UNDERPOTENTIALIZED: Opportunity for Serious Investor
With Knowledge of Wine Export Market
VINEYARD:
The vineyards have about 50 acres of certified organic vines, including merlot, malbec,
semillion, syrah, chenin and ugni blanc.
There is an additional 16 acres of vineyard in common table wine -- muscatel and pedro
jimenez, and another 2.5 acres of syrah.
Grape production is averaging about 4,000 kilos per acre, in part because organic
vineyards produce lower yields. The organic vineyards are sufficient to produce
200,000 of white wine and 100,000 bottles of red wine annually.
WINERY:
The winery operation is certified organic, and actually consists of
two wineries that sit side by side. Capacity of just over 2 million liters.
In 2007 they turned 1.15 million kilos of grapes into wine -- some from the extra vineyards
described below, and 500,000 kilos from third-parties. Most of the wine was sold in bulk
to other wine operations, and they only bottle about 50,000 to 60,000 bottles a year with
their own labels.
The bottled wine was mostly sold on the domestic market, with negligible exports to
Italy and Costa Rica. Wine was also sold in bulk to China and Russia.
The winery is fully equipped with a bottling and labeling line, refrigeration equipment
to cool wine during fermentation, pumps and storage tanks, wine presses, a forklift
and crates, and all the other miscellaneous equipment necessary for elaboration.
HOTEL & RESTAURANT:
A hotel with eight rooms is nearing completion (probably about 60 days to finish if they
had the cash to get rolling). Most of the materials are there, so it's close to getting done.
They've done a great job of creating character by renovating the old house where the
hotel is located. They have incorporated old oak barrels into wood floors, have created
an underground brick tunnel between the restaurant and the wine tasting rooms which
also serves as a wine cavern, and created an environment that would serve nicely as a
wine retreat resort for upscale clients. Simply beautiful when finished, and there is a
nice place to put a pool right next to the hotel
Additional expenses will be equipping the kitchen, and the purchase of furniture for the
bedrooms. Some of that is already on site -- such as antique tables and chairs for the
restaurant, and bed headboards created from old oak barrels.
They estimate another US$35,000 is needed to complete the hotel and restaurant, with
computers, beds and linens, office equipment, A/C, etc.
ADDITIONAL VINEYARD FOR SALE:
There is additional vineyard they own which can be
purchased separately. One vineyard is about 50 acres offsite which includes about 45 acres of
grapes in cabernet, syrah, chenin blanc, chardonnay, pink muscatel and pedro jimenez. This
property includes a worker's house with water and electric. It is priced at US$180K.
The second property offsite is 33 acres with 27 acres in malbec. It is priced at US$137K.
LOCATION:
The winery and vineyards are situated on Provincial Route 143, the
highway to Buenos Aires, in the county of San Rafael. It is located approximately 15 miles
north of the city of General Alvear, and 40 miles south of San Rafael.
VALUE: At current vineyard installation costs, installing 68 acres of vineyard would
run in the neighborhood of US$450,000 with an additional cost about equal to that to maintain
the vineyard for five years before full production.
Costs of building the two wineries, equipped with bottling equipment, etc., for 2 million
liters is difficult to ascertain. Suffice it to say that building costs would exceed purchase
price, not less than US$1.5 million.
Land value, absent of improvements, would be in the neighborhood of US$150K.
EXPENSES:
They are claiming US$60,000 in labor and administration costs for
12 workers -- 3 full time in the wineries, and 9 workers in the vineyards. Harvest costs
for picking the grapes (using additional labor) were US$23,000 in 2007. Costs to elaborate the wine is running about US 2 cents per liter, and bottling costs with label, cork,
labels, etc., run about US 65 cents per bottle packed in boxes of six.
PROS and CONS:
Forget this property as currently run as a cash cow. They're
and with some profit, but are not tapping into the potential. Most of the wine that they
produce is sold in bulk at a minimal profit. Costs are offset by wine they
produce for third parties, but I am guessing income is not great.
Potential is vast, but the current owners are not marketing correctly, or tapping into that
potential. Their ideas are good, but their budget to do so,
and dedication to making that happen are lacking.
At 50 percent occupancy, the hotel done right as a wine-tour destination should do
something in the neighborhood of $180K gross per year alone.
The winery has a capacity to do, from its own vineyards, 200,000 bottles a year in
organic wine -- the fastest growing market in wine sales at the moment -- and a wine that
generally gets premium prices. There is capacity for another 2 million bottles of wine,
and the bottling operation is sufficient to handle most of that.
