| Total
investment costs for the wineries in this study ranged from $560,894
for the 2,000 case winery to $2,339,108 for the 20,000 case winery.
Building and land costs account for the largest percentage of total
investment costs for all wineries. Cooperage accounts for the second
largest percentage of total investment cost.
The highest percent of variable costs for each winery are packaging
costs. Full time labor, cooperage, and purchasing of grapes are
the next highest operating costs by percentage. Depreciation of
capital assets makes up the highest percentage of fixed costs.
Economies of size exist at a decreasing rate among all of the wineries.
That is, as the output of the winery increases, the per unit costs
of production decline. Average total costs per case decrease from
$154.41 for the 2,000 case winery to $124.93 for the 20,000 case
winery.
The wineries in this study all have the ability to produce positive
cash flows by year three, showing that all operating costs and debt
obligations can be met. Results show that all wineries have the
ability to repay all debt obligations and to operate as self-sustaining
entities. |
