When Investing in Vineyards, Patience Is Key Ingredient
International Herald Tribune Saturday, June 23, 2001
by Holly Hubbard Preston
It's a strange investment opportunity that requires someone not only to put up capital but also spend tremendous amounts of their time self-marketing.
"There's a certain rock-star quality to making wine," said Vic Motto, a vineyard property specialist based in the Napa Valley. "The public wants to know the personality behind the wine. They don't want to talk to some paid salesperson."
When The Money Report interviewed William Harlan, the proprietor of Harlan Estate, one of the market's hottest new collectible wines, the real-estate developer turned vintner was headed to Paris for the Vin Expo industry trade show. Even when not traveling, Mr. Harlan, who has a full-time market representative, must meet with collectors, restaurateurs and the press.
To Mr. Harlan, these public relations efforts are part of his 20-year effort to realize a lifelong goal of creating a world-class "first growth" vineyard estate.
Today, he owns 240 acres (96 hectares) of prime land that yield 2,000 cases per year of Harlan Estate from the winery he built. Collectors from California to Hong Kong clamor for the Cabernet blend. A 750-milliliter bottle of Harlan Estate sells for $250 in fine-wine shops in 25 countries. It sells for at least twice that much in the secondary auction market. Collectors lucky enough to be on the vintner's mailing list can buy new releases for $175.
"It took 12 years before we saw a nickel of revenue." Mr. Harlan said. "Forget about profit. We're still waiting for that."
His target date for profitability, he said, is 2006.
Ted Hall, a former senior executive for the consultancy McKinsey Co., is a decade into owning a Napa Valley estate property that includes 25 acres of grapes bottled under the label Long Meadow Ranch.
"This is not an industry you come to in your 50s," he said. A longtime amateur winemaker, Mr. Hall was 41 when he started buying land for the winery.
On a consolidated basis, the ranch and winery are essentially cash flow break-even, Mr. Hall said, "after 11 years of hard work." His wine, being sold in eight Asian and European countries, is starting to get attention from such European experts as Katrina Alloway, tastings coordinator for Wine Magazine in London. That is good news for Mr. Hall, considering he is now over 50.