry. You’re making an educated guess in some cases. It’s an art form.
Learn more about creating a business plan and conducting due diligence when buying a vineyard in this one-of-a-kind episode of Negotiations Ninja.
Connect with James Cluer
- Email James at James@FineVintageLTD.com
- Fine Vintage LTD
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