Actual Cost of Opening a Minnesota Farm Winery

Actual Cost of Opening a Minnesota Farm Winery
Linda & Marvin Seppanen
Garvin Heights Vineyards LLC
www.ghvwine.com
Tasting Room Layout
February 14, 2008
Actual Cost
2
Tasting Room
February 14, 2008
Actual Cost
3
Tasting Room
February 14, 2008
Actual Cost
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Tasting Room
February 14, 2008
Actual Cost
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Production Area Layout
February 14, 2008
Actual Cost
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Production Area
February 14, 2008
Actual Cost
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Production Area
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Production Area
February 14, 2008
Actual Cost
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Production Area
February 14, 2008
Actual Cost
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Crushing/Desteming
February 14, 2008
Actual Cost
11
Red Wine Fermentation
February 14, 2008
Actual Cost
12
Tank Cooling System
February 14, 2008
Actual Cost
13
Presentation Outline
` What does it cost to start a Minnesota Farm Winery?
` Minimum Requirements
` Our history
` Winery Design Considerations
` Our Winery
` What did GHV winery cost?
◦ Capital
◦ Expenses
◦ Future
` Is there a winery in your future?
February 14, 2008
Actual Cost
14
What does it cost to start a Minnesota Farm Winery?
A.
B.
C.
D.
E.
F.
$250
$2,500
$25,000
$250,000
$2,500,000
More than one of the above
February 14, 2008
Actual Cost
15
Starting a winery for $250
• TTB (Feds) bond • TTB (Feds) license is free!
$100
– Can make wine for sale
• MN bond $100
• Liability insurance
???
• MN Farm winery application $50
– Can sell wine in Minnesota
•
• Total initial and annual cost February 14, 2008
Actual Cost
====
$250
16
Minimum Requirements
Minnesota Farm Winery
` Own three acre farm!
` A legal description
` A location to make/store wine
◦ Could be in house ~ outbuilding
◦ Must be locked
` Legal entity
◦ Partnership ~ Sole‐proprietorship ~ LLC
` Winemaking experience & equipment
◦ 200 gallons per year for family use
◦ Small press ~ carboys
` Liability Insurance
` Licenses allow wine to be sold!
February 14, 2008
Actual Cost
17
Our history
Linda & Marvin Seppanen
• 1983 moved back to home state of MN
• 1985 purchase house on 20 acres outside of Winona
– 2/3 wooded – balance rented crop land
– 1986 started planting windbreaks – fruits
– Planted Beta, Concord, Edelweiss, Swenson Red
• 1989 built 24’ x 40’ sheep barn
• Joined MGGA expanded vineyard
• Township annexed forcefully into city
• 2005 became involved with Vernon County WI
February 14, 2008
Actual Cost 18
Vernon County Grape Growers
` 2005 Training sessions by national experts
◦ Developed a business plan
x Apply for winery license
x Convert barn to winery with tasting room
x 5,000 gallon annual production
◦ Trip to MI to visit 6 wineries – Risk Management Grant
x How risks were managed
x Tasting room built to be converted to a house
x Variety of retail styles
` 2005 Produced ~200 gallons of wine from own grapes
` 2006 Revised business plan
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Formed Garvin Heights Vineyards, LLC – started licensing process
City to provide sewer service – no additional restrictions
Designed & built Winery/Tasting Room/Event Center
Made 200+ gallons of wine from own & purchased grapes
` June 22, 2007 opened Winery
February 14, 2008
Actual Cost
19
Winery Design Considerations
` Winery with tasting room & small event center
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Sell a Million dollar view Large deck with vineyard views
A showplace – space for art display & sales
Energy efficient
Space for outdoor events
Handicap accessible
Rural setting for agri‐tourism
Commercial building
` Wine Production
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Lower level with crushing & pressing under deck
Goal of 5,000 gallons per year
Separate lab/test room
Painted concrete walls and floor – floor drains
Forced air ventilation system – fermentation
Outdoor grape crushing & pressing
February 14, 2008
Actual Cost
20
What costs were included?
