How can you profit by maximizing control strategies in the Grape and Wine industry? - ProductDock

How can you profit by maximizing control strategies in the Grape and Wine industry?

by ProductDock 12/20/2021

Growing wine grapes is, without a doubt, a prestigious activity, but let’s not forget, it’s also a business.

Some growers in the industry concentrate on the farming side of things and sell the grapes to wineries while others also venture into the world of grape processing to produce wine or juice and even sell it on site, on local markets, or let’s say, globally.

Different business models mean different approaches. Some vineyards will generate lots of profit, while others will simply struggle to survive.

There can be a myriad of factors that play into the success of a given business. Location, branding, capital, and market presence all play very important roles. On the other hand, in some cases, handling control strategies well is the key factor in differentiating a successful business from one that’s losing profit.

An Industry of Family-owned Businesses

According to estimates, around 75% of the world’s agricultural land is in the hands of family farms, and the grape and wine industry shares this particular characteristic. Most of the vineyards you’ve heard of are run by families, and many of them are just simple small farmers. As a matter of fact, the average vineyard area per holding in the European Union was no more than 3.2 acres (or 1.3 ha). In the US, California takes the lead by a long shot with an average of 82 acres (or 33 ha), with San Joaquin Valley being the absolute best (the average was around 140 acres in 2012).

No matter how large the operation, maximizing control strategies can help greatly getting back on track if something unanticipated happens, or when a strategic plan goes into “worst-case scenario mode”.

Running the Business – Every way Possible

The profitability of a vineyard (family-owned or not) will mostly boil down to a few different factors. Arguably, the most important things will be the weather and agricultural product prices, mostly because winegrowers can’t really have any kind of effect on these.
However, with appropriate planning, every vineyard can achieve superior results.

Even though vineyards are associated with a fairly high investment (especially when comparing them to annual crops) they can still be very, very profitable.
Business, in essence, boils down to two different models: the growers will either sell the grapes to brokers and sellers who will make the wine, or will take control and make the wine themselves.

In the latter scenario, vineyard owners can open onsite wineries. These decisions will also drive the overall investment and operating costs, but it has more potential to bring even larger profit.
The problem is, even a good yield can’t guarantee absolute survival, especially for smaller, family-run businesses who simply don’t have the scale or the economy to withstand taking such a blow.
One way to “keep the ball rolling” is maximizing the on site processing capacities. Apart from winemaking, farmers can also opt for juice production, vine grafting, spirit distillation, and even tourism.

When looking at winegrowing from a business perspective, having an entrepreneurial spirit and constantly aiming at coming up with new business ideas is especially important for smaller farms who simply don’t have the financial stability to pull through a bad year.
On the other hand, it isn’t all about just revitalizing production and introducing new ways of processing and products. While these are all great control approaches, most experts also advise looking into better farm organization models, better business management models, and adapting the latest tech to maximize productivity, reduce risk, diversify production, and increase sustainability.

Disease Control

Illnesses like GLRD (Grapevine leafroll disease) threaten the economic sustainability of the industry on a global scale.
GLRD is a viral disease that delays ripening, affects wine quality, and can even reduce yields.
Scientists are constantly at the forefront of this fight, trying to figure out strategies to combat diseases and to mitigate their effects.
Following the scientific side of winegrowing enables farmers to keep track of the latest trends in phytomedicine and can help them have a better understanding of certain diseases, even enabling them to capture some illnesses in their early stages.
On the other hand, partnering up with experts can also go a long way when the farmers have to resort to disease control strategies.

Producing for the Market

Truth be told, the lion’s share of the money in all types of farming is made from selling products. When it comes to winegrowing, the money can come either selling the grape or the grape products (wine, juice, spirits).
Some experts often advise farmers to produce both for buyers and final consumers alike to “capture value within the value chain”. In their eyes, just producing grapes and selling them just isn’t enough nowadays.
Many smaller wine farms are oriented towards sales and their products. They usually assume that customers will flock when the grapes/wine are good enough.
Sure, awards and competition titles are good for driving sales, however, they still need a bit more of that “oomph” to get things going.

