Wine
Revised April 2024
Introduction
Wine is produced in areas where grape, tree fruit or berries grow. The alcohol in wine creates demand for the product. Wine production began about 8,000 year ago. Today 60 countries produce over 100 billion gallons of wine a year.
The United States produced 3.8 million tons of wine in 2021 The US is the fourth largest producer of wine and the largest consumer of wine in the world. The number of wineries in the US has increase to 10,043 in 2019 from 2,230 in 1998.
| State | 1998 | 2017 |
|---|---|---|
| AK | 1 | 9 |
| AL | 4 | 19 |
| AR | 10 | 28 |
| AZ | 13 | 121 |
| CA | 1094 | 4581 |
| CO | 25 | 156 |
| CT | 16 | 51 |
| DE | 1 | 4 |
| FL | 12 | 88 |
| GA | 12 | 60 |
| HI | 3 | 6 |
| IA | 13 | 118 |
| ID | 19 | 69 |
| IL | 19 | 142 |
| IN | 23 | 102 |
| KS | 7 | 36 |
| KY | 12 | 75 |
| LA | 6 | 20 |
| MA | 21 | 67 |
| MD | 14 | 83 |
| ME | 7 | 29 |
| MI | 43 | 195 |
| MN | 10 | 58 |
| MO | 42 | 165 |
| MS | 5 | 3 |
| MT | 2 | 14 |
| NC | 15 | 155 |
| ND | 1 | 7 |
| NE | 2 | 36 |
| NH | 4 | 29 |
| NJ | 25 | 66 |
| NM | 24 | 52 |
| NV | 1 | 11 |
| NY | 158 | 450 |
| OH | 71 | 223 |
| OK | 3 | 60 |
| OR | 120 | 814 |
| PA | 66 | 257 |
| RI | 6 | 12 |
| SC | 4 | 25 |
| SD | 1 | 22 |
| TN | 19 | 637 |
| TX | 45 | 394 |
| UT | 6 | 11 |
| VA | 62 | 272 |
| VT | 10 | 36 |
| WA | 124 | 837 |
| WI | 17 | 80 |
| WV | 11 | 24 |
| WY | 1 | 5 |
United States wine demand in 2021 is 3.18 gallons per resident up from 1.9 gallons in 1998. Per capita consumption will be higher if based on the legal drinking age population (Wine Institute).
Wine produced from locally grown grapes, tree fruit or berries has the potential to add 8 to 10 times the value to the crop.
Marketing
Before producing wine for sale, the business must apply for and receive a permit from both the federal and state government.
- Contact the Department of Treasury, Alcohol and Tobacco Tax and Trade Bureau- for a Federal Wine Permit.
- A list of each states liquor regulators can be found at the Wine Institute
State laws tightly regulate the marketing and distribution of wine in their state. Complying with those laws is a must-do. Shipping wine into another state requires the wine-seller to comply with the laws of that state. Breaking any of the federal or state laws can result in a felony.
At any one time, there are over 20,000 wine labels for sale in the US. A successful new wine must have a well-designed marketing program executed by people who enjoy meeting the public and have experience in selling.
Production
Wineries come in all sizes from a few hundred gallons a year to E&J Gallo producing over 200 million gallons a year.
All wine production follows the same four steps:
- Harvest & Processing the fruit
- Fermentation
- Clarification
- Packaging
While the process may sound simple, the complexity of the crop, weather, environment, taste preferences, production factors all combine to making a good wine difficult.
The production of good tasting will is the result of years of learning, training and experience.
Management
A winemaker, also known as an enologist or vintner, oversees the entire production process of creating wine, including grape harvesting, crushing, fermentation, aging, blending and bottling. They combine scientific concepts with practical experience to alter a wine's chemical composition and make key decisions based on the levels of acid, sugar, sulfur and sulfite within a wine.