` Included:
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◦
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Establishment of legal entity ‐ LLC
Building with city sewer hookup ~ Roadside sign
Equipment for 2,000 gallon capacity
Tasting room with event tables ~ Shelving ~ POS
Initial inventory thru December 2007
` Not included:
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Land – already owned
Well – house has 8” – 600’ well
Grape vineyards with equipment and trellises
Home winemaking equipment
Our Labor – Interior finish work ~ Painting ~ Operation
Telephone service
3‐phase electric service
February 14, 2008
Actual Cost
21
What did GHV winery cost?
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•
•
•
•
Capital
Expenses
Tasting Room & Wine Inventory TOTAL ( Thru Dec 2007)
February 14, 2008
Actual Cost $372,500
$ 25,700
$ 27,500
========
$425,700
22
GHV Capital Investment
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Building Site Prep (Includes Sewer) Winemaking Equipment Design & Permit Computer Equipment & Software Tasting Room Equipment Road Side Sign TOTAL
February 14, 2008
Actual Cost $238,600 $ 67,000 $ 48,000
$ 6,900 $ 5,800 $ 4,000 $ 2,200 ======
$372,500 23
Winery Building
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General Construction
Concrete
Wood & Plastic
Thermal & Moisture Protection
Doors & Windows
Finishes
Specialties
KBS Contract
Special Construction
HVAC/Plumbing
Electrical
Urinal Additional
Other Changes
Bulk Tank Electrical
Gutters
Bar & Counter Tops
Security System
Plumbing Additional (Water heater, etc.)
Kitchen & Lab Cabinets & appliances
Other Building (Paint, Tile, etc.)
TOTAL
28’ x 48’ =
Retail
Production
February 14, 2008
$211,400
1,344 sq. ft.
$120 / sq. ft.
$60 / sq. ft.
Actual Cost
$ 5,100 $22,500 $35,100 $ 8,900 $14,500 $13,000 $ 100 $35,700 $52,200 $19,400 $ 1,000 $ 1,900 $ 500 $ 700 $ 5,100 $ 1,300 $ 1,700 $ 8,900 $ 8,800
========
$238,600
24
Winery Building Construction
February 14, 2008
Actual Cost
25
Winery Building
February 14, 2008
Actual Cost
26
Winery Site Prep (Includes Sewer)
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City hookup fee
Excavation & Sewer Concrete Class 5 Tree Moving
Driveway Retaining Walls Repairs (Sewer Pump)
Other Oak Mulch
$10,000
$45,400
$ 3,700 $ 2,800 $ 2,100 $ 1,300 $ 1,000 $ 400 $ 300 $ 200
======= $67,000
TOTAL
February 14, 2008
Actual Cost
27
Winemaking Equipment Cost
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4‐1500 liter SS tanks 4‐240 gal SS tanks BP 460120 gal press 100‐Liter SS Tanks & Presses 500 liter tank/cooler Used 250 gal tanks / setup Hanna Instruments SS Sink Tables Cart & Shelving Miscellaneous Valve, Hoses & fittings Zambelli flexible Impeller Pump (110 v)
Cooling System Filler Unit Pressure Washer Chest type Freezer Buon Vino Super Jet Filter Pallet Jack Nitrogen System $12,580 $10,530 $6,540 $3,060 $2,810 $2,360 $1,650 $1,510 $1,130 $1,090 $1,080 $960 $850 $460 $410 $370 $330 $270 ====== $48,000 Total February 14, 2008
Actual Cost
28
Winemaking Equipment
February 14, 2008
Actual Cost
29
Winemaking Equipment
February 14, 2008
Actual Cost
30
Winemaking Equipment
February 14, 2008
Actual Cost
31
Winemaking Equipment
February 14, 2008
Actual Cost
32
Winemaking Equipment
February 14, 2008
Actual Cost
33
Design & Permit
• Architect Design Required
$4,550
– Mechanical and Structural Engineering in building
• Building Permit
$2,000
– Required Site Plan Held up construction
– Variance required for non‐paved parking
