LAND JOURNAL

Owning a vineyard: opportunities and challenges

Diversifying with a vineyard can be a financially astute move for farmers if they know all the risks and challenges

Author: Dr Alistair Nesbitt

06 August 2020

© Viv Blakey

© Viv Blakey

With direct farm subsidy payments set to reduce after 2021, farmers are looking at additional income streams to keep farms sustainable. There are many ways to be involved in the English wine sector and not all require vine-to-bottle production. It is possible to grow grapes under contract for established wineries; sell grapes on the stock market or even make wine for others.

Scarff farm vineyard: James Scarff

My father and I enrolled in a viticulture for dummies course a few years ago. We’re farmers and growers, so we decided to just grow the grapes because that’s our expertise, but there’s still a whole business infrastructure and forecasting to put in place. We contacted consultants who set up and install vineyards and supply everything.

Our business consultants helped us with a 10-year forecast business plan, both with and without the vineyard, to see the profitability of both scenarios and make sure it was all sound. Vinescapes talked to us about frost risk and climatology. Then the bank manager came out. I contacted wineries in Sussex and Hampshire to see if they would be interested in us supplying them with grapes. We then worked out a 5-year deal with Ridgeview in Ditchling, Sussex. In May 2017, we planted the first vines on 20 acres in Suffolk.

We grow the 3 classic grapes for English sparkling wine, which is the big seller and award winner: 50% Chardonnay, 15% Pinot Meunier and 35% Pinot Noir.

"It’s a long-term project with a 35-year life, I think you have to invest early"

You can grow grapes on a budget if you do all the work yourself. Some of this was in our plan, but we didn’t have time to do it all ourselves. When we bought the tractor and sprayer, we went for reliability and a higher cost than I’d budgeted. I bought a new sprayer from a German dealer and paid in euros which saved me £6,000. Then there’s frost protection – we went down the route of cold air drains from Australia. We got a 40% leader grant for the fans, which is still available. You have to go into it understanding that you will be writing cheques for 4 years before you get any money coming back in. Which means you need a bank manager that understands your business and the project well.

It’s a long-term project with a 35-year life. I think you have to invest early. Don’t assume you can spread expenses over that 35-year span. Take a deep breath and buy that fancy recycling sprayer. Cutting corners means cutting the quality of grapes. I would say you need to invest close to £30,000 per hectare for something of this size, plus the cost of equipment. The profit is a complete turnaround compared to wheat, which is relatively easy to grow. For us, the biggest risk is frost. Our business plan says we will get payback in year 9 if we don’t have frost. Lots of factors are out of your control. Weather is important. Grapes need some rainfall to replenish and keep growing but towards harvest time from the end of September to the beginning of October you want dry, bright, sunny weather and a good site on a south-facing slope.

Having the right people around you is important; an agronomist, a vineyard manager. Delegate, and let them answer the questions. I’m still learning, we’re only 3 years in, so now I’m about 80% confident about my decisions but I think there’s a risk in making all the decisions yourself without talking it through.

For more updates on James’ story on Twitter visit @JamesScarff.

Through the grapevine: the figures
  • There are 800 UK vineyards
  • There are 33m wine drinkers in the UK
  • In 2019 there were 3m vines planted
  • In 2014 UK wine sales were predicted to reach 40m bottles
  • The average cost of a bottle of still white wine is £9
  • The average cost of a bottle of English sparkling wine is £25-40
Rathfinny estate: Cameron Roucher

There’s a saying in the wine sector: "To make a small fortune start with a large one." The initial capital cost involved in a vineyard is hard to estimate because it’s dependent on size. Once you get to a certain size you get economies of scale because regardless of the size of the vineyard you can’t live without machinery, tractors, a sprayer. Some things you can hire or contract people to do and a lot depends on how much groundwork is needed and your location. For instance, where we are in Alfriston, Sussex, we have no need for deer fencing, which is expensive. You have to get a vineyard to about year 4 when things start to produce, so that’s about £25,000 per hectare, then add plant machinery costs on top.

Even if you’ve got the land and you can afford to plant vines, vineyards are hugely labour-intensive, then there’s the cost of chemicals, and tractor operations. It’s expensive because things are done by hand that can’t be mechanised, or that are difficult or expensive to do so. Pruning, for example, requires someone to go to every vine and make cuts. Once the vineyard is producing, returns are very healthy at the moment in comparison to lots of other agriculture.

The most important thing is location. Nothing can beat a good site. For a successful UK vineyard, you need a good spot, not too high, not too frosty or exposed, in a warm part of the country with just the right amount of rainfall. A frost-free site is ideal because frost can be devastating financially. It can wipe you out. Even on sites where you can fight frost, it’s labour-intensive and costly.

"Even if you’ve got the land and you can afford to plant vines, vineyards are hugely labour-intensive"

Another huge consideration is to know what your end product will be. Whether you are thinking about contract growing or producing a wine, which is a whole other kettle of fish, take professional advice. On a good site with good years if you are contract growing you’d see a return between year 8 and 10. If you’re making wine, particularly sparkling wine, you need 4 years to get the vines in production then 3 years to age the wine before any money comes in at all. Other than frost, cashflow is the greatest risk. And the weather, which you can’t do a lot about.

Long-term rental of land or selling under contract are definitely viable options for traditional landowners that are otherwise leasing land for arable. I would think most wine companies would pay a premium on what the rental was for arable if you can get a long-term rental for 30 years. Selling under contract is another option, just make sure you have a contract before you plant. Tying down a wine company to ensure there’s a home for that fruit is crucial and helps sell the story to the bank manager.

Rathfinny bought the property in 2010 and did the first planting in 2012. We grow Chardonnay, Pinot Noir and Pinot Meunier, the traditional grapes for sparkling wine, plus some Pinot Gris for our still wine. Within those varieties we have some different clones, as in traditional selection, they each give different characteristics; some will be high yield, others full of flavour, others more resistant to diseases, so we spread our bets.

If you make wine, you need to ask yourself how you will get it to market. If you’re small you can sell through local outlets. If you’re really big you can talk to big distributors but if you’re in the middle, you can get stuck with too much product for local restaurants and your cellar door but not enough for a distributor. I’d say one of the most crucial business decisions is "What are we going to sell and how are we going to sell it?"

For more information on the Rathfinny estate visit rathfinnyestate.com.

Dr Alistair Nesbitt is chief executive officer at Vinescapes  alistair@vinescapes.com

Related competencies include: Land use and diversification

vinescapes.com

Related Articles

BUILT ENVIRONMENT JOURNAL

go to article A biophilic design project

LAND JOURNAL

go to article The benefits of rewilding

LAND JOURNAL

go to article Prioritising climate change in the planning system

This website uses cookies to collect information about your browsing session. By collecting this information, we learn how to best tailor this site to you.  To learn more, view our 

Cookie Policy.