Virginia Wine aptly describes on their website the great potential of land in central Virginia for farming wine grapes: “The eastern slopes of the Blue Ridge and the rolling countryside to the east offer excellent topography, fertile granite-based clay soil and a growing season of over 200 days.” Their site includes a compiled list of 72 vineyards and wineries in the central Virginia area alone. Yet there is still ample open land for sale in central Virginia ripe with possibilities for the next great vineyard. Compared with Napa Valley’s 500+ wineries in 748 square miles, central Virginia still has room to grow (Albemarle County alone is 726 square miles). Luckily for you, the discerning buyer or investor, the Virginia Cooperative Extension (VCE) has just released a Vineyard Financial Calculator, an invaluable tool when considering such a land purchase and business venture. As the VCE writes, “This tool’s intended user is an individual or organization exploring the financial requirements of vineyard establishment and operation in Virginia.” This financial calculator was created by Tremain Hatch, Peter Callan, and Tony Wolf.
The Calculator tab contained within the Excel spreadsheet prompts the user to input information specific to their proposed operation, such as the number of acres that will support the vines, the width of the rows of vines, the crop produced per foot, the hours of labor per acre, and the cost of capital. The formulas already figured into the spreadsheet will then calculate your cash flow. The “Trellis” tab allows you to figure in the cost of installing a trellis, as well as a fence to protect your vines from hungry wildlife, such as the deer population. The “Equipment” tab includes a very informative table complete with the name, type, and price of equipment typically needed to operate a vineyard. Simply consider the kind of equipment you’ll need for the size and type of vineyard you want to have, then enter the relevant numbers in the prepared calculator. You will also need to consult the “hours of use” graph at the bottom of the page, which helps calculate the life of your equipment based on your desired acreage. The embedded formulas will then calculate both your capital expenditures for equipment and your annual fixed cost for equipment based on industry standards.
Finally, once you’ve entered all of the information specific to your dream vineyard, your diligent and attentive work pays off in the Budget, Net Present Value, and Sensitivity Analysis tabs. The Budget includes fields already linked to figures you have entered in other tabs and calculates your revenue and cash flow. The Net Present Value tab looks into the future and calculates when you would begin to see a profit. And the Sensitivity Analysis tab illustrates how your profit might vary based on fluctuations in crop yield and price.
If you’ve long dreamed of owning a vineyard in central Virginia, now you have the means to begin seriously thinking about logistics. And when you’re ready to see land in which to plant those first few seeds of your dream, contact Gayle Harvey Real Estate and we’ll be happy to help.
To learn more about what is entailed in establishing a winery in central Virginia, read our blog post here. For information on business license requirements in central Virginia, click here.