=====
$6,860
•
• TOTAL
February 14, 2008
Actual Cost
34
Computer Equipment & Software •
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Dell Monitor $ 240 Dell Notebook Computer $1,940 LX 400 Printer & labels $1,420 HP 2600n Printer $ 400 Quickbooks Credit Card Processing $ 30
Quickbooks POS Software Hardware $1,420 Quickbooks Retail Software $ 320
===== TOTAL $5,770 February 14, 2008
Actual Cost
35
Computer Equipment Pictures
February 14, 2008
Actual Cost
36
Tasting Room Capital Cost
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Shelving Chairs & Tables Acoustics Panels Miscellaneous Wine Glasses, IKEA $1,540 $ 900 $ 850 $ 510 $ 160 ======
$3,960
TOTAL February 14, 2008
Actual Cost
37
Tasting Room
February 14, 2008
Actual Cost
38
Tasting Room
February 14, 2008
Actual Cost
39
Roadside Sign & Logo
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Sign
Logo
Other Signs
$2,200
$ 500
$ 300
=====
$3,000
TOTAL
Non‐electric sign
– Saved 50%
– Solar lights from Menards
February 14, 2008
Actual Cost 40
Operating Expenses thru 2007
Category
Conferences & Meeting
Legal, Licenses & bond
Utilities
Advertising
Visits Winery & Vineyards
Insurance
Taxes (Wine & Sales)
Training
Membership
Web Site & Internet
Tasting Room Supplies
Winery Supplies
Publications
Banking & Credit
Postage & Shipping
February 14, 2008
TOTAL
Cost
Annual
$4,930
$4,330
$250
$3,010
$1,840
$2,750
$2,550
$1,880
$2,400
$1,790
$1,470
$1,050
$580
$890
$720
$590
$190
$110
$90
$300
$50
Actual Cost
$25,700
$6,090
It costs
$500 per
month to
stay in
business!
41
Tasting Room & Wine Inventory
Category
Grapes & Juice
Wine Supplies
Bottles
Items for Sale
Total
February 14, 2008
Actual Cost
Cost
$19,200
$3,500
$2,600
$2,400
$27,500
42
What did the GHV winery cost?
•
•
•
•
•
Capital
Expenses
Tasting Room & Wine Inventory TOTAL ( Thru Dec 2007)
Initial year sales
Wine inventory
Retail inventory
$372,500
$ 25,700
$ 27,500
========
$425,700
$20,000
1,800 gallons
$3,000
Expenses not covered,
but we are in business for the long run
February 14, 2008
Actual Cost
43
Future
` Marketing
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Professional quality brochure – visitors center
Minnesota Grown
Twin Cities Food & Winery Experience: 23‐ 24 February
Local hotel room ad (Holiday Inn)
Bluff County Studio Art tour ad: 25‐27 April ` Selling cases versus bottles
◦ Credit cards
◦ Case discounts
` Retail Sales
◦ Open April 25 thru Christmas
◦ Winery events – St. Urho Day: March 16
◦ Internet sales
` Wholesaling ‐ self distribution
◦ Restaurants
◦ Liquor store
February 14, 2008
Actual Cost
44
Future
• Equipment Needs
– Crusher/Destemmer with must pump
– More tank capacity ‐ sizes
– Minnesota oak barrels
• Longer term needs
– Paved parking – water control & snow removal
– Signage
– Telephone service?
– Production space
• Original barn winery still bonded – wine storage
• New construction – lower cost per square foot
February 14, 2008
Actual Cost 45
Is there a winery in your future?
• Long term investment!
– How long?
– Alternative use of building
• How can a winery be financed?
– Self and/or family
– Investor group – must be TTB approved
• A winery is a lifestyle issue!
– More than a job
– Limited free weekends
• Transition plan!
February 14, 2008
Actual Cost
46
GARVIN HEIGHTS i|ÇxçtÜwá
` Linda & Marvin Seppanen
` 2255 Garvin Heights Road
` Winona, MN 55987
` www.ghvwine.com
` seppanen@hbci.com
` Wine Tasting – Vineyard & Winery Tours
` Open weekend afternoons April ‐ Christmas
February 14, 2008
Actual Cost
47