Tim Hanni is the first American along with Joel Butler to earn the title of “Master of Wine.” He is an accomplished speaker and author, and instructor at Napa Valley Wine Academy. Below are 10 tips from Tim on getting into the wine business, and if those peak your interest, you might just want to consider his new online course: The Business of Wine.
MASTER OF WINE TIM HANNI’S TIPS
- BUSINESS IS BUSINESS. The most common cliché I know related to starting a winery is, “So you want to know the secret to making a small fortune in the wine business? Start with a large fortune!” It is no joke that it is easy to lose money while pursuing your passion and dreams of creating your own wine brand. The most common mistake, and a sure-fire path to losing money, is not being able understand the business end of wine. Business is business.
- KNOW YOUR COSTS. Wine education and learning often places little-to-no emphasis on the financial consequences of key quality decisions from the vineyard through the wine production processes. A sustainable wine business model must be aware that if the desired goal of the vintner is “attaining the best quality grapes, a talented winemaking team and caves filled with new French oak,” there will be a multitude of financial implications to consider.
- TIME IS MONEY. There are many production models available for aspiring wine producers, each with strengths and weaknesses, and the time from starting your venture to having wine to sell, ranges from less than 90 days to tying up lots of capital for over 8-10 years!
- BUSINESS ACUMEN IS A NECESSITY. If you are looking to transition from another field of business to the wine industry many people are surprised to discover that solid general business acumen, in marketing, sales, finance and many areas, outweighs wine knowledge and education.
- BEWARE OF THE DTC SIREN. Beware the siren’s song of, “selling consumer-direct (DTC) cuts out the middlemen and is the pathway to untold fortunes” that overlooks the true costs of doing DTC business: costs of acquiring new customers and horrendous drop off rate of wine club memberships.
- KNOW THE LAW TO KNOW YOUR VISION. Create a solid mission, vision and goals for your business. Nobody I have ever met told me, “I went into the wine business to spend my time fighting with the city, county, state and federal regulators, pounding the pavement making sales calls to apathetic and disinterested buyers and distributors, while buried in red tape, forms and paperwork.”
- MAKE PROFIT BEYOND WINE SALES. Winery special events and weddings, if you can get the permits, can often be far more profitable than making and selling wine.
- KNOW THE BUSINESS YOU ARE IN. Make sure you understand that opening a tasting room puts you in a completely new business dimension – you are now fundamentally running a retail store and wine bar.
- DEVELOP A MARKETING AND SALES PLAN FOR MULTIPLE AUDIENCES. It is imperative to have marketing and sales plans not only for the consumer, but for the ‘gatekeepers’ (wine writers, bloggers, distributors, retailers and restaurateurs) that you must sell and market to before your wine will even enter the market.
- HAVE A BUSINESS PLAN. The key to financial and lifestyle success is to have a great and realistic business plan that also has fallback plans and realistic risk assessments.