Winemakers also supervise the work of viticulturists, the grape growers who work for the winery or an independently owned vineyard. In the case of smaller wineries, a winemaker's responsibilities could begin with grape planting and extend through to the marketing and selling of the final product.
A bachelor's degree in viticulture would be beneficial.
Financial
A five year review of over 200 winery financial reports from across the US show profits before taxes ranging from 3.4 percent to 9 percent.
Income Data
| Year | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|---|---|---|---|---|
| Net Sales | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| Cost of Goods sold | 53.6% | 53.7% | 52.6% | 51.3% | 51.1% |
| Gross Profit | 46.4% | 46.3% | 47.4% | 48.7% | 48.9% |
| Operating Expenses | 38.0% | 36.6% | 37.8% | 36.6% | 37.2% |
| Operating Profit | 8.4% | 9.7% | 9.6% | 12.1% | 11.7% |
| All Other Expenses (net) | 5.0% | 4.8% | 3.7% | 3.9% | 2.7% |
| Profit Before Taxes | 3.4% | 4.9% | 5.9% | 8.1% | 9.0% |
The cost to develop a winery can be as high as $70,000 per 1,000 gallons (400 cases) of wine making capacity for just the building and wine making equipment. Adding a vineyard is extra.
Resources/Other Links
EU-27 Wine Annual Report and Statistics, GAIN Report, FAS, USDA, February 2014.
List of Permitted Wineries, Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of the Treasury.
National Association of American Wineries
National Grape and Wine Initiative - This nationwide coalition represents all segments of the grape industry including raisin, juice, fresh grape and wine. Membership includes grape growers, processors, wineries and representatives of academic institutions and cooperative extension organizations committed to improving the industry.
Oregon Wine Research Institute, Oregon State University - This website is a collaboration between Oregon State University and the Oregon wine industry. Resources include a Getting Started section for newcomers to the wine industry, sections dedicated to viticulture and enology, and a section listing Oregon State Extension publications and presentations on viticulture and enology.
Texas Wine Marketing Research Institute, Texas Tech University - The institute provides research and education to audiences interested in the wine and grape industry and fosters the economic development and growth of the grape and wine industry in Texas.
Other Links
American Society for Enology and Viticulture - A nonprofit scientific society dedicated to the interests of enologists, viticulturists and other fields of wine and grape research.
Department of Viticulture and Enology, University of California, Davis - Information on grape production and enology.
eBacchus.com - This online wine information community allows viewers to add their ratings and reviews to: wine ratings, reviews and tasting notes. The site offers sections on winery visits and featured regions as well as a free newsletter.
IRS Catches Up With The 1986 Tax Act, Chief Counsel’s Office Says Vineyard Qualifies For Expense Method Depreciation, Center for Agricultural Law and Taxation, Iowa State University, 2012
Northwest Grapes Cost-Of-Production Calculators - Growers choose among four calculators: conventional or organic winegrapes or juice grapes, then specify how many years the vineyard has been established. Then, just plug in your equity, operating capital, estimated yield by year, vine spacing, row length, acreage and trellising details, and once the data is entered, the calculator reveals your per-acre costs.
Society of Wine Educators - Promoting accurate and professional wine education.
Vinification and Brewing Technology Laboratory, Department of Food Science, Cornell University - Located in a new facility, the lab is a pilot plant dedicated to research and teaching in wine and brewing sciences.
Weekend Winery - More than 2,000 wineries listed from all 50 states.
Wine Business Online - News and information for wine industry professionals.
Wine Economics - This site provides a collection of useful links to persons interested in the economics of wine.
Winery and Vineyard Feasibility Workbooks, Value-Added Agriculture Program and the Agricultural Marketing Resource Center, Iowa State University Extension & Outreach - These workbooks aid producers in developing a business plan. Producers may input numbers in an Excel spreadsheet to determine the financial feasibility of establishing a vineyard or winery on their operation.
World Wine Outlook 2022.
