Advertisements

Break even for a vineyard.


vineyard-002I read a nice article in the Financial Times recently on the cost of buying a vineyard. The article is investment focused, but mentions that given costs of production, wine prices and annual sales in bottles, the investment will breakeven in a few years – meaning the investment is recouped. If you have studied management accounting, you’ll be aware this not breakeven in the way you many have learned it – fixed cost/contribution per unit. It is not very different though. In essence, the investment is regarded as a fixed  cost, with the contribution per unit being the annual contribution which can be made from sales of wine in a year. It’s not a perfect measure, but a good enough rule of thumb to help make an investment decision.

Advertisements

Tags: ,

About martinjquinn

I am an accounting academic, accountant and author based near Dublin, Ireland.

3 responses to “Break even for a vineyard.”

  1. topochinesvino says :

    It’s an interesting business, grape growing and winemaking. I live in Napa Valley and one of my neighbors has 6 acres planted and makes the usual Bordeaux-type varietals: Merlot, Cab, etc. We were talking about the $2 buck Chuck wine (Charles Shaw) that sells at Trader Joe’s for $2.00 (now $2.49). My friend exlaimed: “I pay $2.00 for my empty bottles!” Same with use of Oak barrels – they are about $1500 a barrel new – and one barrel is 300 bottles of wine. So that means $5/bottle just to age in new oak.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: