Alternative Enterprises for Farmers: Economic Feasibility of a Small Scale Winery in Tennessee

Nicholas W Waynick, Tennessee State University

Abstract

Tennessee farmers are constantly searching for new enterprises as an alternative to existing enterprises in order to increase income from farming operations. For some farmers based on their bundle of existing resources including knowledge and skills, wine production could be a profitable alternative enterprise. However, current knowledge, about winery establishment in Tennessee, especially for those who might consider entering into production of wine at a small scale, is very limited. This study attempts to fill this void by developing economic information to develop a small winery operation in Tennessee. The study uses both primary and secondary data to achieve objectives of the study. A questionnaire was developed and administered to 29 of the 37 existing wineries in Tennessee in 2011. The survey attempted to obtain information regarding an average small scale winery in Tennessee and winery operators. The information obtained on production methods and operating procedures used by winery operators were used to develop a model small scale winery operation in Tennessee. Equipment cost, production cost, startup and taxes were estimated by receiving price quotes from a minimum of three suppliers. ^ Similarly, revenue was estimated by obtaining retail price quotes from the 13 most commonly produced wineries in the state and calculating an average price per bottle. The total cost of establishing (starting up) a small scale winery was thus estimated. Similarly cost of production and operation for a small scale winery were estimated. A five year projection was made of costs and revenue for this model small scale winery. The projected numbers show an annual profit beginning in the third year and reaching a high in the fifth year of the operation.^

Subject Area

Economics, Agricultural

Recommended Citation

Nicholas W Waynick, "Alternative Enterprises for Farmers: Economic Feasibility of a Small Scale Winery in Tennessee" (2012). ETD Collection for Tennessee State University. Paper AAI1510446.
http://digitalscholarship.tnstate.edu/dissertations/AAI1510446

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