Savills: Business planning for viticulture

Grape growing and winemaking in the UK has changed enormously during the past 20 years and most notably over the past three years. England and Wales now have more than 5,000 acres under vine, with 500 commercial vineyards and over 130 wineries producing internationally award winning wines, thoroughly deserving their flourishing reputation. In recognition of this burgeoning sector, Savills viticulture team has been established.

Whether an established grape grower or a new entrant into the fast expanding English wine industry, Savills can offer a comprehensive and bespoke one-stop-shop advisory service which draws upon the long established range of expertise across the Savills network.

For those looking to trade within the sector, our team has the expertise to provide a wealth of services including buying and selling, consultancy, planning, valuing, research and GIS/mapping.

Strategy is key to success

For vineyard sellers, confidentiality is often key, particularly where there is a strong brand which has been built up over the years and requires protection.

Savills Viticulture team has recently handled the sale of a well-established Kentish vineyard with a great winemaking reputation. Situated in a first class location in terms of soil, aspect and altitude, the vineyard was immaculately maintained and had potential for further expansion.

From the outset, it was clear the method of sale was going to be as important as the outcome, so we implemented a strategy to protect the brand that the owners had worked hard to establish while striving to achieve the best price for them.

In the first instance, we drew up a list of buyers that we knew were active in the sector, and went through one-by-one with our client having the final say on a shortlist of 15, who were invited to receive a private and confidential brochure upon signing a non-disclosure agreement.

This exercise led to 12 viewings and subsequently three premium offers, before the preferred bidder was chosen.

The sale was not without its hurdles – we had some existing agreements and stock to deal with in addition to the usual conveyancing matters – but a dedicated seller and buyer combined with a practical approach made the process run smoothly. Exchange and completion took place before harvest 2017, the best the vineyard had ever seen.

Chris Spofforth, Savills head of farm agency in the South East

Detailed business plan essential

Viticulture has the potential to generate financial returns far in excess of other land based enterprises.  This, together with improved performance in the UK, makes it an attractive option. However it is important to consider the amount of upfront funding required to establish a vineyard. Establishment costs can exceed £30,000 per hectare and, once established, the vines require careful management for three to five years before they start to produce viable quantities of grapes.

Therefore before any business embarks on viticulture it is critical to ensure there is a detailed business plan in place which demonstrates the proposals are viable, realistic and affordable.

Savills has many years of experience in preparing business plans. These are not only important to provide confidence that your proposals are realistic, they are necessary if outside funding is required; to demonstrate to a landowner that a proposed rent is affordable, and to support an application for grant funding.

Viticulture is primary agricultural production and therefore is not usually eligible for rural grant support, however follow on income streams, such as wine production or wine tourism are. Savills has been involved with securing grants of 40 per cent on eligible expenditure in both sectors. Our experience has demonstrated how important it is to prepare the business plan at the very earliest opportunity, to ensure that the scheme will meet the grant criteria – if not, time and expense will be wasted having to resubmit an alternative plan

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