For starters, one control strategy can be devising an advertising orientation. Surely enough, building a proper presence (especially in online marketing) isn’t something that will happen overnight, however, taking advantage of social media and other digital advertising formats and strategies, winemakers can improve sloping sales and can even improve brand recognition at the same time.

The problem is, most winemakers have neglected the power of social media and digital marketing, which has left them somewhat behind.
Most of them, who are getting into the digital game, need to shift into a more customer-centric model, producing products that their customers want and not what they think their customers want.
With a good marketing strategy to begin with, winegrowers can still keep their sales numbers in optimal ranges.

The same idea can be applied to farmers who sell to cellars, companies, or brokers. Getting to know your grape buyer and understanding their needs isn’t really a control plan, but sound advice that can play a crucial role in keeping the business afloat when things go AWOL.
Developing long-term partnerships with these companies can help you establish a name for yourself within the business and can also open new business opportunities.
Also, diversifying your buyers can also go a long way. Different brokers and companies will look for different things in grapes, and catering to their needs by creating different vineyard blocks for each of them can give you more flexibility when having to deal with issues or even canceled contracts.

If nothing else, having more buyers to choose from can be a great backup plan, especially if your main buyer simply can’t purchase your yield.

Aim for Sustainability

Long-term land use is also a crucial factor in grape growing. As long as the land yields, the profits are guaranteed. As such, creating a sustainable production cycle is paramount to the success of vineyards.
Reinvesting some of the profit into fertilizing the soil, conserving natural resources, and focusing on sustainable products isn’t necessarily a control plan, yet again, sound advice that will enable you to stay in business for a long time without having to deal with infertile land.
Going totally “green”, however, isn’t an option for every farm (at least, not yet). In this case, sustainability isn’t us saying that you should go zero-emission or fully organic, but more about taking proper care of the soil. Increasing its organic matter, using herbicides and pesticides smarter and in lesser quantities.

Embracing Innovation and the Latest Tech

Another strategy that’s less about controlling something that’s out of plan, but something that’s inevitable for future farmers/vineyards.
Applying the latest practices and technological advancements can help increase efficiency, lower costs, increase sustainability, help out with business, finances, even marketing.
So far, only larger wine companies and commercial farms were the ones embracing modern tech, but nowadays, smaller players are also catching.

As a matter of fact, there are solutions for winegrowers of all capacities and sizes. There are high-tech equipment solutions available for cultivation, harvesting, and processing, often accompanied by software and applications that help farmers keep better track of production, calculating costs, and simplifying several management-related operations.

Learn, Learn, and Learn

Again, not an actual control strategy, but one of the best overarching strategies one can implement. Constant learning and acquiring new information can help you overcome the challenges of an ever-changing market.
Learning all there is about the latest tech, industry trends, disease control, product processing, and product sales are all important.

Also, learning about risk management, finances, and labor management are almost equally significant because without them, a farm would never reach it’s true potential on the market.

So, to recap, vineyards should focus on:

  • Crop production knowledge
  • Learning about the latest technological advancements
  • Learning about basic farm management (economics, organization)
  • Product marketing knowledge
  • Basic informatics knowledge
  • Implementing Great Long-term Plans

Without a doubt, the best control strategy is thinking about every scenario and calculating them into the overall farming strategy.
While this probably won’t happen, having thorough and meticulous farming plans is crucial in successful production, business management, brand development, and so on.

As we said before, diversifying production, proper disease control, sustainable processes, using the latest technologies, proper product placement, marketing, and brand building should all be present in a great plan.
Truth be told, you can devise the most thorough plan and still, there will be no guarantee that everything will play out perfectly. However, when you think about everything and create certain strategies and approaches to eventually combat them, it’s easier to take control when issues do appear.

Conclusion

As you can see, there are quite a few approaches you can take to ensure that your business will stay afloat even if things get out of hand a bit.

All in all, it’s safe to say that having a well-rounded long-term strategy that focuses on the latest innovations, sustainability, product diversification, and on your buyers/consumers can greatly help you with keeping things at bay.

Remember, the best control strategy is the one you don’t have to use. And if you want to avoid that, your main strategy has to be impeccable, addressing not just a wide palette of different production and cultivation-related operations, but business processes as well, alongside financial moves, and so on.

 

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