Owning and operating a winery in the U.S. is both rewarding and fulfilling. Not only is owning a winery an opportunity to produce quality wines and to promote local industry, but it can also be a profitable business venture. This article will discuss some of the benefits of owning and operating a winery in the United States.
The Wine Industry Shows Significant Industry Growth with Increased Consumer Awareness
The U.S. wine industry has shown tremendous growth and more and more Americans have developed an interest in wine. Based on a report by IBIS World, the revenue for the global wine industry has been increasing at a compound annual growth rate of 0.7% each year for the last five years and is expected to reach $374.1 billion in 2023. This incredible growth is due to a number of factors, such as the increased demand for high-quality wines, a growth in wine tourism, and the desire of many folks to source products from local farmers and other manufacturers.
The U.S. Allows Flexible Production
U.S. wineries are privileged in comparison to many wineries in different countries. For starters, U.S. wineries have the flexibility to produce a wide variety of wines, from classic varietals to unique blends. Winemakers are thus able to experiment with different varieties, blends, and winemaking methods allowing for unique wines that generate high demand.
Unlike international regions, most regions in the U.S. do not require wineries or vineyards to grow a specific type of grape in order to label the wine with a certain appellation of origin or an American Viticultural Area (“AVA”). U.S. wineries can typically grow or use any type of grape varietal they desire and still label the wine with an appellation of origin or AVA. (States may have slightly more restrictive requirements about sourcing grapes.)
U.S. Wineries Can Tap Into the Direct-To-Consumer Market
Wineries in the U.S. are generally permitted to ship wine directly to consumers. This is typically established through wine clubs or online stores run by the winery but may also be an option if a consumer visits the tasting room and wants to ship wine home. Regardless of the means, direct-to-consumer shipping helps many wineries establish a loyal customer base and to increase its profit margins. Additionally, having wines shipped directly to the customer’s house is usually a convenient option for the customer and may allow the customer to access wines that are not typically found in local retail stores in the customer’s state.
Wineries Promote Community Involvement
Wineries can become a focal point for local communities and may serve as a meeting or gathering place for friends and family. Wineries can generally also host events, such as weddings, retirement parties, anniversary celebrations, birthdays, or similar which can help increase the company’s profit margin. Finally, wineries generally can participate in community events and support local charities, which may help to create a positive reputation, build goodwill, and help to expand awareness.
Wineries Help Promote Tourism
These days, when folks travel to a new place, many like to seek out local wineries, breweries, and distilleries as a way to learn more about the community, taste new blends or types of beverages, and to relax. Tourism can be a great revenue generator for wineries, especially if the winery is located in a region with hotels and restaurants. Wine tourism can also help to increase awareness of a particular wine region and wines produced within that region.
Wineries May Qualify for Agricultural Tax Benefits
In some regions, wineries may qualify for agricultural tax benefits (depending on what is allowed under state or local law). Agricultural tax benefits may include – but are not limited to – reduced property tax, exemptions on sales tax, or even grants issued by the state or locality. These benefits can help to reduce the financial burden of starting and operating a winery.
Wineries are a Sustainable Business
One unique benefit about running a winery is that wineries can be uniquely positioned to be environmentally sustainable. Wineries rely on agricultural practices that can be environmentally friendly. Additionally, many wineries are incorporating sustainable practices into their operations which may include using organic biodynamic farming methods, reducing water usage, and using renewable energy sources. Depending on the location of the winery, the state or the locality may also provide tax reductions or grants or similar relief for wineries embracing sustainable business practices.
Owning and operating a winery in the U.S. has many benefits, ranging from flexibility in production to direct-to-consumer shipping to the potential for agricultural tax benefits to helping to build community. While starting a winery can be challenging and expensive, the business can provide significant long-term benefits for those passionate about making wine and building a brand.
Lindsey Zahn P.C. is a firm that focuses on alcohol beverage law and has represented a multitude of clients before the TTB, ranging from wineries to breweries to distilleries to importers to wholesalers and beyond. The firm has experience working on applications for startups to multinational conglomerates and with drafting brand new permit applications as well as drafting amendments. Our experience also extends to labeling, formulations, excise taxes, trade practices, and beyond.
Contact Lindsey Zahn P.C. to schedule an introductory meeting to discuss your needs and products and to learn more about how we can help: info@zahnlawpc.com or (929) ZAHNLAW (929-924-6529).