Finance for your Vineyard

The success of UK wines, with a steady growth in popularity and production helped by a changing climate, has encouraged many people to look at vineyards as a business.

Vineyards can vary from a few acres to large commercial wineries, and with a single vine capable of producing up to three bottles of wine, it is easy to believe that even a small vineyard could be the basis of a profitable business.

However, experts agree that in the UK, to establish a profitable business, the minimum size you need is five acres if you are selling your wine directly to enthusiastic drinkers. If you aim to sell your produce on a more commercial basis on the wholesale market, you’ll need at least seven acres and ideally much more to achieve economies of scale.

What’s more, not all locations are suitable for growing grapes. You may be able to grow grapes as far north as Yorkshire, but most are in the South East, and the best sites are free-draining, south-facing slopes sheltered from strong winds and frost. Chalky soils are not essential though as vines can thrive on many soil types.

Remember that running a vineyard is very different from other types of growing, which may offer one or two cash crops each year. Your vineyard will take two years before it even starts to become productive, and it will take four years for still wine and as many as eight years for sparkling before your wine is ready for sale.

After around five years, you should be expecting an average yield of about 3 tonnes per acre, which would allow you to produce around 2500 bottles of wine.

This delay means that owning a vineyard, whether you are creating a new one from scratch or taking over an established holding, will have some key funding needs. Finding the most appropriate type of finance and the most competitive lender can help make your vineyard profitable.

At Rangewell we work with growers and other businesses throughout the horticultural sector. We know the special challenges you face as a vineyard owner and the financial answers to them. They include funding solutions to help you:

• Buy agricultural land to use as a vineyard
• Buy vineyard and winery equipment with Asset Finance
• Provide working capital

Buy agricultural land to use as a vineyard

Arable land in most parts of the UK sells for between £8,000 to £10,000 per acre. The number of plots coming to the market each year is limited and of that, only a few will be suitable for vineyard planting. As a result, acreage suitable for vineyard planting often sells for a premium, commanding £15,000 per acre or more. Plus having the ability to expand your acreage to grow your business could help you achieve economies of scale. Commercial Mortgages are often used to buy any kind of commercial property, but Agricultural Mortgages can be particularly suitable for agricultural land, premises or even purchasing an existing vineyard. Repayments can be spread over up to 25 years, and interest rates are always agreed on an individual basis.

Commercial Property Finance is always arranged on an individual basis, and we can help you find the most appropriate lenders for your vineyard plans.

However, the costs may not stop with purchasing the land. You will also have substantial upfront investment costs for establishing a vineyard. These may include soil conditioning, establishing vines, and putting in wires and fencing. Establishment costs of £12,000 per acre are often required. 

We can provide solutions to help you invest in preparing your vineyard.

Buy vineyard and winery equipment with Asset Finance

If you use a contractor to manage your vines, pick your grapes and transport them to a producer, it will require very little equipment to run your vineyard. A suitable vineyard tractor and the appropriate attachments for topping and spraying may be all that you need.

However, to maximise your profits, you will need to manage the vineyard and harvest, as well as the winemaking, bottling, cellarage and marketing. You will need all of the standard vineyard equipment, including a winery, cellarage, staff for your business and offices. However, this level of investment will require careful planning, budgeting and a significant amount of finance.

Asset Finance is a solution which can help make the equipment you need more affordable, by spreading the costs of finance over time. With Asset Finance, the funds you need are actually secured on the asset itself, meaning that if you were unable to keep up with your repayments, the lender would simply reclaim the asset and remove it from your business. It can also actually reduce the cost of the finance, as the lower the risk to the lender usually means a lower interest rate for you.

There are many types of vineyard equipment that can be purchased with Asset Finance, including Hire Purchase, Leasing and Contract Hire.

Hire Purchase

Hire purchase lets you hire the equipment, vehicles and buildings you need until you have paid for them, after which time they become your property.

This type of agreement generally lasts between 12 and 72 months and require a 10-20% deposit along with fixed monthly instalments. Once you have made your final payment the equipment becomes yours. HP may be most appropriate for the equipment you will use for the long-term.

Equipment vendors almost always offer HP arrangements to support their sales. But their finance plans, however, may be designed to support their business rather than yours. In such case, arranging your own finance from a specialist lender can be more cost-effective and mean substantially reduced costs for you overall.

Leasing

Leasing is much like a rental agreement. You pay a monthly charge to have use of the asset. With some arrangements maintenance, repairs, and registration will remain as the owner’s responsibility. It’s common for vineyard equipment such as tractors and other vehicles which will have a limited life to be on a lease as it means you can easily update your equipment when you need to.

Our Asset Finance team can help you lease or Hire Purchase almost any type or value of equipment for your vineyard or winery operation, both new and used. Find out more here.

Funding to support your cashflow

Cashflow is a major challenge for every agricultural business - but particularly for vineyards. Having to wait years to see a return may mean that you need some very special funding in place.

Arranging a loan to help you through the first years may be essential.

Even when you have harvested or are ready to release wine, you may find that you still wait for months for invoices to be paid by buyers and it can trigger a cashflow crisis, but there are ways to help.

Invoice Finance provides cash advances based on the value of invoices you have issued but have yet to be paid for – in effect letting you get paid as soon as you invoice.

Both Invoice Factoring and Invoice Discounting allow you to release the funds you need as soon as the produce leaves your farm.

Tax Loans

Tax is an issue for every business and a large quarterly VAT or annual tax demand can cause severe problems with your cash flow if you haven't prepared for it, particularly if it falls at the same time as other costs.

Funding is available to let you spread the cost of your tax demands into affordable monthly payments in line with your cashflow. This will help ensure that your business avoids cashflow problems, and can free up cash for use elsewhere.

Benefits of a Tax Loan can include:

• Better control of cash flow
• Fixed monthly payments
• Quick and simple to arrange
• Avoids issues with HMRC and potential penalties

Find out how a Tax Loan works to offer better control of cash flow with fixed monthly payments.

Insurance cover for your vineyard business

Insurance cover will be a major cost for your business and the usual suspects - premises, contents and public liability cover - will all be essential for you to function. This could turn into a major expense - but there are a number of ways to provide for the costs. Find out more about Professional Indemnity solutions for your vineyard.

Dealing with problems

Even the best-run agricultural business is under constant threat from uncertain weather and the risk of pests and diseases. A cashflow problem can be triggered by a bad harvest, and discovering that you cannot meet your immediate commitments could mean that the problem escalates.

At Rangewell, we understand which solutions can help your business deal with this kind of challenge. We can provide funding solutions even if your business has run into difficulties - and even if you have a damaged credit history or CCjs, we know the lenders that can help.

Find out more about finance for vineyard owners facing financial difficulties.

Why you need Rangewell to help capitalise your vineyard business

At Rangewell our team includes experts in all parts of the agricultural industry, including the vineyard sector. We not only understand the challenges your business faces - but we know the solutions to them too. 

We also understand that conventional funding solutions may not always be suitable and that quarterly or even annual loan repayments may be more appropriate than the monthly repayments more familiar in other sectors.

That means we can provide a unique service. We will help you to find the most appropriate funding from lenders across the market – from established high street banks to alternative funding suppliers. We know the lenders who can offer the most competitive rates for businesses in the sector for all types of finance, including Professional Loans, Unsecured and Secured Loans.

As well as conventional loan products, we can help you find Alternative Funding, using new loan providers and innovative funding solutions. Our specialist teams, experienced staff and land agents can give you all the help you need to develop your proposal and choose the most appropriate loan.

Simply call us to see how we can help you and your vineyard.